Tony Harding explains how this nationwide water utility reorganized to increase efficiencies and customer satisfaction.

When Tony Harding took over Harrington Park, NJ-based United Water in 2003, he didn’t want to be just another face passing through. Since the mid-1990s, the company had been through so many management changes that employees’ motivation was draining.

Harding came to United Water, one of the country’s largest water and waste water services companies, from Suez Environment Local Services where he oversaw water and waste water activities in South East Asia (Suez is the parent company of United Water). During his first few months with United Water, Harding traveled from site to site, asking the company’s 2,100 employees what they would like to see change.

“I didn’t think they’d say much, but boy, did they let me have it,” he laughed. “They were very honest with me.” Aside from typical concerns, such as pay and benefits, one of the key issues that became apparent immediately was a lack of leadership. “I asked them to give me until Christmas to prove that I wasn’t going anywhere. I’ve now spent four Christmases with this company, and I still don’t have plans to leave,” said Harding, CEO.

In addition, employees were concerned with the company’s stability, especially given its efforts to diversify during the 1990s. Certain acquisitions—such as a software company—distracted United Water from its core competencies, and some were losing money, as well. “It was time our employees had a clear path to follow,” said Harding.

Tony Harding

United Water also provides services through 145 public/private partnerships in which the company contracts with municipalities to operate water utilities for a period of five to 10 years. The municipality maintains ownership of the utility and its entire asset base. “As professional partners, we help increase compliance, maintain property, and create efficiencies. Some municipalities have asked us to handle all of the revenue and the customer relationships, as well,” said Harding.

In total, United Water delivers nearly 720 million gallons of fresh water to 7.7 million customers and has the capacity to process 1.1 billion gallons of waste water each day.

At the time, the company’s five regional presidents were responsible for regulated and private partnership accounts. “Although operationally both sides do the same thing—deliver fresh water and receive waste water—the models are different,” Harding said. On the regulated side, United Water needs to have expertise in regulatory relations, civil engineering, and contract writing. The contract services side can be overwhelmingly competitive, and low margins make it risky, so the focus is on daily operational efficiency.

The CEO decided to organize the business on a functional basis, putting one person in charge of regulated operations and another in charge of contract operations. After intense analysis, United Water also created a clearly defined strategy for both business lines. On the regulated side, the strategy focused on improving customer service levels, investing in existing assets, and increasing shareholder value through timely rate filings with regulators.

On the contract services side, United Water came up with a strategy to address individual contract terms and conditions to achieve greater balance. Harding explained that historically, water utilities scrambled over certain accounts, calling them a “must-win.”

“We were one of the companies with that frame of mind, and looking back, some of our contracts were unbalanced—we were assuming almost all risk. We went back to some of our clients and worked out some more favorable terms. Others wanted to hold us to the original terms, and that was fine. We got off to a good start.”

Main objectives
Under Harding’s direction, United Water now operates with three main objectives in mind: motivate and develop employees, increase business efficiencies, and improve customer service and value. “I told our employees that they will hear the words customers, employees, and efficiencies in every conversation with me, and all of our action plans will be based on these three key themes.”

To create an environment where talented individuals enjoy coming to work every day, United Water began involving its employees in decisionmaking processes. It also has invested heavily in training and development. For Harding, training simply ensures employees are skilled at tasks associated with their current jobs, but development goes much deeper. “A company of this size and resources has a duty to look at its people beyond the particular tasks they perform. Development is making the best use of their skills and talents for the future, but it has to be a two-way street. Employees have to be committed to development, as well.”

Creating business efficiencies can be tricky, especially when employees and management alike confuse efficiency with cost cutting, “With that thinking, we could be 100% efficient if we had zero cost, but if we have zero cost, our customers would turn the tap on and no water would come out,” he said. “Efficiency means we will deliver the most reliable service at a reasonable cost.” The first two objectives, as well as continued investments in existing assets, ultimately result in the third: improved customer service and value.

About a year ago, Harding added a fourth objective: managed growth. “We needed to clean up our portfolio and focus on implementing these changes before moving forward,” he said. The company is now growing at a comfortable pace.

In addition to winning new contracts in Glynn County, Ga.; Durham County, NC; and Laurel, Miss. during the past two years, United Water recently purchased Aquarion Water of New York and AOS Operating Company from British-based Kelda. These two acquisitions bring nearly $45 million in new revenue and increases the population served by the company by approximately 700,000.

“The addition of these companies to our portfolio is in line with our strategy to grow both our regulated and contract services businesses organically and by acquiring companies that are adjacent to our operations where we have a strong presence.”