Interview with David Ratcliffe: Chairman, President, and CEO of Southern Company

David Ratcliffe is the chairman, president, and CEO of Southern Company, one of the largest electrical companies in America. After decades of service, Mr. Ratcliffe will be retiring this December. Recently, he was gracious enough to speak with us about the high calling of his daily work.

Have you learned any insights about God from leading a power company?

I’m hesitant to suggest that leading a power company is any different than leading any other kind of organization in regard to learning lessons. The fundamental principles that we find in the Bible apply to any organization, whether it’s not-for-profit or for-profit. Principles like treating other people how you want to be treated, accountability, integrity, honesty, trust, and faithfulness transcend any organizational construct or particular service or product that an organization might produce. So, I don’t think there’s anything unique about a power company. I happen to love what I do. I think it is extraordinarily important to the well-being of society and to the improvement of mankind’s standard of living.

What is the high calling of providing power to people?

I think it goes to what it enables society and people to do. When we have a storm and the lights are out, we see clearly that a great portion of society comes to a screeching halt. Because we’ve become so dependent on electricity and take it for granted, it doesn’t take long before people get fairly ill and in bad humor about the fact that the lights are out. So, the men and women in this industry have a tremendous sense of responsibility for the order and humaneness of society as a function of the service that we provide because without it, our society comes to a halt. It’s a huge responsibility, and we take it seriously. It is a high calling for us. We care greatly about making sure that we provide people with reliable and affordable electricity.

With power, it seems like there are a lot of stewardship issues involved, both for your company, as you try to produce power as cleanly and efficiently as possible at an appropriate rate, and also for consumers. Can you talk a little bit about the stewardship issues unique to your work?

We are, first of all, engaged in a very large endeavor. There’s a lot of activity going on, and in many cases what we do is dangerous. So, our first stewardship responsibility is to the safety of our employees and customers. We want to make sure that we do everything we possibly can to prevent accidents and injuries. Every single day, our objective is what we call “Target Zero.” We don’t want anybody hurt, including our customers and the communities in which we operate.

Beyond that, in day-to-day operations, it becomes a balancing act of responsibly generating power with the resources we consume. In our case, we consume a lot of coal and some natural gas. There are impacts to the environment in using these products. At the same time, we’re trying to provide a service to society at the most attractive cost possible, because it’s important that our customers are able to afford our product in order to enhance their standard of living or their particular business opportunity. We try to use common sense and find a way to balance what we do and how we do it against many, many competing stakeholder objectives, whether they come from environmental groups or customer groups, or subsegments of those groups.

Your code of ethics states: “We compete vigorously, but fairly.” Christians don’t talk about competition much, except perhaps in negative terms. What is healthy competition for a Christian?

I believe that we’re supposed to live life to the fullest. This means that whatever we are about, we’re supposed to “run the race set before us,” as Paul said, with great intensity, preparation, and vigor. We are supposed to run to win. That doesn’t mean we break the rules or take unfair advantage; it means we compete fairly, but we compete vigorously.

Life is meant to be lived with enthusiasm too. I don’t like passivity. I think we’re called to be competitive about what we believe. Paul says we’re supposed to be ready to give an account for our faith, but not in an offensive way. So, I think healthy competition means that we are as prepared as we can possibly be.

If an athlete is going to compete well, he’s going to make sure he’s in great shape, he’s going to have studied the play book, and he’s going to go into the competition knowing the game plan. I expect my people to do the same thing. We’re in shape physically, we’re in shape financially, we’re in shape mentally, we play by the rules, and we play to win. Now, if we don’t win, we’ll congratulate the other team on their ability to out-do us or out-play us, as long as our opponent has played fair. I think that’s the way we’re supposed to live out the opportunities we have been given.

I’ve heard you talk about “turning the other cheek.” How do you turn the other cheek in a competitive business environment?

When we’ve competed fairly and lost simply because the other person was better, it’s easy to move on. When somebody swings at us unfairly—and people swing at us these days, not so much physically, but emotionally and verbally—we have an opportunity to stop and exercise the discipline of choosing not to hit back, either verbally, physically, or emotionally. That’s my notion of turning the other cheek. Now, I’m not going to let someone beat us up, because I don’t think that’s what turning the cheek means. It means not being reactive in our responses.

Certainly we don’t want to allow people to engage in libel and slander against us without feeling the need to defend ourselves.

Nor abuse. Abuse takes many forms. We think first about battered wives and husbands in marriage relationships, but there are a lot of battered employees in manager/employee relationships that shouldn’t be allowed to continue either.

Can you talk a little bit more about that? How would you intercede in what you perceive to be an abusive relationship in your company?

There are many opportunities, but I think in order to intercede, there first has to be a clear statement of expectations for employees. We call ours “Southern Style.”

Every organization generally has some kind of value proposition or code of behavior. I make sure people understand ours. And then, I hold people accountable for behaving in a manner consistent with the expectation laid out in those propositions. Accountability has to start at the top of an organization, meaning with me first as the CEO of the company. There has to be a foundation of expectation. A leader has to create a standard by which, when people see behavior that is inconsistent with the expectation, they have not just a right, but a responsibility to challenge that behavior in a constructive and loving fashion.

In many cases, that takes the form of a confidential hotline. In some cases, it means filing a report with a compliance officer. In the cases where we’ve built the kind of trust relationships that allow for it, a face-to-face confrontation is best in which we say, “I observed this behavior.” Sometimes we’re recognizing blind spots. Other times, we are simply acknowledging that we’re human and we need to get better. Without people who are willing to call us to task and point out inappropriate behavior, we can’t get better. It’s constructive feedback.

Who holds you accountable?

My expectation is that there are a lot of people who do. First of all, I expect the ten other members of Southern’s Senior Management Council to hold me accountable. I’ve tried to communicate clearly to them that we’re all equals around the table, and that we have to hold each other accountable. So, when they see me doing something wrong, they have to say so.

I would hope, also, that my wife does. I know that my Board of Directors does. But, I desperately hope that my friends would too. You know that saying “Real friends don’t let friends drive drunk?” A measure of friendship is the ability to challenge each other about behavior and to hold each other accountable. If we don’t have accountability, then I'm not sure we really have anything.

You also talked about enthusiasm, which doesn’t immediately seem related to accountability and responsibility, but you’ve connected the two, in that we have a responsibility to hold a particular kind of enthusiastic approach to life. Can a person learn to be enthusiastic?

I think they can, but it’s a matter of attitude. One of my favorite quotes about attitude comes from Chuck Swindoll. He basically said that attitude is more important than almost everything else in life. Life is 5 or 10 percent what happens to you and 90 to 95 percent how you respond to it.

I think developing a positive attitude is also a learned discipline. For me, it’s very easy, because I can quickly go back to the foundation of my faith and say, “I know who I am, and I know there’s a higher order. There’s Somebody who cares about me and has a plan.” Therefore, I don’t have to worry about as many things as people who don’t have that kind of faith and that kind of foundation.

You talked about enthusiasm being related to gratitude as well. Can you describe the disciplines of learning to be grateful and enthusiastic every day?

I sure can. It’s part of my morning reflection time. I try to encourage my employees to think in a similar manner because in the process of reminding them, I remind myself that if we think about the fact that most of us have slept in a bed with a roof over our head with some kind of air-conditioning or heating, and we were able to get out of bed and go to a bathroom with hot and cold, running, clean water, and we most likely had a shower, and we have a toothbrush and clean underwear and shoes on our feet and a coat on our back, and we probably had something to eat for breakfast before we left the house—how much do we have to be thankful for? It’s a conscious effort for me to say, “I have so much to be thankful for. How in the world can I leave here whining about what I don't have or about other circumstances?”

Now, there are people who get up with severe illnesses who cannot do those things, and there are certainly people who don't have some of life’s necessities. But, the vast majority of people in this country live an extraordinarily wonderful lifestyle.

I’m so glad you shared that. Another thing I’ve heard you say is, “Accept that some days you are the pigeon and some days you are the statue.” Can you tell us the story about a day when you were the statue, or when you felt like the statue? How did you find your high calling in that?

No particular instance comes to mind, because I typically work hard at not dwelling on those things. If something bad happens to me, the easy thing to do would be to wallow in the question, “Why did this happen to me?” Instead, I try to ask, “Why not me?” Who says I’m immune to being the statue some days? When I am the statue, it’s my day to be the statue. I’m going to clean up and get back into life.

One of my favorite stories about the eternal optimist is about a kid who, no matter what anybody did to him, they could never get him down or convince him that there was not something positive about life in every situation. One day his friends decided to challenge him. They filled a room full of horse manure and threw him into the room. He immediately began to dig out, saying to himself, “There's bound to be a pony in here somewhere.” I try to remember that “there’s a pony in here somewhere; I’ve just got to find it.”

You said you have trouble remembering specific instances, because you let them go so quickly. How do you do that?

Again, it goes back to how we choose to respond to what life deals us. There’s no question that life is going to deal us some bad things, whether it’s job losses or illnesses or loss of loved ones or divorces or whatever. We have a choice to dwell on those things and take them into our emotional bank account and let them become a poison to us or not. We can choose to evaluate them, assess what we can change about them, get about doing that to the extent there’s something we can do to change things, and then move on. I choose to move on, or I choose to live a life of trying to overcome those situations.

For example, if I’m in an accident and lose my right arm, there’s nothing that I can do to replace my right arm. It won’t grow back. Now, I might get a prosthesis, and that would be dealing with the situation. I can begin to choose to make something out of that. Or, I can simply dwell on the fact that I’ve lost my arm, and isn’t it awful, because all the things I used to do with my right arm, I can’t do them anymore. It’s just terrible. Why did this happen to me? That becomes a cancer, if you will. It starves the positive energy that I think we’re supposed to live life with. I try to make a conscious effort to assess those situations and work on the things that I can do something about and turn loose the things that I cannot do anything about.

But, again, it is a discipline. I don’t mean to suggest that I’ve got this all figured out, because I’ll go back and pick up a setback from three months ago or six months ago and look at it again. I guess I consider it some success when I pick it up less frequently and hold it for a shorter period of time.

A lot of places in the country are not doing well right now, which means a lot of people are getting laid off. As a Christian, how do you fire somebody?

Again, it goes back to trying to achieve a balance. In many cases, CEOs are running businesses that have owners. In our case, we have shareholders and I have to balance the commitments I’ve made to my shareholders with the commitments I’ve made to my employees and the commitments I have to operate the business in a reliable fashion. So, I’m constantly trying to find ways to do that better and more efficiently. Sometimes, I get into stressful situations and simply have to make hard decisions. A lot of times, those decisions involve laying off or firing people. I do that with as much compassion as possible.

One of the things that we try to do for our employees is to be absolutely up-front about what’s happening. We tell folks, “Here’s what we’re looking at, here’s why we’re looking at it, here’s what we’ve got to achieve, and here’s why we have to make this decision. We’re going to do everything we can to help you find another job within our company, if we possibly can. If we cannot, we’re going to try to provide you some outplacement services.”

My experience has been that when I sit down face-to-face with people and say, “Let me explain to you what we’re doing and why we’re doing it,” they don’t necessarily like it, but they understand it, and they appreciate the courtesy and the compassion of an honest answer. And then, they can appreciate the gentleness and the compassion that I try to exercise in letting them exit the company as gracefully and with as much professionalism as possible.

Like not forcing them to carry their stuff out in a box immediately?

That’s an interesting comment, because I’ve been involved in that. And, it is an awful situation that we’re in, in corporate America, because what has happened is that organizations are extremely concerned about confidentiality and security. So, we do it too. We will tell someone that this is their last day, and that they need to clean out their desk and turn in their stuff and leave the building. The reason we do that is because we can’t afford to take the risk that an angry employee will go back and sabotage their computer, or go berserk emotionally and try to do something either to the facilities or to the people around them. It is the most cold and unkind thing. I’ve been through it, and I don’t like it at all, but I don’t have a better solution.

You’ve worked at Southern Company for nearly forty years. That seems to be unusual, given that the average career in a particular workplace is seven years right now. What advice would you give people who are trying to stay faithful to a particular career at a particular company? How did you do it?

Actually, I love the work, and I enjoy the process of learning. This is a very complex business with lots of opportunities for learning new things. And then, we have a value proposition at Southern of unquestionable trust, superior performance, and total commitment. Those are three pretty good principles to build a career on.

My advice is to learn as much as you can, wherever you happen to be. Don’t be afraid to ask questions of people, particularly the older people, because there are no dumb questions and they love to talk about what they do and why they do it. Expand your universe and knowledge. And then, do the very best job you can of building your communication skills, both verbal and written. Learn as much about how to communicate effectively as you can, because it is an art. We all think we do a good job at it when the fact of the matter is all of us can be a little better at it.