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SUPERHERO SKILLS for Next-Generation CEOs [Rural Telecommunications](Rural Telecommunications Via Acquire Media NewsEdge) Some rural telcos are going the way of Hollywood. Like Jay Leno leaving "The Tonight Show," a wave of senior executives is retiring from rural telcos. NBC faced many of the same issues telco boards must address as they seek to fill those vacancies. Chief among the considerations is determining what skills are desirable in the nextgeneration of leaders in order to build on the success of predecessors and tackle a new business era. For example, during his 22-year tenure, Leno successfully tapped into the Baby Boomer market. Leno's replacement, Jimmy Fallon, is almost 25 years younger than Leno, and is tasked with building on Leno's success while reaching a new type of viewer: millennials. That technology-savvy group watches TV by using technology that didn't exist for the majority of Leno's late-night reign. Consequently, the need to reach the younger market led NBC to want someone more skilled in social media and YouHibe-friendly show segments. In their own way, telco boards are looking for Fallon-esque-type leaders, too. They want new executives who, like Fallon, have a different skill set because these incoming executives will face a much different operating environment than managers have historically faced. Boards view new skills as necessary for ensuring telco operations will thrive even as new regulations, revenue streams, network technology and user demands evolve. Those indemand skills? Regulatory relationships, financial finesse, marketing mojo, being technically tuned in and understanding tech-sawy millennials. Regulabony Relationships NTCA-The Rural Broadband Association has provided manager search services for about 15 years, and over that time Barbara Ritter, vice president of human resources, has seen a shift in skill priorities needed for telco executives. In the past, managerial candidates were more likely to have outside plant knowledge and to have started at the ground level installing phones before working their way up to executive positions. Today's boards want someone with specialized knowledge in areas like finance and regulatory issues. "Historically, 60% to 80% or more of a typical rural telecom's revenues have come from cost-based sources," stated Dan Caldwell, president of Consortia Consulting (Omaha, Neb.), which specializes in assisting rural telcos in the areas of finance, operation and policy. "Access revenues and [the] Universal Service Fund [USF] were both calculated on the actual costs of the business. While some of the recovery from those sources lives on, it is declining rapidly. And, while we may not like the changes, or agree with them, it currently appears to be a reality that managers must deal with in the future." This emerging regulatory environment is a key driver behind the need for managerial regulatory experience. That experience could be gained by actively working with local government agencies; holding a prior position as a company's regulatory issues liaison; participating on a regulatory committee; or some similar industry-based involvement. For the foreseeable future, the expanding impact of regulations and regulatory changes at both the state and federal levels makes having a firm grasp on regulation a valuable skill. New leaders must be able to evaluate the financial implications of regulatory changes in USF funding and adjust business plans to mitigate the potential impact to the telco's bottom line. Financial Fineeae Randy Tepatti has been working in the rural telco industry for over 20 years, has a financial background and is the newly appointed assistant manager for Ligonier Telephone Co. (Ligonier, Ind.). He explained, "Generally speaking, in the past if someone called in and requested service, you just went out and did it. Nobody really considered the cost because there was always a regulatory fund to compensate for the expense. Now you have to do some budget analysis to justify the value of providing new services. There are a number of ways to provide services, and there's a cost to each of them that you have to weigh." These assessments also help mitigate risks affiliated with infrastructure projects, which require increasingly higher capital expenditures that are harder to justify given USF reforms. Caldwell believes that fundamental changes in telco management will be necessary. Instead of managing expenditures to provide a network and customer service focused on providing superior quality, managers of the future will need to build an organization that's focused on getting the maximum possible done with a limited amount of available resources. "CEOs of the future must be creative in terms of sharing resources, finding costeffective ways to accomplish the delivery of network resources, and raising their expectations of staff skills and production," he said. "At times it feels like we're more regulated being deregulated just because of the sheer number of regulatory agencies asking for the same information in different formats. It causes you to ask, 'Do you want to be a CLEC and get into those regulations? Why don't I just offer a broadband service and get away from that? If I can provide services without all the hassles, why wouldn't I?"' Tepatti said. Marketing Mojo Telcos that once didn't need to market themselves are now facing new competition. And, as boards seek to increase market share along with profits, marketing skills will get higher priority on the list of hiring criteria. "Today there's plenty of places consumers can go to get service. Small telcos are now competing against cable and cellphone companies, as well as other communication providers. We have to be more proactive in promoting and educating consumers about our products and services," Tepatti said. Caldwell said a successful CEO has to be engaged in the "I want it now" marketplace. "The consumers of tomorrow are not willing to wait for the hometown company to catch up with the times," he said. Positioning the rural telco as a gateway to the world and freeing up the consumer to have access to all that the Internet offers is essential to future success. The future CEO must 'sync up' with his consumers and be one step ahead of their needs." The latter may be easier said than done. The FCC and public utility commissions are trying to balance the impact of regulatory changes with the business environment, but they aren't able to move as quickly as technology, Hauer said. At the same time, customer demands and rapid technological changes make it important to not fall behind. "You have to be every bit as fast and as good as your competition," Hauer said. "It's like we need to have one foot in the past for regulatory reasons and one foot in the future to satisfy customers." Technically Tuned In With landline service declining and broadband and its capabilities booming, future leaders need to have technical knowledge and understand emerging capabilities. "The days of managing a network designed for basic voice service are over," Caldwell said. "Technology has moved from singular use networks to multiuse, multiplepriority networks. Despite shrinking traditional revenue streams, the networks of tomorrow will have to deliver more: more services, more bandwidth and more quality. Doing so will be a tall order given the scramble to find new revenue sources at the same time. "Network technology requires the executives of tomorrow to not only be personally familiar with seemingly endless change, but to surround themselves with staff that actively embraces technology," Caldwell continued. "New services are being developed and delivered over a variety of platforms. To remain relevant, rural telcos have to keep pace with those developments," he concluded. Technology changes aren't limited to telco networks and the devices being used by consumers. Tepatti foresees growth in new businesses like data centers, and those accounts are likely to place more technical demands on telcos and be staffed by employees with a level of technical expertise far different from the baby boomer era. Millennial Managemenb Just as Fallon is modifying "The Tonight Show" to be more attractive to millennial, this technology-sawy future workforce is likely to force CEOs to rethink operations and what it takes for an organization to thrive. Caldwell believes that trying to force next-generation workers into traditional telco organizational structures will limit an organization's growth potential. "With the exodus of the baby boomer generation from the rural industry, creativity in hiring practices and work environments is going to be essential to future success," he stated. Future rural telecommunications executives face a much different operating environment than historical managers. Market forces have changed the required executive skill set for success. As future telco leaders skilled in regulatory issues, finance, marketing and new management structures take the helm, they will have to work to create the happily-ever-after Hollywood ending telco board members and customers will be expecting. "Today there's plenty of places consumers can yo bo get service.... UUe have bo be more proactive in promoting and educating consumers about our products and services." RANDY TEPATTI Ligonier Telephone Co. "You have bo be every bib ae fasb and as good as your compebibion. lb's like lug need bo have one foob in bhe pasb for regulabory reasons and one foob in bbe fubure bo sabisfy cusbomers." PAUL HAUER Consolidated Business Services, LLC Consortium Contracts and Rlkornatin Organizational Models Paul Hauer, president of Consolidated Business Services, LLC (CBS; Mt. Angel, Ore.), recently became the president and officer under contract for three companies: Canby Telcom (Canby, Ore.), Beaver Creek Cooperative Telephone (Oregon City, Ore.) and Mt. Angel Telephone Co. (Mt Angel, Ore.). The three companies that make up the consortium of CBS are Canby Telcom, Beaver Creek Cooperative Telephone Co. and Stayton Cooperative Telephone Co. (Stayton, Ore.). Hauer explained that the consortium contract arrangement extends beyond his position. The trio of telcos use centralized human resource and accounting services, also provided by Consolidated Business Services. "The telcos keep their local community presence, but we've changed the back office business service model, which provides an economy of scale beneficial to each of them," he stated. "Each telco has remained independent and governed by FCC rules, but we've converted them all to a single software program and have a uniform chart of accounts to help them deal with state and FCC changes more efficiently." This alternative organizational model also has footholds in other regions in the United States and may grow increasingly popular as the new generation of leaders look to maximize resources and minimize costs. Anna Henry is a freelance writer. She can be reached at [email protected]. (c) 2014 National Telephone Cooperative |