CEO Talent Champion:Tom Fanning, Southern Company

When I think about the external environment we’ve been facing for the last three to five years, it’s very clear that the pandemic has provided an enormous challenge to us all. But at the end of the day, we’ve been able to evaluate that challenge and, I think, create something really positive — like a whole new way of evaluating the work-life experience at our company.

Before the pandemic, we were roughly 80% full-time employees and 20% virtual; now, we are 20% to 25% full-time, at least 50% hybrid in some formal fashion and then the rest is virtual. We really are changing our work practices, and that includes me. You know, if I put on a suit and a tie, and I come to work everyday, people will model my behavior. So I’ve had to change the way I act as the leader of the enterprise here at Southern Company. That’s a big deal.

But I think, more important than that, has been the broader social underpinnings of moving to racial equity. That deals with things way beyond race; it goes to gender, sexual orientation, religion, national origin and a variety of other things.

I’ve been passionate about not reacting to events but rather creating a more sustainable improvement in our culture. I think anybody can react to a headline. If you kind of think about national consciousness with these issues, it’s almost like a sine wave: An event happens. Everybody’s aware of it. Everybody wants to do something. But when the next headline moves on and this ceases to be part of our overt national consciousness, we tend to lose focus.

My passion, my focus, has been to say, “Let’s deal more with the underlying improvement that our culture can do, not the headline.” By increasing our cultural bandwidth, I think Southern Company will be better able to generate vision and courage to deal with the challenges we will face in the future, many of which are not yet known.

What we have done is evaluated some actions we can do to not only put in place systemic improvements but also measure them and hold ourselves accountable with respect to talent. We have six or seven different strata, and we evaluate how we can get better representation. We report on representation scores every two weeks, and in fact, one of the things that has come out of that effort is not just hiring more people of different genders or races but rather looking at how those people are mentored over time.

We actually look at turnover, and we break it down into attractive turnover (i.e., people get promoted out of their current position into something better) and unattractive turnover (i.e., losing people to somebody else that we would have loved to have kept). If we can get somebody to stay with us for five years, our turnover numbers go from somewhere in the high teens down into the low single digits. So much of that impact is not just training somebody to do their job well but also creating a network of personal support and making sure that people get to know them, understand their full story, help them on those days when they come to work and they’re not so fired up or they have a personal challenge.

I believe that we’ve got to be bigger than our bottom line. In our work, we have the privilege not just to restore the power but to actually restore the hope and the ability of communities to thrive, and we find that mission much bigger than electricity.

Everybody in our company has a journey, and we call this the “arcs of life.” Everybody comes to work with a different arc, whether it’s about friendships, your significant other or the work experience. We all have a different story to tell. And one of the things we do inside our culture is to create a safe space for people to contribute to the best of their ability, to bring their full selves to work. We all have to fit in, but I want those lines of fitting in to be wider than most people would think so that we are free to act and use our wisdom, our judgment, our experience, our personal context to improve the company going forward.

One of the things we look for in people is community and social justice. We try to find organizations and participate. We’ve invested in building a center of innovation and technical expertise where we can grow people to be more capable in this new kind of environment. But it’s not just about giving money. One of the other things we track is our own involvement in churches, athletic organizations, you name it. I’m proud to say that Southern Company employees contribute over a quarter of a million volunteer hours every year. We expect all employees to be involved in the communities they’re privileged to serve.

The other thing we try to do is find organizations that make a difference and invest in them as well. We really do foster a sense of entrepreneurialism. Not only do we do it with investments, but we work with individuals and companies to help incorporate them into our supply chain and diversity efforts.

The last thing is political engagement. I think that’s sometimes a dicey place to operate, but we are very clear that what’s good for the community is good for us. And we take positions on issues like racial equity so that we can help model first and influence second, our ability to improve that very important cause in America.

At its best, HR is one of the most strategic partners we can have. HR is a critical partner in maintaining a long-term perspective, in improving the fabric of our cultural system over time. I would evaluate HR in this regard as helping provide leadership.

This is not delegated to HR. This responsibility to improve our cultural bandwidth is an obligation, not an option, for every leader in the company. What we find is that HR can help create the tools to measure and hold us accountable and then provide the support and tools necessary for the leaders to undertake this very important obligation. It’s a partnership with me to help make sure this happens over time.

There are three kinds of companies in the world: roadkill, moving prey and the birds of prey. People that lose their ethics end up being roadkill. They don’t have a North Star and ethical standards. Moving prey are companies that sometimes lose their focus on the long term and just maneuver to make the short term work.

Southern Company always starts with our long-term aspirations, and we make the short term work. This is what I call a bird of prey. These are people who can fly above the battlefield, maintain this focus on the future and influence the current, as we need to.

One of the things we do is develop our high-potential/key talent list, and we bring different groups from that list into every quarterly meeting we have with the board. We bring in 10 different people and provide exposure to the board and explain to the board what they do for the company. This helps the board get a sense of the depth of our talent, and it really gives recognition to employees that you’re valued, that you are important and you are our future.

The signals have to work both ways. Employees have to signal to us that they’re doing better and they’re ready to go. We have to signal to them that we value their talent, expertise and behaviors.

The simple answer would be to pay attention to the total shareholder return, but that’s just the minimal thing you can do as a CEO. The real way to propel your company is to understand its total value to the communities that you’re privileged to serve and ensure you can create an inspirational culture — one that embraces future challenges — and that we have the courage to move the culture forward. Everyone will expect you to talk about total shareholder return. Talk about something people don’t expect, and then deliver on it.