Tony Cardenas hammers DWP on integrity

CouncilmemberTony Cardenas 

On November 9, 2004 , Tony Cardenas , Councilmember and the chair of the Commerce, Energy, and Natural Resources Committee (CENR), expressed his dissatisfaction with Los Angeles Department of Water and Power (DWP) management. By its actions, management clearly states to employees, "No good deed will go unpunished."

Successful management knows the importance of integrity. It is the willingness to do what is right even when no one is looking. Integrity is the core of our society’s foundation of trust and our “moral compass.”
Cardenas had a reasonable expectation that DWP management would conduct a diligent good faith investigation into his inquiries about a custodial services contract with Empire and the treatment of DWP employees – whistleblowers – that reported contract problems. The response that Cardenas, Cindy Miscikowski , and Janice Hahn received fell far short of expectations.

Cardenas hammered Henry Martinez, acting DWP General Manager on integrity. “The integrity of the Department is priceless.” Cardenas said to Martinez , “It is an extension of the integrity of the City.”

These integrity violations and incidents of retaliation against employees who come forward are not isolated. This is another one of many incidents that comprise a pattern and practice of City management which seeks to degrade, intimidate, and retaliate against employees who exercise their rights as citizens and who fulfill their moral and condition of employment obligations to report malfeasance as required by DWP Administrative Manual code.

In response to an August 2004 article entitled “Out of the Darkness” written by Jeffrey Anderson of LA Weekly, Tony Cardenas hit the nail on the head. Cardenas was quoted to say, “We can’t use settlements as Band-Aids for systemic problems in any department. We need to get these claims on the record in the City Council in full purview of the public. It’s time we expand the scope so taxpayers know how their money is being spent.”

The problem is systemic. The DWP has had a steady stream of general managers, rotating assistant general managers, and Board members and not only has the culture not changed, the dysfunctional behavior seems to have metastasized through the ranks of the organization. A DWP facilities maintenance technician put it simply, “You can change all the pipes you like. It flows downstream and it makes DWP reek of cronyism.”

W. Edwards Deming, an American systems guru responsible for a successful Japanese business culture transformation, taught that management, and management alone, is responsible for system problems. The biggest mistake managers can make is to blame individuals for system problems. Consistently, DWP management is sending a very fearful message to employees by example. Employees who exhibit integrity and strength of character to come forward should expect to have their careers ruined and character besmirched.

Responsible city managers don’t treat employees like that! Good managers praise and reward employees that find problems and then they focus others on supporting, sharing and using the information to improve processes and ultimately reduce cost and improve effectiveness. Jeffrey Pfeffer, professor of Organizational Behavior at Stanford University Graduate School of Business, claims that organizational learning requires a clear understanding of recurring problems, the willingness to address root causes, and cultural values which encourages workers to find, fix and report recurring failures.

The Los Angeles Times and the Daily News recently reported that a DWP audit concluded that the Department had lax controls over contracts and spending. The Daily News reported that the audit found improperly authorized contracts, contracts approved without authority, split contracts circumventing Board approval, inadequate credit card use procedures, and contracting that was not at the lowest ultimate cost or in the best interest of the DWP.

These administrative and operational problems, because of their established, pervasive, and unresolved “systemic” nature, must be considered fostered by high-level management. Custodians, storekeepers, supervisors, and mid-level managers do not make policy. They merely reflect the processes and standards of performance which management controls.

Deputy Mayor Doane Liu’s response to the audit inappropriately redirects blame to employees. Liu said it was too early to discuss whether employees involved in the problems should be subject to disciplinary action. Mayor Hahn has had a blue-ribbon commission studying contracting for some time. Responsible ethical managers should have taken ownership of the known contract administration problems, but they did not. Deputy Mayor Liu reflects the pin-the-blame on the subordinate culture that has become an ugly and festering cancer at DWP.

This audit was a small almost insignificant sample of the $3 billion in contracts that the DWP maintains – But the auditors found considerable problems. Statistically, it means processes are out of control. The finding should warrant serious investigation into the administration of other contracts at DWP.

Lax controls and inconsistent processes are a reflection of management performance not individual employees. Enduring systemic problems are evidence of what management allows. A quote from Michael Josephson, founder of the Josephson Institute of Ethics, may be appropriate here, “What management allows, it condones.”

With a predominance of inconsistent practices, it becomes illogical to blame the workforce or lower-level management. It comes to mind that DWP management maintains a lax inconsistent system for another purpose – illicit control in support of pay to play. In this system, individual employees who speak of foul play become subject to intimidation, retaliation, and constructive discipline. They are held to a standard of performance that in practice does not exist at DWP. In this environment, management can neutralize individual employees like Sandra Miranda , a custodial services supervisor, and intimidate co-workers who brought the Empire contract to light, and put fear into other employees who do no more than question management authority. This environment is oppressive and intimidating and, of course, it reflects poorly upon City management.

In response to many employee claims of retaliation, DWP management created the Equal Employment Opportunity Section (EEOS) to deal with personnel issues. The EEOS is subordinate to DWP management. All employee promotions into and out of the organization are made by DWP Management. Consequently, it can not be independent of management. It functions to support the system. Inquiries are inconsistent and incomplete. Pertinent witnesses are not examined. It is no surprise that the findings rendered by this pseudo-regulatory office consistently support management behavior and serve to redirect blame to lower levels.

Next, consider the City network in support of the major DWP management players. Systemic contracting problems and personnel issues seem to form a nexus at Assistant General Managers. DWP Assistant General Manager and former City Attorney's Office Chief, Thomas Hokinson, has been one consistent policy maker behind the scenes in Hahn’s bigger organization. He seems to have considerable influence marshaling findings, decisions, and actions through the City Attorney’s Office, the Personnel Department, as well as, the Board of Water and Power Commissioners. Hokinson sets purchasing policy, directs personnel actions and confidential agreements, and encourages subordinate managers and administrative staff to ruin employee careers.

Lastly, consider DWP management’s solution to correct the problems. They have decided to retrain managers on EEO policies. The personnel problems are orchestrated by high-level managers who are predominately accomplished attorneys. They know the laws, the boundaries, and are most savvy in the manipulation of perception. Training is another effort to reframe the problem. The Problem is not a lower-level supervisory or mid-level management problem which can be corrected by training. Rather it is an effort to redirect and enable the culture to continue.

The General Manager(s) and the Board of Water and Power Commissioners serve at the pleasure of the Mayor. S. David Freeman, former General Manager of DWP reported that Mayor Hahn has the power to set their agenda, influence Board members, and if needed replace them. Consequently, if DWP did not reflect the culture the Mayor desired, he has the power to pursue immediate corrective action to change the culture at DWP. Therefore, it seems until we get a new mayor or Mayor Hahn decides otherwise, employees who report malfeasance, business vendors who don’t support the current status quo, and a public institution which has been politically-undermined, will continue to suffer.