[00:00:00] Michael Fricke: Thanks for joining us for season one of The 30 Minute Ethical Leader podcast. This podcast was presented and sponsored by the Center for Leadership Ethics at the University of Arizona's Eller College of Management. Podcast is hosted by the center's founder, Dr. Paul Melendez and the associate director, me, Michael Fricke.
[00:00:16] The goal of our podcast is to memorialize in the advice and the knowledge of seasoned leaders from the private, public and government sectors for the benefit of today's leaders and leaders of the future. We plan to release episodes in three episode seasons. So if you want to be one of the first to know when season two will be released, please subscribe wherever you get your podcasts.
[00:00:39] Don't forget to follow us on Twitter @UArizona_CLE. And of course, if you find this podcast to be valuable and you want to connect with our Center for Leadership Ethics and are interested in supporting the ongoing research, outreach and education that we are involved in, please consider donating at eller.arizona.edu/CLE. [00:01:00] See ya in the next season.
[00:00:00] Paul Melendez: Welcome to The 30 Minute Ethical Leader sponsored by the Center for Leadership Ethics in the Eller College of Management at the University of Arizona. My name is Dr. Paul Melendez, and I serve as the founder for the Center for Leadership Ethics. I'm an author, professor, and a consultant.
[00:00:29] Michael Fricke: And I'm Michael Fricke, Associate Director of the Center for Leadership Ethics, faculty member in the Department of Management and Organizations and recovering attorney.
[00:00:38] Paul Melendez: I'll be the play-by-play announcer, and my colleague Michael will be doing the color commentary. Today's guest is Ciara Garcia. She is a passionate social change leader with 17 years of experience in the nonprofit sector. She believes in the power of relationships to transform individuals, [00:01:00] organizations, and communities.
[00:01:01] Her diverse background in operations, fund development, governance and programming provide her with a keen understanding of how to improve internal systems and expand community impact. Sierra brings a value driven, results oriented, human centered approach to SVP Tucson where she has served as the president and CEO, since January, 2016. In 2011, she was recognized as one of Arizona's top 20 up-and-coming nonprofit leaders.
[00:01:34] And in 2013 is one of Tucson's 40 under 40 honorees. She currently serves on the board of directors for Social Venture Partners International and is a member of Women at the Top. Sierra, welcome. We are delighted to have you, uh, how are you doing today?
[00:01:52] Ciara Garcia: Well, thank you so much for that introduction. And, um, it's a pleasure to be here with both of you today, and I'm doing [00:02:00] quite well.
[00:02:00] I'm just really excited to have this conversation with you.
[00:02:03] Paul Melendez: Well, as I said, we are just absolutely delighted to have you. The goal of The 30 Minute Ethical Leader is to memorialize the thoughts, learnings and recommendations of seasoned leaders from our business, government and nonprofit sectors to help inform ethical leaders of today and tomorrow. With that, let us begin.
[00:02:21] So Ciara, what ethical behaviors are required of all leaders?
[00:02:29] Ciara Garcia: This is a great question. And the more I think about it, the more I realize how complex it is. Um, I believe that the complexity of the challenges that we face requires us to move beyond a simple set of ethical rules. I think that the ethical standards of the past, which were often defined by the notion of doing what is right or the golden rule or the principle of integrity, which are all very important, but I think they fall short in providing any real [00:03:00] guidance for the challenges we face today.
[00:03:02] And so I think about three ethical behaviors, lean into complexity, demonstrate courage and practice radical candor. And so I wanted to just kind of break down what I mean by those. So when I think about lean into complexity, I think about the fact that leaders are accountable to multiple stakeholders. And we often sit at the seat of tension between the needs and desires of various groups.
[00:03:29] So in the nonprofit sector, this includes donors, staff, boards, clients, our broader community. And first and foremost, leaders need to have a willingness to lean into and embrace this complexity, which allows them to really understand the challenges, including ethical ones more fully. And so when I think of the action of leaning into complexity, it really is the practice of listening, listening to people and not being afraid of what they [00:04:00] might say, and listening to multiple groups, um, not just one group or one opinion, but to many.
[00:04:06] Um, so the next behavior is demonstrating courage and we often think about courage, the courage to do the right thing. And that's definitely a part of it. At the end of the day, we have to do what is right. But before we act, we have to have the courage to be self-reflective. We have to challenge our inherent ideas and beliefs.
[00:04:26] Um, we need to question our understanding of a situation and be open to learning. And from that place of reflection, we can really root ourselves in doing what is right and making that ethical decision. And then the last behavior that I'll bring up is the practice of radical candor. And this is a phrase that was coined by Kim Scott, and she has a book of the same name and the concept of radical candor is to care personally and challenge directly.
[00:04:53] And I think about this a lot. I actually have it up on a post-it note on the wall in my office, both at home and my [00:05:00] actual office. And Kim shares that the radical candor framework as a way to manage people. And I think it extends beyond that. And I use it as a framework for many of the relationships that I hold as a leader. The work that we do in the nonprofit sector, and I imagine this extends to other sectors as well, is highly relational. We are in deep relationship with our staff, our board, our clients, our donors, and everyone is really committed and passionate about the outcomes. And so the practice of radical candor, um, of caring personally and challenging directly is really the, how I deliver my integrity and how I deliver my ethics.
[00:05:41] So after I've leaned into the complexity, through the act of listening and I've been courageously reflective, challenging my own assumptions. And from that point, I've made a decision or I've set a direction. I have to communicate it clearly in a way that people can understand, and I need to bring people along.[00:06:00]
[00:06:00] And that is where radical candor comes in. It's not about pleasing everyone, but about building the relationships and the trust and standing up for what is right. Not shying away from the hard conversations. And I think it requires us as leaders to show up authentically.
[00:06:15] Michael Fricke: Ciara, I want to follow up with a quick question on the first of your three Cs, the complexity piece, because I think it's, uh, it's really interesting, the way that you describe it as leaning into complexity with all of the many stakeholders that your organization and all of our organizations have. And I'd really like to know when you encounter some of those stakeholders that do have conflict with one another, or have conflicting opinions about the direction that the organization should go.
[00:06:48] I mean, this is sort of the essence of that complexity, right? There are so many different, uh, people with different, um, incentives and different desires. How, how do you navigate those [00:07:00] conflicts when your stakeholders, maybe, want to pull you in different directions?
[00:07:04] Ciara Garcia: That is such a good question. And it's one that I, and I would imagine many nonprofit leaders face, um, frequently.
[00:07:14] There's a few things behind that. I think first and foremost, um, going back to having relationships that are built on trust and having relationships where, where people know I'm going to be honest and real with them has allowed me to navigate through that complexity. I often have to think about, um, whose voice am I going to center in a decision.
[00:07:38] And I think when you dive into the conversation between different stakeholders, um, what often first present as kind of diverse opinions or diverse directions are really rooted in the, um, same desire, the same desired outcome. And so if you're able and willing to dive into the conversation and really understand [00:08:00] what's beneath it, I think you can find the commonality to help guide people through.
[00:08:04] But at the end of the day, we often do have to think about whose voice are we centering in our decision-making. Um, and what stakeholders, um, voices really need to be at the table in this. So for, in the non-profit sector, you know, we're often hearing from the nonprofits and their clients. Um, and then we're often hearing from donors and board members.
[00:08:28] And again, once we get into those relationships, in those tough conversations, we can often find the through thread where there is a commonality and we can find our path forward.
[00:08:37] Paul Melendez: Ciara. Uh, what is the biggest ethical dilemma you've faced, and what did you do?
[00:08:44] Ciara Garcia: So you asked for the biggest, and I am going to dive into a big one here and it gets to Michael's question he just asked about, um, and I want to start out by just setting some context.
[00:08:55] So in 2017, Social Venture Partners had just completed a [00:09:00] 10 year impact study that was actually led by the Eller College of Management. So thank you for supporting us through that. And our goal was to get, um, an independent assessment of the effectiveness of our work.
[00:09:14] And our work is about building capacity and nonprofits. We are a nonprofit that builds capacity in other non-profits. And after this process with Eller, the results validated our programming at SVP; we are good at strengthening non-profits operationally. We are good at scaling them up. And all the nonprofits that we'd worked with had seen significant increases in key metrics, including like financial reserves and operating budgets and the number of clients they serve.
[00:09:45] And it was far beyond the norm in nonprofits of comparable size or loss. So, you know, we had this moment of celebration and patting ourselves on the back, but what came, um, as a result of this, um, we had two very different reactions [00:10:00] from different stakeholder groups. Um, first our donors were thrilled. It was just the validation that they needed to incentivize continued and increased giving.
[00:10:11] And so that was really exciting to see as CEO. And on the other hand, the nonprofits we work with saw this as a call to action as a call for SVP to do more. And the message we were hearing from them was in part validating of our work. They were saying, your work is good, we need it. But they were clear that they needed us to step up and do more and not just to do more of what we've done in the past, but to do things differently.
[00:10:38] So we really wrestled with the idea that our work is good, but it's not enough to achieve the impact we desire in our community. So we were making nonprofits bigger and stronger, but the community level challenges that we really seek to have an impact in weren't changing. And we were sitting [00:11:00] with this tension between the real difference between how donors saw our future and how nonprofits saw our future.
[00:11:07] So from the donor lens, it's, you know, this is effective. It's proven, it's, it works. So just do more of it. But for nonprofit leaders who are tasked with solving, like, the biggest social challenges of our time, they were calling on us to think and act bigger. And we dug into this and really, we had two clear paths.
[00:11:28] So one was do more of what we do well. Just like scale up our current programming. And quite frankly, this was the easier path. It was one we knew well, and we could do with little risk to the organization. And there was immediate donor interest. And to some degree, even some donor pressure to move in this direction.
[00:11:51] And then the second path was to take on a new initiative, and this had more risk for us. We would be building new programs and we would be taking [00:12:00] on challenges we had not in the path- past. Um, and this path was really a call to action from our nonprofit community to deliver additional programming that they needed, specifically supporting them to work across organizations, to truly drive these community-based solutions and to hold ourselves as a nonprofit capacity builder and a funder, um, accountable to community level change.
[00:12:27] So this story for me, illuminates, like, two of the biggest ethical questions, um, I've had to face as a nonprofit leader, which is like, who and what are we accountable to? Um, are we accountable to our donors, our non-profits, our community and how do we define risk? What is the risk of using our resources to try something new that is not guaranteed, but also what is the risk to our community if we don't take action?
[00:12:54] So at the same time that I was wrestling with this from an organizational standpoint, [00:13:00] I have to be honest with you. I was wrestling with it personally because option one was by far easier. It was the path of least resistance. Um, it would be easier for me personally. I wouldn't have to work as often or as hard.
[00:13:16] Um, clearly- clearly, you know, I, I take my job seriously and I work hard. And the idea of adding something else felt much more challenging. And option two was that challenging path. It would take more time, more resources, more risk to our organization. Um, I was really aware it would stretch me as a leader to lean in and learn new things.
[00:13:37] And it would mean more demands on my time. But ultimately, first, I had to set aside what was the easier and less stressful experience for me and allowed myself to examine the us from the needs of our community. And SVP decided to take on the bigger challenge and to hold ourselves accountable to a bold goal [00:14:00] and to create change, um, that our community was asking for.
[00:14:05] Michael Fricke: So, and Sierra, we didn't plan this ahead of time, but there are- your answer to this question did perfectly segue from my question earlier and I want to follow up on, uh, this dilemma that you face, because the thing that popped into my mind was, "Man that really is a conflict between sort of, uh, the vision of your organization, uh, that two different stakeholder holder groups have."
[00:14:28] And since, uh, you, in essence, did, uh, choose to, you know, essentially serve the needs of the nonprofits that you work with and adopt that bigger vision, um, what, what sort of message did you send to your donors? How did you communicate this to the donors to help them understand that, you know, this is a new direction we need to go in and, uh, to keep from alienating them at the same time?
[00:14:53] Ciara Garcia: So, as I mentioned, we made the decision that we are accountable to our community, [00:15:00] and that was like the big, first thing we had to wrestle with. And we are accountable to the desired social outcome we seek to create. And through that, we made the decision that we are centering nonprofit voices in our decision-making.
[00:15:13] And that's an action that is now ingrained in our organization in every aspect. But while we centered the voices and the needs of our nonprofit community in our decision-making, we did not leave our donors behind. We invited them in to join us in listening to our community. We invited them in to hearing directly from a group of people that they weren't hearing from- our nonprofit leaders and the individual served by those nonprofits.
[00:15:43] And we invited them to consider a new way of being in relationship with nonprofit. And so it took time. Um, I think one of the things I've learned as a leader is that change and change management take a lot of time. But the beauty of it is that we [00:16:00] were now an aligned group between donors and philanthropists and our nonprofit community and how we could mutually serve this community together.
[00:16:11] And I think that's one of the most important things that we've done at SVP Tucson is bring these two groups together and allow them to focus on community voice.
[00:16:20] Paul Melendez: As I listen to your, your dilemma, I couldn't help, but reflect on something that, that for many years, I've given a lot of thought to.
[00:16:29] And it's what I like to refer to as these kind of moral problems in, in management. And it's always the way I see it. You know, when, when managers are facing financial, you know, performance expectations while on the same token social performance expectations. And so your example really almost kind of fits very nicely, right?
[00:16:50] Because you've got your, your donors that are, you know, saying, Hey, let's scale up. Right. And, and yet in the same token, you've got your, your broader stakeholders, right? [00:17:00] Who, who are kind of holding you and really trying to challenge you, right, to, to, to take on new initiatives. And, and so it's a really wonderful example.
[00:17:09] And I just want to kind of commend you for your candidness. I'd like to move forward to our next question, peeking around the corner. Um, what do you see as the next ethical challenge, uh, facing the nonprofit sector?
[00:17:24] Ciara Garcia: There are so many. Um, and I'm going to specifically talk about representation in the nonprofit community.
[00:17:33] Um, I don't know that this is the next ethical challenge, but I think it's one of many ethical challenges that we are wrestling with as a sector. No matter what background or what sector you come from, we're seeing these conversations about diversity and inclusion. Um, but this is especially prevalent in the nonprofit sector. And in our sector, a lot of influences held by boards and donors, and yet they remain largely, um, [00:18:00] positions that are held by white, wealthy people.
[00:18:03] And, um, one of the statistics that I was looking at recently is from BoardSource. They recently released a report called "Leading with Intent". And the number one finding from that report is that boards are disconnected from the communities they serve. And only a third of boards place a high priority on knowledge of the community served when looking at their membership, and even less than that place a high priority on membership within the community served.
[00:18:37] Now there is some hope. Um, we're actually seeing an increase of people on color, people of color, on boards. Um, it grew from 16% in 2017 to 22% in 2019. So we're trending in the right direction. Um, but it's still a really low number. And when you talk to CEOs in the nonprofit [00:19:00] sector, they are very clear that this is a priority, um, that our organizations need to have diverse voices at the table, making decisions on our behalf.
[00:19:12] And, the other thing I think about when I think about representation comes from the funding side. Only 8% of philanthropic funding goes to nonprofits that are led by people of color and less than 1% goes to nonprofits led by women of color. And I think we really need to wrestle with like, "What does that mean? And how do we move forward as a sector that is, um, really rooted in creating change and creating justice? And what are the systems that play within our own sector that need to be examined and changed for us to move forward?"
[00:19:48] Michael Fricke: Ciara, I think, I mean, obviously all of our organizations, uh, from here at the university to non-profits to the private sector are working through [00:20:00] these same issues.
[00:20:01] And I think the way to describe them and the challenges that the nonprofit sector face. I mean, they just seem so almost insurmountable. When you look at numbers on a big, uh, a global scale, like, you know, the numbers you mentioned about. The, um, amount of investment that goes to, um, non-profits that are led by people of color by women.
[00:20:22] When you take that down to a micro level and look at, you know, here in our community, uh, what are you seeing as some of the small steps that organizations acting on a local level can take to start working on that problem?
[00:20:40] Ciara Garcia: So in addition to, you know, what's happening at the national level and these numbers I shared, we are seeing people talking about this, thinking about this, and even acting upon this in our community.
[00:20:53] And so we are seeing, um, boards specifically look for, um, and set kind of diversification [00:21:00] agendas, um, and really diving into what does that mean to not just diversify a board, um, but to make a board inclusive. And they're recognizing it's more than just, um, having representatives, but really making sure that the system and structure and culture of a board, um, support all voices being heard equally.
[00:21:21] Um, we're seeing, you know, very various kinds of trainings and awareness. Um, that's happening in boards. Um, there's a number of consultants who are leading these conversations. But another thing that we're seeing is even when organizations might not be at a point where they're diversifying their board, um, they are looking to bring in additional voices in their decision-making in other ways.
[00:21:45] So perhaps having a parent or family advisory group where they can hear the voices of the families served, um, and then really make sure that that's influencing their decisions. And so SVP is really working [00:22:00] with the nonprofits that we have the honor of supporting to make sure that this concept of centering family beliefs, um, is present in all of their decision-making.
[00:22:10] And I would say that we're not alone in really, um, encouraging that as an initiative.
[00:22:17] Paul Melendez: Uh, Ciara, just a, another follow-up. Um, I'm really intrigued with your, um, your example of, of representation on boards. And, uh, there's a couple things that you mentioned that I'd like to kind of follow up on, uh, because I think that it's, it's really, uh, It's very impactful given that it's coming from you as a leader of a nonprofit in our community, but you talked about the need for a board members to have a knowledge of their community served and, and, and representing, or being a member of that community serve.
[00:22:48] And, you know, I'm, I'm just curious, um, what have you seen or what have you done in a real innovative way that, that is helping to promote this? Because one [00:23:00] of the things that, that in my experience I've- I've seen is that sometimes organizations have to really, um, begin to manufacture, uh, some, some potential supply.
[00:23:12] Right? So I'm seeing some organizations literally trying to develop pipelines and, and, and beginning to engage the community in a very different way. And so I'm wondering if there are some specific things that you're doing, uh, with SVP or that you've seen, you know, in other nonprofits that are really kind of aspirational.
[00:23:33] Ciara Garcia: Yeah. To, to begin, I would say that SVP is, is making progress in this space for our own organization, but I, I can't in all honesty, say that we have it.We're in this path of achieving this, or working towards this, outcome. And one of the things that I'm, I'm most proud that we have done is that we have taken specific decisions that might have typically been [00:24:00] held by our board or by our donors, um, such as who receives funding and support from our organization, because we do make grants out into the community and we do layer that with our capacity building services. And we have said that we, as, you know, the board and the donors won't make those decisions, but a group of community members who represents our community, um, will make those decisions.
[00:24:29] And so that's one thing I take a lot of pride in as we are building out this more diverse board, and that is something that I'm seeing in other organizations as well. And I think your point about a pipeline is a really good one because, um, we didn't set out to do that as a pipeline, but a natural result of that is we now have a pipeline of people that we've had the opportunity to work with, who we've learned from organizationally.
[00:24:58] And now we have the [00:25:00] opportunity to perhaps bring them into these key leadership positions to move SVP Tucson forward.
[00:25:05] Paul Melendez: Thank you, Ciara. Uh, our final question for today. Could you share a few thoughts that capture your philosophy on ethical leadership?
[00:25:16] Ciara Garcia: So my philosophy comes down to the idea of service above self, and I view my role as CEO as one of real honor and privilege. And I try to never take for granted the responsibility that I have to our community. So this includes, um, me placing the needs of the people I am in service to above my own, placing the needs of SVP as an organization above my own self-interest, and centering the needs of our community and every decision I make.
[00:25:52] And I think that in order to do this, um, leaders need to surround themselves with truth tellers. We have to create an [00:26:00] environment where staff feels comfortable sharing openly and honestly with us. It is one of the most rewarding and one of the most challenging, um, behaviors I commit myself to practicing.
[00:26:11] There have been times, including one recently, where I brought something forward to my team that I thought was perfect, and I was passionate about. And they didn't like it. And I had to be able to sit in that space and hear them and, um, take in their decision or their, um, ideas and reframe my decision because ultimately they are even closer to the problems and the challenges we're trying to fix than I am.
[00:26:39] And I think we have to invite board members and investors, to be honest with us, but we also have to commit to being honest with them. Um, even though we know they may have power in our organizations. And I think we have to have people outside of our organizations who have no attachment to outcome [00:27:00] who serve as our sounding boards.
[00:27:02] Um, personally, I believe that all leaders, regardless of how experienced they are, should have a professional coach. It's been one of the most game changing things for me, as I've had to navigate, um, leading an organization through change, um, many ethical, um, decisions that I've had to face. And so I really feel like that's an important place for leaders, um, to have an outlet, but the summary of it is my philosophy is all about service above self.
[00:27:34] Michael Fricke: Ciara, when Paul and I teach our ethics classes to our undergrads, our MBA students, everyone here at Eller, you know, we always emphasize this idea of, you need to have people who are willing to tell, you "no", people who, um, can see a, an objective viewpoint of the decisions that you're having to make. And I think it's, it's, uh, it's phenomenal that you have this, uh, willingness to, um, have people [00:28:00] in your life that can tell you these things and you're open to it.
[00:28:02] And the thing that always strikes me is, uh, I think most people would agree that this is a healthy way to lead people. And yet we still have so many, uh, leaders in the private sector and the public sector and nonprofit everywhere who are, um, just full of themselves, full of ego. And I'm wondering for you, was there a point in your career that this really- the light switch flipped on for you where you said, oh, this service above self is so important. Is this a, uh, product of how you were raised as a child, or was there a moment when you said, "Oh, aha. This is it. This is important. I need to focus on this."
[00:28:42] Ciara Garcia: That's such a great question. And I'm, I'm really thinking back to, you know, where that comes from for me. Um, I don't know that I can pinpoint a moment, but what I can say is that when I had the opportunity to move into leadership positions, um, I really approach it from this place of humbleness [00:29:00] and made a decision that if I was going to sit in one of these seats of privilege, that I needed to ground myself in the fact that it is a seat of privilege. And I think it's really hard for people to see their own biases or their own, um, maybe to discern where their own interests are conflicting with that of their organizations.
[00:29:22] And so I made a commitment early on to have people around me who would be truth tellers, and it's hard sometimes. I mean, it can be very exhausting, to be honest with you. Um, but I think, you know, it is really important and I'm, I'm thrilled to hear that you're teaching that at Eller. Because there's not any one individual who knows what's right for an organization, um, or right- the right solution for a community.
[00:29:52] Um, but you have to be able to kind of like get through all the noise and get to what is truly the right answer when it's [00:30:00] informed by everyone. And it takes a lot of people informing you. So I think the successes that I have. You know, had in my leadership are really just a representation of me listening to a lot of people and pulling that kind of through thread of what's ethical and right and moral and, um, good for our community and moving that forward.
[00:30:23] Paul Melendez: You know, Ciara, at the very beginning of our podcast, when you, uh, took the first question and, you know, you, you said something that has kind of really kind of been woven throughout the podcast, which is the importance of listening. And it, it to me is, is just another really good reminder that, you know, while communication is really diverse, right. Most people, when they think about leaders and, and their effectiveness, they usually go right to speaking. Right. And that is certainly important, but I always like to point out, and so does Michael, that [00:31:00] it also includes things like, you know, reading and writing, but the one area that typically gets forgotten about, but for Michael and I, and I think you would agree is probably one of the greater differentiators between good managers and great leaders is that capacity to listen.
[00:31:14] Right. And so I think you have, you started out the podcast with, with the importance of listening and you found a way to just kind of reinforce it again towards the end. So I just want to tell you that that really resonated with me. Um, Ciara, I want to thank you for your candidness and time today. I feel like we all learned a great deal from you.
[00:31:33] Uh, I'd also like to thank my colleague, uh, Michael Fricke and our podcast producer, um, Mariah Brown. Uh, we look forward to everyone joining us for our next episode. Uh, please follow us on Twitter @UArizona_CLE. Good day.[00:32:00] .
[00:00:00] Paul Melendez: Welcome to the 30 Minute Ethical Leader, sponsored by the Center for Leadership Ethics in the Eller College of Management at the University of Arizona. My name is Dr. Paul Melendez and I serve as the very proud founder of the Center for Leadership Ethics. I'm also an author, professor and consultant.
[00:00:26] Michael Fricke: And I'm Michael Fricke, Associate Director of the Center for Leadership Ethics, faculty member in the department of Management and Organizations and recovering attorney.
[00:00:33] Paul Melendez: So I'll be the play-by-play announcer and Michael will be doing the color commentary. Today's guest is Mr. Michael Ortega. Michael Ortega is the City Manager of Tucson overseeing its 4,500 employees. And 1.7 billion annual budget. Before joining the city of Tucson in 2015, Ortega served as Cochise County Administrator and Douglas [00:01:00] City Manager. Ortega graduated from the University of Arizona with a Bachelor of Science in Civil Engineering, and later earned an MBA also from the U of A.
[00:01:11] He has completed a certificate at the Harvard Kennedy School of Government for senior executives in state and local government, and is an active member of the Arizona City County Management Association. As Michael Ortega enters his sixth year as manager of the city of Tucson, he has gained valuable insight on how the organization can best prepare for authentic, diverse and unique community to be a vibrant and sustainable city for the future. Mr. Ortega challenges his staff in whatever capacity they serve to not only strive for excellence as they deliver the services expected by the community, but also to realize that they are uniquely positioned to be drivers of innovation and economic opportunity that will benefit all of Tucson's [00:02:00] residents.
[00:02:00] Moving into 2021, Mr. Ortega looks forward to implementing the mayor and council's priorities to ensure that the Tucson is best positioned to quickly recover from the pandemic. Mr. Ortega, welcome. We are absolutely delighted to have you. How are you doing today?
[00:02:18] Michael Ortega: I'm doing great. Thanks for having me. I'm excited to be here.
[00:02:21] Paul Melendez: Well again, thank you. The goal of the 30 minute ethical leader is to memorialize the thoughts, learnings and recommendations of seasoned leaders from our business government and nonprofit sectors to help inform ethical leaders of today and tomorrow. With that, let us begin. So, Michael, I have a few questions that we're going to go through.
[00:02:43] So let me go ahead and begin with the first. What ethical behaviors are required of all leaders?
[00:02:50] Michael Ortega: Thanks. So I think first and foremost, uh, openness and transparency, honesty, uh, accessibility. Those are all [00:03:00] key traits for a leader of today. And those are behaviors that have to come or have to be there for a manager/leader to be successful.
[00:03:11] And I think that how you approach that and if it's forced or if it's not genuine, I think employees or others will see that. So it's important that in all aspects of your life, and particularly when you're interacting with staff, that you, you display that. One of the things that I've done, uh, since the pandemic started is I have coffee with Mike and it's a zoom or a teams meeting where, uh, we have all employees that are interested, uh, come through.
[00:03:45] We get somewhere between 600 and a thousand employees attend and listen in, or watch coffee with Mike. It's not just an opportunity for me to talk about what's going on at a city council meeting or talk about, you know, the issues [00:04:00] of the day, but I also open it up to questions. And generally I schedule that for an hour and I answer questions for probably anywhere from 20 to 40 minutes of that hour.
[00:04:11] And it's any question that's on their mind, and that's tough because you never know what you're going to be asked. And sometimes the best answer is I don't know, or that's a great question. I haven't thought about it. Let me, let me think about it. What that does is it really establishes a relationship where your integrity, and choosing to make decisions where the employees understand you're choosing to do the right thing, even though it's hard, not necessarily what's easy. And you say that, and you basically can demonstrate that when you you're just honest about the approach. Uh, the other thing it does is it establishes that trust.
[00:04:49] That accountability for the words and actions, you know, leading by example. And so there are instances where during the coffee with Mike, there's a conversation around what led [00:05:00] up to a decision, and I will share some of the challenges of making that decision. Although the decision's made, uh, there's an opportunity to have a conversation with employees that wouldn't necessarily be at the table, if you will, when those decisions are made, ultimately the empathy, uh, of what pressures they're under, uh, become key pieces to that conversation and that, that demonstration of that, uh, that leadership, uh, of course equity. And I'll come back to that here in a bit, but equity and how that applies in our government center. Uh, and then the generosity of the time, you know, your time as a leader.
[00:05:41] Uh, and what that looks like in every interaction. So for example, after we'll finish, uh, a meeting, uh, which we all love to do, whether they're virtual or in person, uh, I'll often times ask, what did you learn from this? You know, talk through what you heard, you know, and, [00:06:00] and it's kind of the meeting. It's kind of like the after meeting sort of like the after party, right. And what ends up happening is it gives you a chance, um, to listen as to what the learning opportunities were for those that were involved in that meeting, but also gives you an opportunity to guide and say, well, you actually misread that or no, you're right on target or better yet. Wow. Hadn't thought about that.
[00:06:24] And so I learned from that as well. Um, so those are just some, some opportunities underlying is a fundamental humility. I think you have to remain humble, that you have a role. You have a gift, you have an opportunity and cherish every single day. Uh, exactly as that gift.
[00:06:42] Michael Fricke: Michael, I want to follow up on a couple of things you said. Um, I think the three of us here can obviously agree that openness, transparency, humility are foundational, vital traits for an ethical leader. And yet we see so many leaders who, uh, operate in [00:07:00] secrecy or try to, um, put themselves in a position of power that, where they can abuse people underneath them. And I'm sure that throughout your career, you have faced temptation to, um, you know, not be as open and not be as humble.
[00:07:19] Um, and I love how you do these coffees with Mike, and I'm just wondering what else you have done throughout your career to try and stay grounded and remember to, to practice humility and openness and transparency.
[00:07:33] Michael Ortega: So that's a, that's a great question. And, and, uh, quite frankly, uh, If I decide, or if I'm feeling pretty good about myself and my role here, um, I usually get home about 6:10 every evening.
[00:07:48] And when I walk in the door, uh, usually my wife Pat will say, "How was your day, honey?" And just before I start to say, you know, "It was great. It was hard, or I'm feeling pretty good about myself-"
[00:07:58] [Michael Ortega speaking as Pam]"Oh, can you pause? [00:08:00] And the trash needs to be taken up out and oh, by the way, the dog droppings needed to be picked up. And so as soon as you finish with those chores, can you come back in and tell me all about your day?"
[00:08:09] So it tends to keep me grounded, but, but in all, in- and that actually happens virtually every week. Um, but, but I think that, that, the temptation is always there. Right? And we start feeling good about ourselves in a certain role.
[00:08:26] And boy, you have all this authority, you have all this power, you have all these things that, that, uh, some people dream about having, right. Um, but the key piece to, to, and I'll use the term, keep it grounded, is recognizing the role. And just as I mentioned earlier, um, I see this as an opportunity to make a difference in people's lives, in a positive way.
[00:08:47] Uh, I'm very spiritual. I pray every day. Uh, helps me to, uh, keep things in perspective and make sure that I am doing what is best for all. [00:09:00] And sometimes that's, that's really hard. Um, and it could be easier if I were just to do things without conversation or, uh, to do things that would be of benefit to only me, or only a small part of the population.
[00:09:14] And I don't mind telling you that there have been instances where you scratch your head and say, well, wait a minute. You know, why, why are we making this so hard? Well, because it's the right thing to do. And so it could very easily, uh, you know, been a different path to make it easier if you will, on me or on those around me.
[00:09:33] Paul Melendez: Michael, what is the biggest ethical dilemma you've faced, and what did you do?
[00:09:40] Michael Ortega: I'll tell you- a year and a half ago, if you'd asked me that, I'd have said something different. Uh, today, I think what I'll tell you is the COVID protocols. The COVID protocols, you know, with the, the pandemic have been extremely difficult, uh, because there, there has been such a divisiveness, [00:10:00] uh, amongst society, amongst our employees. Uh, there has been, um, and, and again, one could, could argue, at least I make the argument that it really isn't about the pandemic. I think it is a fundamental frustration that people have with, and then just pick the list, right? Just go down the list of, of stuff that's out there in people's lives.
[00:10:24] But clearly when I've had to make decisions that affect people's lives and livelihood. Um, that's really tough, uh, because on one hand, you know, there's, there's all this science, right. And depends on what websites you visit or who you ask or who you talk to or what doctor you go in and see, they can give you almost the answer that you want.
[00:10:49] And so ultimately the, the difficulty is trying to do the right thing, uh, that resonates with the population [00:11:00] in terms of the right thing to do. And I'm not talking about a popularity piece, but truly looking out for all the residents of this community, including the employees. And there are folks that absolutely disagree with wearing a mask, you know, uh, with the, you know, receiving the vaccine, they absolutely disagree with it.
[00:11:20] Right. And I can show you the science that says this is the right thing to do, and they can show me the science that says it makes no difference. Right? And so ultimately that dilemma, that, that conflict, that challenge is, is very difficult and it is weighed on me very heavily. Um, I don't mind telling you that, um, the fact that we have a deadline looming that if people are not compliant with the policy that's set forth, uh, they will be terminal.
[00:11:50] Um, I don't take that lightly. That's very, very difficult to know that you're affecting their impact or you're impacting their family. You're impacting [00:12:00] their livelihood. Now, granted, I could go down the path and say, but they've chosen that. And that's true. They have chosen that path. Um, but it still weighs heavily on me as the leader of this organization.
[00:12:15] Uh, to implement something that does affect people's livelihood. Now the flip side of that is, uh, I'll call it the positive, which is what are we learning? Right. And so part of the dilemma is we get so focused on the negative aspects of the pandemic and the opportunity, right? The challenge, the opportunity is oftentimes not focused upon or not reviewed, not thought of.
[00:12:41] And so. It's really, uh, been a challenge to say to folks, look, let's pay attention to the opportunities that this pandemic and this environment is providing us as an organization, as a people. It's an exciting time to be involved in this. [00:13:00] Very difficult from a lot of perspectives, virtual environment, right.
[00:13:05] Working from home, working outside of the office environment. Those are things that were unheard of. Right. And so how, how do you manage that resource? Right? How do you ensure productivity? Right. All of these things that we used to have to worry about- well, still worry about, but used to focus on. And now it's, it's just kind of turned it on its head.
[00:13:27] And so as we go down this path of the pandemic and things that, that, uh, are changing because of it, I think the bottom line is how do we take advantage of that and not focus on the negatives, but really see it as an opportunity for those that do want to comply with the policy that do want to be a part of this organization and, and go down that path.
[00:13:50] Michael Fricke: I want to follow up on one aspect of what you just said. And, you know, I, I know in public administration, in schools and faith communities [00:14:00] all over the place, leaders have sort of been between a rock and a hard place in a lot of ways where no matter what decision you make, you will face criticism from, uh, one side or the other.
[00:14:11] Right. And I know that, um, I I'm thinking of my daughter's school, their teachers. I'm feeling constantly bombarded by people from one side or another. So when you face this criticism for making decisions to, uh, keep your staff safe or to, um, you know, implement, um, the vaccine mandates or something like this, what's your go to, uh, support structure. How do you, um, find support when you do face those kinds of challenges and criticisms.
[00:14:43] Michael Ortega: Oh, that's a, that's a great question. Um, so as I mentioned earlier, I'm very spiritual. I pray a lot. Uh, I pray every day. Um, and that, that is really the foundation for my ability to do this. Um, I think when I [00:15:00] look at who do you share, who do you talk to?
[00:15:03] Um, you know, I've been married for going actually in two weeks, it'll be 41 years. So I do have a, an amazing support structure at home. Um, I would not be sitting here where not for my wife, Pat, uh, she's an amazing individual and, and provides me that grounding as I mentioned, which by the way, it is not just about, uh, uh, doing the household chores, but truly an opportunity to bounce around thoughts and ideas.
[00:15:30] The difficulty, I think, in these types of roles is you really don't have, uh, peers that you can tap on or, or even mentors that you can tap on on a regular basis, like a daily check-in. Right. Um, and that makes it hard sometimes because you are going down this path. Uh, you do the best you can and you live with it.
[00:15:53] And that's why decision-making by an individual, uh, can take a different toll, right? [00:16:00] And, and it, it takes a toll. I can feel it in my body. I can feel it in my, in my, uh, emotional state, mental state, all the things that go along with that, uh, because these things do weigh on, on the individual very heavily.
[00:16:13] But the flip side is you surround yourself with a great team and the team will keep you in check. But ultimately, that opportunity to really search out, uh, different thoughts, different, uh, ideas and run those scenarios and try to get a handle on what those risks are. Right. There's going to be criticism, you know, that was the basis of your question.
[00:16:38] Okay. Are we okay with that? Am I willing to take that risk? And the individual risk tolerance, it varies, right? But if you have enough really smart and diverse thinkers around you, they can give you, they can anticipate and give you a lot of the outcomes that are going to be out there. Right? And then you weigh as the leader, you weigh [00:17:00] the, the amount of risk tolerance that you're going to take on based on whatever decision you make.
[00:17:06] So I think, you know, those three, uh, in that order, I think are really important for me.
[00:17:11] Paul Melendez: So Michael, uh, peeking around the corner, uh, what do you see as the next, uh, ethical challenge facing government, whether that's at the local, state or federal levels?
[00:17:24] Michael Ortega: I think, uh, Paul, the, the in-depth discussion of, uh, diversity, equity and inclusion.
[00:17:31] I think that really is, is the future and the ethical challenge that will face government. Um, and by the way, I have a suspicion that it's not just government. I think it will face virtually every aspect of our lives. I think that as you dissect what that means, oftentimes we think of diversity and equity in terms of, uh, racial.
[00:17:55] Uh, or social justice conversations. Uh, and I like to think of [00:18:00] it even broader terms than that, which is diversity of thought. And so there's perspective. Right. Um, and as I mentioned earlier, the, the most dangerous thing for a leader is to surround yourself with like-minded people, right. People that look like, you think like you, act like you and, and, and all of a sudden you end up, uh, almost, uh, in a self fulfilling prophecy, uh, that, it's like everybody's patting each other on the back. Right. And the diversity conversation, the equity conversation included- inclusion conversation has varied levels, uh, within an organization that we, at least as I've been able to think it through. And one of the fundamental pieces is the lens, right? The, the, what I'll call the equity lens.
[00:18:47] And it's not just in, oftentimes we think of it in terms of hiring, but in my world, it's also, um, how we invest. Right. There have been pockets of this [00:19:00] investment, uh, within the community and you can drive around and you can see it and you can ask yourself, why did this occur? There's great reasons for it, right.
[00:19:08] It doesn't mean they're right. It doesn't mean that they're good reasons. Right. But they're, they're, they're out there and we could point to them and say that that those are, that's how it happened. It's explainable. Okay. So what do you do about it. Right. How do we address that going forward? And that's the challenge.
[00:19:24] All right. So I'll give you an example, uh, that that is, is weighing on me, right? So if we agree that there has been disinvestment in the past and some areas, okay. We, we point to them, you can physically see them. What that basically means is that in order to overcome that disinvestment, they need, those areas need a higher level of investment today than they had in the past.
[00:19:52] Fine. Uh, but all of a sudden that means that those resources come from another area and it's all of a [00:20:00] sudden, it's like time-out here, you know, wait a minute. Uh, what does that look like? And how do we truly go back in this- we'll call it fairness- model that we were accustomed to right. Where everybody gets an equal share.
[00:20:12] Uh, well, when you look at it from a historic standpoint, it really calls that into question. Right? And so one of the challenges that we face in government is overcoming that historic perspective. And, and my opinion is the future will look like a conversation that includes that, where everybody sits around and says, "Okay. Here are, here are the knowns, right, here are the facts that we agree on. So what do we do about it going forward? Not, not today, not, not in the next year's budget, but the next five years or 10 years, what does it look like to overcome some of that?"
[00:20:54] Because keeping in mind that this, this conversation, although [00:21:00] recent, what led up to it is many years of, we'll call it disinvestment, or in, in the lack of equity lens in, in those conversations.
[00:21:11] So it's, it's difficult to say to someone, well, we need to change it tomorrow. We need to change it right this second. Um, I I'm okay with the conversation around it evolving that way, but I think the more powerful and sustainable model is to look at it in a five or 10 year horizon, where then we can be having a conversation about- and a framework and then moving it in that direction.
[00:21:36] The other thing that I will tell you, which is really fascinating, uh, to me is the use of social media. I think an ethical challenge facing governments facing our, our society is the use of social media. Right? Should, should we even be on social media? I'm talking as the government, right? Should we have a Facebook page?
[00:21:55] Well, of course we should because that's how people get their news. Well, really, maybe that's part of the [00:22:00] problem. Right? So, so those are the kinds of things that we've, we've been thinking about and talking about. Um, and, and it's an exciting time to be a part of it because the world is changing and it's changing for a variety of reasons.
[00:22:15] Um, and I think a part of it is, you know, how do we take advantage of it? Going back to the point I made earlier, how do we take advantage of it and do something amazing, govern like no other. Govern, like never been done before.
[00:22:28] Paul Melendez: You know, Michael, as I listen to you, uh, describe this challenge, uh, both you and I know that this is something that's front and center, uh, not just with government, but also nonprofits and business.
[00:22:40] And it's, it's really interesting what you said, because the diversity part seems to really be, uh, an area that, that, that many leaders latch onto, right? You can do a pre and a post test. If you look at the, you know, composition of your organization and, you know, you could come in one day and say, we [00:23:00] need to move the needle on more representation with X, Y, and Z.
[00:23:03] And that can be done, right. The inclusion part is where it gets to be really difficult because that gets to the organizational culture. Right? So if you bring in all this diversity of, of, of thought and experience, et cetera, and yet your organizational culture is anything but inclusive. That's when really good people leave, if you will.
[00:23:24] The equity part, I thought you just offered a tremendous benefit to everyone. You know, we've all, I think, have been raised with this idea that, you know, when you think of equity, it's about treating, treating people the same, but in reality, both you and I know it's not, it's about treating people fairly.
[00:23:43] And in that fairness is where kind of the rubber meets the road, right? That's where, you know, you may have to make decisions and take actions that for some people is going to be very much appreciated and for others is, is not. So I just really wanted to kind of echo, uh, your, your challenge that [00:24:00] you raised. Uh, Michael, did you have a follow-up?
[00:24:02] Michael Fricke: I do actually, I'd be very curious to know, Michael, um, as the City Manager who, you know, is directly responsible for overseeing all of the staff of the city, um, you obviously work very closely with the elected officials in the city, the council and the mayor, and when it comes to issues of investment and diversity, equity and inclusion, um, do you feel like you face different pressures than the elected officials face?
[00:24:30] And do you ever find yourself in conflict with those officials or with the pressures that they face when it comes to fulfilling your vision for, um, the city and how it responds to these diversity, equity and inclusion initiatives.
[00:24:43] Michael Ortega: Another great question from Michael, I think it's the name, Michael?
[00:24:47] Michael Fricke: Certainly.
[00:24:47] Michael Ortega: No doubt, no doubt. So first and foremost, um, the role that, that I see myself playing is one of implementation of policy. And [00:25:00] so I certainly can guide, I certainly can give thoughts and ideas in that. Um, but ultimately the, the guidance, the policy guidance comes from the elected. So I stay focused on that. So if the electeds, uh, policy is to, you know, have a conversation around a specific topic, then I help facilitate that and make sure that that's occurring, and that's implemented. When it comes to the, the, uh, diversity, equity, inclusion conversation. It's easy. Those are three words that are easy to say, right. Uh, but when you have a culture, and I'm not talking about just an organizational culture, but you know, society as a whole, uh, that if I say diversity, equity and inclusion, that you'll get varying definitions, varying approaches, you know, all of the things that go along with, with, uh, something that really hasn't been discussed to the level that we're discussing today. And quite frankly, [00:26:00] moving towards implementing, uh, it, we've never seen this type of, of, uh, uh, and I'll use the term commitment because I do see it as a huge commitment on the part of the city council and the mayor.
[00:26:11] So when, when we start to go down this path, um, the investment piece is mechanical, right? So if you think about you have X amount of dollars and I divide them up, you know, divide them by some denominator. And all of a sudden you come up with some, some number. Where the policy comes in is a deeper conversation about where the needs are.
[00:26:36] Right. How do you put metrics to those needs? Right. So some of that's mechanical, some of it's tactical, others strategic. And so, you know, my favorite example is when I was a kid, I grew up in Douglas, Arizona over on the border and we had no curbs or sidewalks. We had a strip of, I guess you could call it pavement, out in front of our house. We were [00:27:00] happy as clams, didn't know any different, right.
[00:27:02] Uh, down the road, a little more affluent neighborhood had, you know, nice paved streets, curbs, sidewalks, they could, you know, skateboard and do whatever on the sidewalks. And it wasn't until years later that I saw there was a movement to pave our, to, to have, uh, uh, curbs and sidewalks. So then I started thinking about that in this context.
[00:27:26] So today, right, uh, well obviously clearly they needed to, at that time, invest additional dollars along the street where, where my parents still live, uh, as opposed to other streets. And that was an open conversation that some people really wrinkled their nose and said, "Well, wait a minute, we pay more taxes than these folks do because you know, our property values are, are greater than, than these folks that don't have a curb and sidewalk."
[00:27:54] Right. So the conversation then in our, in our today is one [00:28:00] of openness and it's the open dialogue goes back to the conversation that I had about the transparency and the humility and all the things that, we'll call them the facets of leadership, that isn't just with the staff. That's also with the city council and the mayor and with the community.
[00:28:17] And, not everybody's going to agree, not everybody's going to like that discussion, but it's one that needs to happen. And that then will set the stage for what the future looks like and moves us down the path.
[00:28:29] Paul Melendez: Michael, could you give us as our, uh, final question, a sentence that captures your philosophy on ethical leadership?
[00:28:40] Michael Ortega: A sentence. Wow. You put some pressure on me now, man. So I wasn't stressed at all. You got this whole thing, but now that you've said that I'm like a sentence. Wow. So I actually, uh, and thank you for sharing the questions cause that helps. Right. Um, I thought about that, but you didn't say a sentence-
[00:28:59] Paul Melendez: How about a [00:29:00] sentence or two? We'll give you a sentence or two.
[00:29:02] Michael Ortega: I think, uh, Paul, Michael, uh, by creating a safe and ethical environment, you stimulate creativity and innovation in your organization.
[00:29:14] Paul Melendez: Excellent. Excellent. Mr. Ortega, I want to thank you for your candidness and time today. Uh, we all learned a great deal from you. I'd also like to thank my colleague, Michael Fricke and our podcast producer, Mariah Brown. Uh, we look forward to everyone joining us for our next episode.
[00:29:32] Please follow us on Twitter @UArizona_CLE. Good day.
[00:00:00] Paul Melendez: Welcome to The 30 Minute Ethical Leader sponsored by the Center for Leadership Ethics in the Eller College of Management at the University of Arizona. My name is Dr. Paul Melendez. I serve as the founder for the Center for Leadership Ethics. I'm also an author, professor and consultant.
[00:00:24] Michael Fricke: And I'm Michael Fricke. I'm also a faculty member in our department of Management and Organizations in the Eller College. I'm a recovering lawyer, and I teach all of our undergrads and MBA students.
[00:00:35] Paul Melendez: So I'll be the play by play announcer, and Michael will be doing the color commentary. Today's guest is Susan Gray. Susan is the president and chief executive officer of Tucson Electric Power, Unisource Energy Services and their parent company, UNS Energy Corporation, based in Tucson, Arizona. Susan, who began her career as an engineering student in 1994 at TEP, [00:01:00] established herself as a collaborative, inclusive leader who inspired a culture of safety, recognition and transparency through a values driven approach.
[00:01:10] She was named vice president of Energy Delivery in 2015 and was promoted to chief operating officer in 2019. She was named president in January, 2020 and became CEO in January, 2021. Susan leads the company's efforts to advance economic development in the communities the company serves. She serves on the boards of the Southern Arizona Leadership Council, Sun Corridor, and the University of Arizona's Eller College of Management and the College of Engineering.
[00:01:42] She also serves on advisory boards for the Edison Electric Institute and Western Energy Institute. She also brings her industry experience and leadership acumen to the boards for the Central Hudson Gas and Electric and Caribbean Utility Company to other utilities in the Fordist family.
[00:01:59] [00:02:00] Committed to community, Susan is a longtime member of the board of the Boys and Girls Clubs of Tucson. She earned a bachelor's degree in electrical engineering and an MBA from the University of Arizona. Susan, welcome.
[00:02:13] Susan Gray: Thank you so much. Great to be here today.
[00:02:16] Paul Melendez: We are really delighted to have you. How are you doing today, and what do you do on your spare time, given that demanding schedule?
[00:02:24] Susan Gray: I'm doing great today. Really enjoying a view of a blue skies and mountains right outside my window here. Um, you know, I, I've kind of gotten into endurance sports over the last few years. So, prior to the pandemic, I was racing in Half Ironmans and triathlons. And, uh, then during the pandemic, I started training for a rim to rim hike of the Grand Canyon, which we did in May. And now I am training for a Half Ironman- er, not Half Ironman, a half marathon, um, at the end of this year. So I don't know, I like to kind of test myself in those [00:03:00] endurance sports.
[00:03:01] Paul Melendez: Wow. Thank you for sharing. The goal of The 30 Minute Ethical Leader is to memorialize the thoughts, learnings and recommendations of seasoned leaders from our business, government and nonprofit sectors to help inform ethical leaders of today and tomorrow. With that, we'd like to begin. So, Susan, what are some ethical behaviors that you believe are required of all leaders?
[00:03:27] Susan Gray: So to me, ethical leadership is about leading from values. So values-based leadership really anchors our decisions in a broader foundation rather than chasing those more short term financial results.
[00:03:41] And that's why I was so proud to roll out our new UNS energy values at the time I ascended into the CEO role. So I'll just share quickly what our- our six values are. We work safely. Our differences make us stronger. We do the right thing. We achieve excellence together. We learn continuously. And [00:04:00] we drive sustainability.
[00:04:01] And when we described these values, we described them as our DNA, because they're like the genetic building blocks of everything we do. So when you lead from a foundation of values, it helps you to understand that treating employees and customers with dignity and respect is not just a priority when it's not in conflict with the bottom line, it's- it's a core consideration in everything we do.
[00:04:24] So leading this way creates an inclusive environment where everyone feels valued, respected and heard.
[00:04:30] Michael Fricke: Susan, I love that you make reference to your values and especially that part, right at the beginning, we talked about leading from our values instead of the desire for short-term profits. I wonder if you could maybe flush that out a little bit more because as I think all of us know, the temptation for so many leaders is to chase those short-term profits. And I mean, it can be so damaging to the longterm health of a company. What's your experience been like putting your values over those short-term profits?
[00:04:56] Susan Gray: Yeah, I think that leading through this pandemic's been a real test of [00:05:00] our values and really great timing for us to have kind of leaned into defining those values and really having a strong understanding of not only who we are, but who we want to be.
[00:05:09] Because some of these, these values I would say are aspirational. So as we're making decisions, um, in the midst of a pandemic where, you know, new information is coming out all the time, you know, no one really knows what the future looks like or what the- what the right decision is at any step of the way.
[00:05:29] Um, we, we were able to really just dig in and say, well, this is who we are. As an organization, this is who we want to be, and this is how we want to show up. And so our decisions were based in those foundations. And I'll, I'll give you a couple of examples. Safety is paramount at UNS energy. You know, we, we do some really dangerous work.
[00:05:50] And so we focus on safety in everything that we do. And we wanted to make sure that we were providing a safe workplace for all of our employees. And many of our employees [00:06:00] had to continue to work onsite. So we wanted to make sure that we created a safe place for people to say, "Hey, I'm sick. I don't think I should be at work today."
[00:06:08] You know, we didn't want people to, to come in because they were afraid of missing out on their paycheck or having to even use their sick or vacation time. And then potentially exposing others. So we came up with a pandemic sick pay, or pandemic pay, that, um, allowed for employees to take the time off that they needed to quarantine. Or to, to heal in the case where they had actually contracted the virus and not be impacted, you know, not have to really think twice about whether or not to come in because they knew that they were- they were financially- they were financially secure regardless of their decision. And so that obviously costs us a little more money to offer that benefit. But in the end, it's, it's been helpful. It's helped us to keep our, all of our employees safe and, um, prevent workplace transmission.
[00:06:57] Paul Melendez: You know, Susan, when you were [00:07:00] responding to Michael's question, uh, Michael, you and I have talked about this extensively. You know, I, I always kind of look at these, you know, moral problems in management. When, when managers and leaders of organizations have to try to find that balance between financial and social performance. And, and I know that what Michael and I go to great lengths to, to teach with our undergrads and grad students is, it's not a binary choice, right.
[00:07:26] Today, you got to do both. And so I love your example because I think that's a, that- that is a perfect way of illustrating how you find that balance. Right. And, and so I appreciate your, your response. I'd like to move on to our next question, Susan. What is the, uh, biggest ethical dilemma or dilemmas that you've faced and, uh, what did you do?
[00:07:48] Susan Gray: So this example is also in line with what we just talked about. You may remember the 2018 Arizona ballot initiative called Proposition 127. And this initiative would [00:08:00] mandate 50% renewable energy by 2030. So while we support the goal of transitioning to a cleaner, greener energy portfolio, we also knew that accelerating investments to accomplish this goal would drive a steep increase in capital spending.
[00:08:15] Now on the utility side, increasing capital spending is great because we earn a return on those investments. But we also know that that the pace that we would have to make these investments would cause, uh, significant increases in our customer bills to the tune of like $500 a year for a typical residential customer or $3,400 a year for our typical business customer.
[00:08:42] And the main driver for the cost increase is the way that this proposition was developed, was it had a requirement for 20% rooftop solar in that 50% of renewable energy. And rooftop solar is at least three to five times more expensive than utility scale [00:09:00] solar. So we were concerned that meeting this arbitrary one size fits all target could undermine our ability to provide reliable energy to our customers.
[00:09:11] It would also require the early retirement of legacy generating resources that we knew were still needed. So it's difficult to come out against the policy when, you know, it will result in a significant increase in revenue, but ultimately we decided to lead an educational campaign. So our customers could make an informed decision.
[00:09:32] You know, everyone wants clean energy, but what are they willing to pay for? So we focused our message on the cost impacts, particularly for our low and fixed income customers. And we reached out to some partner groups that, uh, are focused on the needs of that population and developed a coalition of organizations to really align around our message.
[00:09:54] Ultimately, the, that proposition was not supported by the votes. So [00:10:00] the next steps for, for TEP was to develop our own integrated resource plan, which was our plan for how we want to transition to a cleaner, greener resource mix. But our approach is much different. Um, while the Prop 127 had some real, um, strict guidelines and some specific technology solutions embedded in it, this was a more data-driven approach.
[00:10:25] It was informed by climate scientists, and we also included a diverse group of stakeholders. So it was a very collaborative process. And ultimately, we decided to pursue a goal of 70% renewables by 2035, which would reduce our carbon emissions by 80%. So the outcome is actually pretty similar to Prop 127, but the solution is more cost-effective and allows flexibility so that we can plan to adapt to any [00:11:00] changes in technology.
[00:11:01] Because technology is really rapidly changing right now. As- as you know, scientists are really focused on technologies that will support this transition to be affordable and reliable. We've also worked with the Arizona corporation commission to help shape energy rules that, rather than go through legislation, are coming through the Arizona Corporation Commission. And those rules are intended to put all the Arizona utilities on the path to an affordable, reliable, carbon-free future. And it's focused on carbon reduction goals rather than specific types of renewable resources.
[00:11:38] Michael Fricke: Susan, I want to follow up on what you just said, because I think it's so fascinating that you basically agree with the goal of the proposition, but not the, the method for getting to that goal. Right. And we all know in today's political climate, people get characterized unfairly in a lot of ways. And so I can only imagine that there were probably some folks who said, [00:12:00] "Well, TEP doesn't support, clean energy. They're- they're against this!"
[00:12:04] How did, how did that, um, those conversations go? How, how did TEP and you and your staff, um, communicate with the Arizona legislature or, um, the, the folks who were pushing this proposition and, um, can you give us some inside baseball on, on what, what that looked like inside TEP for you guys?
[00:12:26] Susan Gray: Sure. Yeah. You know, I think that the proposition's well-intended right, we all want clean energy. We all want to get there faster. And, um, I think just trying to understand the ins and outs of how this proposition was written and how it would actually be executed and the cost of executing it to that through, through that guidance, um, was going to be very costly for our customers.
[00:12:51] And so I think we're, you know, I talked about this collaboration with other organizations that- that already have the relationships built with [00:13:00] the customers that would be impacted the most. That was really important. You know, we have, um, we always strive to maintain trust with our customers and to be their trusted energy partners for, um, to be transparent and to have good relationships with our customers, as well as the Corporation Commission.
[00:13:20] So that, um, when we share something like this, it's not, I mean, there's always going to be the people out there that say, "Oh, you're just, you're taxing the sun, or you're not. You're you're, you're in a war against solar." And, um, you know, so there'll always be kind of those barbs that are thrown at us. But I think in the long run, because we stay true to our values, because we continually offer information so that customers can choose for themselves rather than coming out strong against the proposition or diving into those war- the war on words, I guess I'll call it.
[00:13:58] Um, we were able to stay [00:14:00] engaged and, and just stay true to, "Hey, this is, this is the truth. This is the way it will play out. If that's the way you want it to play out, we will support it. I mean, We're going to profit from this. Um, but if that's not the result that you're looking for, then let's come to the cape, the table and figure out a better way to do this."
[00:14:19] Paul Melendez: Susan, I'm peeking around the corner. What do you see as the next ethical challenge facing your industry?
[00:14:30] Susan Gray: Sure. I think, you know, one that, we're kind of in the middle of right now, um, I'll call a community transition.
[00:14:36] So as we are transitioning to cleaner energy, we are impacting the communities that have long supported us with, uh, fossil fuel generation. These communities tend to be built around power plants and everyone in that community works for, or, or has a family member that works for the plant. And so as we start to close these generating [00:15:00] stations, those communities will be impacted, um, significantly.
[00:15:05] And so I think the ethical challenge here is, how do we support those communities as we make this transition to a decarbonized future? How do you balance the impacts to these communities, particularly rural and tribal communities against the urgent need to reduce the greenhouse gas emissions to meet these climate targets?
[00:15:25] And then more specifically, who should pay for this? Should customers or shareholders bear the cost of supporting those communities? Both customers and shareholders have benefited from the output of these generating stations. And so how do you, how do you pay for this long-term? Who should pay for it, and how should that money be invested to support those communities?
[00:15:48] So I think that's one, one example, and I would offer another kind of hot topic right now. You know, that's really also associated with the climate crisis- thinking [00:16:00] about the future of disconnections. So in a warming world, the health and safety risks of disconnections, or to shutting off someone's power or gas are changing.
[00:16:11] You know, we've had the hottest June on record. Last summer, we saw in Texas that, you know, the Texas freeze off was a severely cold winter. And in Arizona, we have a summer disconnection moratorium that lasts for nearly half the year. That means that if customers don't pay their bill, you know, when we normally would have disconnected their power or their gas, because of the disconnection moratorium, we, we won't, we won't make that disconnection and the customers know upfront when that period starts and when that period ends.
[00:16:46] And so I think that, back to the ethical challenge here, should all customers bear greater costs to support providing services for customers who don't pay their bills? And of course there are so many customers that [00:17:00] struggle when their bills exceed the kind of, the normal average amount. And so, I understand why many customers aren't able to pay their bills.
[00:17:09] And then you have the folks that just know that this is the timeline, and I can use that money elsewhere and catch up at the end of the period to get back on track. Um, so there's certainly some, some folks that kind of game the system that's intended to help these folks that really can't pay their bills.
[00:17:27] And so when we, when we have these large balances that build up, these folks that already struggle to make their payments every month really struggle to get caught up when the moratorium ends. And so one solution that's been discussed with the Arizona Corporation Commission is, well, maybe we, you know, as, as customers start making their payments, we forgive some of their debt and that debt forgiveness is, would be born by the rest of the customers.
[00:17:58] And so I think that's, that's the [00:18:00] ethical challenges- who should pay for that, for the, for the folks that have used that energy and aren't able to pay.
[00:18:07] Michael Fricke: I want to go back for a second to your first example of, you know, what happens to these communities when these power plants go offline and we transition to renewables. Um, you know, we've all heard examples of, you know, companies pulling out of these factory towns and just leaving them desolate.
[00:18:24] I spent most of my life living in the Midwest. You can drive, you know, an hour in any direction, find one of these factory towns, which has been decimated. So I think it's really, um, to TEP's credit that you guys are thinking about these sorts of things. And I, it makes to me really, really curious, you know, how far down this road are you in terms of, um, planning for these communities, help- and, helping them figure out how to transition to, you know, whether it's, um, training for new jobs or, uh, relocation or whatever. Um, what's been your role in that process?
[00:18:58] Susan Gray: Yeah. Great question, [00:19:00] Michael. So we announced our plant closure with 12 years notice. So we wanted to give the community and the employees as much time as possible to make that transition.
[00:19:12] And we formed a committee within TEP that is partnering with leadership in the community to talk about what that transition should look like and what types of investment would make the biggest difference in the community. I would say the number one investment is broadband. And there's some federal legislation that's coming out that will support, you know, government funding of building that broadband, but it won't be a hundred percent funded by the government.
[00:19:38] And so there's an opportunity for power plant owners, like TEP to step up and make that investment, and to really partner with the community to make sure that that that broadband gets built. There's also, you know, uh, a sense of fear among the employees that are impacted, you know, [00:20:00] they've been working for a power plant, most of them for their whole career, whether they've just started or they're at near the end of their career.
[00:20:07] And many of these employees are generational power plant workers. It's all they've known. And so we have established a process to have leaders meet with every single employee and talk through what their career plans are. So kind of help them, um, help cast a vision for what their future could look like.
[00:20:31] Whether it's meeting with the company and working remotely from, we have a big plant in Springerville, Arizona. So, if employees want to stay in the Springerville community and can work remotely for TEP doing a different job, great. We're going to help them prepare and educate and train for that, that new role.
[00:20:50] If they want to transition out of the industry or, or transition into, um, something outside of the company, we're, we're helping provide that education. We, we [00:21:00] have, uh, we've stood up an online university called SGS University, Springerville Generating Station University. And so we're providing that training so that people can really be focused on a solutions and not sit in the fear of not knowing what's next.
[00:21:17] And I think that by trying to combat that fear and give a plan for the future, employees are able to focus more on the work at hand, which allows them to work more safely and more productively.
[00:21:30] Paul Melendez: Could you give me, uh, one sentence that captures your philosophy on ethical leadership?
[00:21:38] Susan Gray: Sure, I think my personal mission statement describes it the best. And that is to be a heart forward leader, who inspires our team toward a common vision by investing in people and bringing them together to create a culture of engagement, where people thrive and can reach our full potential.
[00:21:56] Paul Melendez: Susan, thank you for your [00:22:00] candidness and time today. Uh, we learned a great deal from you.
[00:22:04] I'd also like to thank my colleague, Michael Fricke and our podcast producer, Mariah Brown. We look forward to everyone joining us for our next episode. Please follow us on Twitter @UArizona_CLE. Good day.
[00:22:19] Susan Gray: Thank you so much.
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