Reinterpreting Priorities at Chesapeake Energy
When you look at the sprawling campus of Chesapeake Energy—a campus that has single-handedly brought life to north central Oklahoma City, even courting the city’s first Whole Foods to the neighborhood—you have no doubt that the organization behind it is anything but great.
But when Doug Lawler, a veteran of the oil and natural gas industry, assumed the CEO-ship earlier this year, the company was far from where it wanted to be. Compared to peers, the recovery of Chesapeake’s stock value had not been nearly as strong. While the drop could be blamed on economic crisis and natural gas prices, Lawler needed to look deeper to understand why their performance had not rebounded so completely.
At today’s The Role of Communications in Creating Best Places to Work Conference by Ragan, in partnership with Great Place to Work, Lawler asked the hard question, “What do we have if we put being a great place to work in front of being a great business?” Lawler candidly spoke about Chesapeake’s journey over the last six months, and shared pride and optimism that Chesapeake had become strong, healthier, and more competitive in such a short time.
Being a Great Business
With 11,000 employees and over $12 Billion in revenue, and strong assets in natural gas and liquids, Chesapeake had the means to succeed. Coupled with a young, innovative, and tech-savvy workforce, Lawler reasoned that Chesapeake should be enjoying great results. In Lawler’s equation, Great assets plus great people should equal great business results.
Something at Chesapeake didn’t add up. Lawler logically pointed out that workplace quality becomes a non-issue if your business is no longer viable. Spending that trumps business growth depresses revenue and stock price, and puts more than the quality of the work environment at risk. Chesapeake could not remain a great workplace if they could not achieve great results, after all, nothing deals a bigger blow to the work environment than employees feeling that business outcomes don’t match up to their input.
Putting a Value on Stock Price
If it’s not lack of assets, nor lack of talent, that caused Chesapeake to fall out of pace with competitors, the company’s spending might be to blame. While much attention has been given to Chesapeake’s “land grab” and the aggressive acquisition of assets pursued by founder and former CEO, Aubrey McClendon, much attention is also paid to Chesapeake’s luxe campus and cushy perks.
Shareholders notice these things and become particularly critical of expenses when the business does not perform as anticipated. Still “stock price can never be the most important thing for a company,” cautioned Lawler. He continued, “focus only on stock price leads to short term decisions that compromise long term value.” The challenge then is to maximize shareholder value while maintaining a work environment that could allow Chesapeake to continue attracting the best and the brightest. As Lawler noted, his job as CEO and that of all Chesapeake employees, is to manage the business well enough so that investors don’t step in to make those decisions for them.
Subsequently, Chesapeake has been restructured, a move resulting in the recent layoff of around 800 employees. It’s also resulted in a shift in how Chesapeake thinks about being a great workplace. While still thought to be of paramount importance and essential to being a great business, the conversation has moved away from amenities and on to the values and behaviors that drive success.
One of Lawler’s first acts as CEO was to introduce a new set of values to Chesapeake employees. Unlike other organizations, this was not a democratic exercise. Instead, Lawler assembled the values and in eight town hall meetings during his first week on the job, unveiled the five new principles that would direct the business.
Some of the values are obvious; Trust and Integrity naturally needed to be at the core of all they did. Respect for Differences, and respect for the safety of employees, and the environment and communities where they operate came next. Open Communications would ensure that all employees understand the state of the business and business decisions being made.
The next value speaks to Chesapeake’s predicament and expectation that all employees will be a part of the solutions. The value of Commercial Focus asks employees to be stewards of corporate resources and act like investment advisors to the company. Commercial focus spreads the responsibility for savings, performance, and pursuing the best interests of the company throughout the organization.
The final value is Change Leadership. Being a change leader means being a part of the solution. The value means (certainly) not acting like a victim, and not merely “doing” the job. It asks employees to innovate, to improve, and to deliver beyond what is expected.
Lawler believes this focus on values will make Chesapeake a great business and a great workplace. Shared values such as these provide the yardstick against which employees will measure Lawler, against which employees will be measured, and how they will remain accountable to each other and the company.
The values have been successfully adopted inside the company with some 90% of employees knowing the values. External validation for this approach is showing up as well, with a nearly 60% stock price improvement during 2013.
While the tenor of the conversation may have changed, the focus on being a great workplace is a strong as ever at Chesapeake Energy. If anything, the conversation has gotten more authentic. While an amazing campus and top notch amenities may help attract talent, meaningful work, the ability to act like a stakeholder, and being part of a winning team are even more important. Lawler’s moves are helping Chesapeake and its shareholders understand the role being a great workplace plays in creating a great business.
Leslie Caccamese is the Director of Strategic Marketing and Research for Great Place to Work®.