TEXPERS Pension Observer Vol. 3, 2017

Take Stock of Your New Insight Into Pension
Communication Efforts System Investments

GREEN
INVESTMENTS

Return on investments may do
more for the environment than
save-the-planet activists. Find out
what risks are involved.b- pg. 8



INDEX 3

CONTENTS

» p.8 up-fRONT
» p.4
Column: With the close of the legislative session, now is a good
time to review how you communicate with your members. pg. 4

Column: Transparent pension systems could kill some state bills
dead in their tracks. pg. 5

News: Study finds that pension funds ar mostly investing in public
equities. pg. 6

Advice: It takes a team effort to spread the power of defined
benefits. pg. 7

spotlight

World Outlook: With trillions in investments, public retirement
systems may shape global climate change reform efforts. pg. 8

Best practices

Board Relations: Want to know how to be an empowering leader?
Follow these five practices. pg. 10

» p.7

» p.10

www.texpers.org | TEXPERS Pension Observer

4 UP-FRONT

BOARD OF DIRECTORS DID YOU TALK TO
YOUR MEMBERS?
President
Paul R. Brown by Paul R. Brown
Big Spring Firemen’s Relief & Retirement Fund
President, TEXPERS
First Vice President
Sherry Mose COLUMN
Houston Municipal Employees Pension System
Now that the 85th Legislative Session MUST HAVE
Second Vice President has closed, it is a good time to
Tyler Grossman measure how your pension system commu- SSoocciiaall MMeeddiiaa TToooollss ffoorr PPeennssiioonn SSyysstteemmss
El Paso Firemen & Policemen’s Pension Fund nicated its lobbying efforts to its members.
How did your fund represent its members TWITTER
Secretary during the session? Did your system attend
John D. Jenkins TEXPERS’ lobbying day at the Capitol? Did You can use Twitter to buildcconnections
Dallas Employees’ Retirement Fund system administrators attend public hearings with a relevantcaudience. These connections
or provide testimony regarding bills that could can lead to actions across a network of loyal
Treasurer impact pensions? Were letters written to leg-
Eyna Canales-Zarate islators and were emails drafted for or against customers for your business.
City of Austin Employees’ Retirement System bills? Did you let your system members know?
Communicating with members is an FACEBOOK
BOARD MEMBERS important part of managing a pension fund.
Sometimes members don’t realize the work It’s a great opportunity for a pension fund
• Jose Cavazos that fund administrators and board trustees to talk directly with followers and to
Dallas Area Rapid Transit Retirement Plan and Trust do to secure their benefits. It’s important to
talk about the work you do and TEXPERS create a platform where system members
• Mike Curran does with the resources, services, forums, can discuss retirement and benefits.
MTA of Harris County Retirement Plan and educational programs that make a dif-
ference in their lives. INSTAGRAM
• Larry A. Reed The legislative session proved that there
San Antonio Fire & Police Pension Fund are renewed attacks on public pensions. Instagram is a highly curated and personal
That means pension systems need to com- environment. The content is seen as
• Billy Samuel municate what is coming to their members.
Fort Worth Employees’ Retirement Fund Let your system members know how they trustworthy, authentic and relevant, and
would be impacted by specific bills, what subsequently, more likely to inspire action.c
• Jim Smith your system is doing to protect their retire-
San Antonio Fire & Police Pension Fund ment benefits and ways they can participate. TUMBLR
For example, Governmental Accounting
• David Stacy Standards Board Statement 77 will force all Tumblr is the best place for pension systems
Midland Firemen’s Relief and Retirement Fund levels of government to disclose their tax to find an audience for theircpension-related
breaks as well as how much it is costing their
ADMINISTRATION taxpayers. GASB will go a long way in helping content.cThere are over 200 million blogs
push back against legislators and employers publishing 80 million posts per day.
• Max Patterson who insist that pay or benefits are unafford-
Executive Director able or unsustainable. PINTEREST
The National Public Pension Coalition
• Carolyn Butterworth, CMP has developed a state-by-state list compar- Pinterest is an online tool for collecting and
Director of Conferences & Member Relations ing the normal pension cost vs. unfunded lia- organizing images. It has become
bility for each state to its annual tax abate-
• Barbara Zlatnik, CAE ments. In every state except two, the cost of important for some, particularly those
Associate Director for Programs & Training these giveaways is greater than the pension who like a more visual environment.
cost. While this new rule is effective immedi-
• Lena Terrell ately, it’s unlikely your city currently provides material regarding issues such as GASB
Membership Manager & Bookkeeper this information. It is important that pension Statement 77 to their members not only so
systems provide comprehensive resource they will be informed but so they can help
• Allen Jones educate elected officials, the media and the
Communications & Public Relations Manager public.

CONTACT INFORMATION It is also important to look back at the leg-
islative session and let your system members
The TEXPERS Pension Observer know how much you appreciate the work they
c/o Texas Association of Public have done to help secure defined benefits.
Employee Retirement Systems
See COMMUNICATE, pg. 5
13111 Northwest Freeway, Suite 100
Houston, Texas 77040

Telephone (713) 622-8018
E-Mail: [email protected]

Copyright ©2017 by Texas Association of Public
Employee Retirement Systems. TEXPERS Pension
Observer is the official magazine of TEXPERS, published
quarterly for TEXPERS members. Contributions to
TEXPERS Pension Observer are welcome, but the
right is reserved to select material to be edited and
published. Publication of any article is not to be deemed
an endorsement of the views expressed therein, nor
shall publication of any advertisement be considered an
endorsement of the product or service involved.

TEXPERS Pension Observer | www.texpers.org

UP-FRONT 5

ADDRESS SHORTCOMINGS BEFORE
THE NEXT LEGISLATIVE SESSION

by Max Patterson

Execu ve Director, TEXPERS

COLUMN

Texas legislators may go Review Board. Fund Management Advice

after the same pension issues There is no The managers of pension To become more transparent, pen-
sion systems must develop strong
in 2019 that failed to make it doubt some plans know where there are communication and financial report-
into law this past session. A weaknesses in their funds. ing initiatives that serve as two-way
communication between the fund and
good way to minimize the filing legislators These shortcomings need to all stakeholders. Here are a few tips
to ensure your communications are
of the same bills is to eliminate will attempt to be addressed over the next clear:
any reasons for their need. 18 months especially in the • Make communication and report-
Even though Gov. Greg add anti-defined
area of transparency. Your ing a priority
• Engage all stakeholders, even
Abbott has called for a special benefit legisla- local elected officials will know
legislative session to be held, tion to the next if there is transparency by critics, before, during and after the
as of this writing, I do not antic- your willingness to keep them implementation of policy, benefit
and programmatic changes.
ipate any local pension issues session’s agenda. informed and briefed on a • Be open to using social media
making the agenda, even regular basis. technologies.
• Establish formal structures such
though there may be an effort Pension system adminis- as forming advisory committees
to garner detailed feedback from
to do so. trators and trustees should make sure they stakeholders.

The 85th legislative session ended May include local representatives and senators Information obtained from Public Pen-
sion Reporting and Disclosure: The
29. Pension system administrators and trust- in fund briefings. Don’t get confused with the Current State of Practice and Exam-
ples of What Works Well available at
ees witnessed a number of bills filed relating to need to protect the identity of employees with www.slge.org.

public pensions and retirement. Although most the level of benefits being provided and the

bills failed to pass, administrators and trustees fiscal soundness of your plan.

of public pension systems must now prepare Opponents to defined benefits will be

for the 86th legislative session in 2019. There looking for every opportunity to criticize your

is no doubt some legislators will attempt to add plan. Don’t give them that evidence. Manage

anti-defined benefit legislation to the next ses- your plans correctly, make good decisions

sion’s agenda. in the interest of your plan participants, and

During the 85th session, bills were pro- remember that the employer (local govern-

posed requiring pension funds to perform ment) is a critical component of the plan.

additional studies. Texas pension funds must A plan cannot continue without the contin-

show there is no need to add studies on top ued contributions of employers. There needs

of those already filed with the state’s Pension to be a partnership.

COMMUNICATE, from pg. 4

Recognizing their contributions can be a great way to encourage them to continue your fund’s efforts.
One way to reach out to your system members is through technology. The way business is conducted and how we communicate has changed.

There are software programs that provide integrated solutions for collecting benefit information for your members. There also are websites, email
and texting capabilities and social media integration that makes communicating with members easier.

An important mode of communication is social media. Reaching your retirees by communicating retirement and pension issues practically
requires a social media effort.

More seniors are using social media than you might think. According to 2016 PEW Research data, 34 percent of Americans age 65 and older
use social media platforms such as Facebook, Twitter, LinkedIn and YouTube. The most popular is Facebook with 36 percent of the age group uti-
lizing it, followed by platforms LinkedIn and Pinterest. The point is that your retirees may not have an official email address any longer, but there’s
a chance of reaching them with social media.

The educational programs, services and resources available to your members must be communicated to them. And they need to know about
the type of legislative, legal, technical and strategic assistance your fund is providing on their behalf.

Everyone at TEXPERS is continuing to work and push to do the best we can for our members. Let your system members know that TEXPERS
is on their side and working with you to ensure their future retirement income.

Enjoy your summer vacation, and I look forward to seeing you in San Antonio during TEXPERS’ Summer Forum.

www.texpers.org | TEXPERS Pension Observer

6 UP-FRONT

STUDY: PENSION FUNDS CONTINUE

T O O U T P E R F O R M E N D O W M E N T S TEXPERSStaffReport

NEWS

A new study by Aon Hewitt, an invest- a larger percentage of public equities (44 while E&Fs averaged 23.7 percent in 2016.
ment consulting firm, indicates that public percent stocks) in their portfolios than E&Fs Also, public funds performed better
funds continue to outperform endowments (28 percent), benefiting from their strong
and foundations. The groups are similar returns. Public funds also typically have a during turbulent times, according to Aon
investment types to public pension funds. cost advantage given their size, says Kristen Hewitt.
Doyle, an Aon Hewitt partner who worked
Researchers updated a study con- on the report. “The conclusions from these studies indi-
ducted in 2011 that compared public funds cated that relative performance was driven
to endowments and foundations, or E&Fs. In addition, the research report noted by three factors: asset allocation, asset class
The new study concludes that public pen- how public funds used far fewer hedge funds structure, and investment expenses,” Doyle
sions continued to outperform endowments and private equity assets than the E&Fs. says. “Similar factors also influenced relative
and foundations on average by 100 basis Nationwide public funds averaged about 13.1 performance for public funds versus E&Fs
points over the last five years ending Dec. percent of their assets in those investments, for the period from Jan. 1, 2012 through Dec.
31, 2016. 31, 2016.”

The July 2017 report, Public Funds Can This research is important for two
Still Compete, compared the five years of reasons, says Max Patterson, executive
returns ending in 2016 of 400 public funds director of the Texas Association of Public
to 300 E&Fs. The public funds gained 8.47 Employee Retirement Systems.
percent while E&Fs gained 7.47 percent,
according to Aon Hewitt. “It indicates that pension funds around
the country, despite a low-interest rate, low-
The interesting news didn’t stop there. growth environment, have succeeded in
The public funds outperformed at lower beating an 8 percent assumed rate of return
levels of volatility than the E&Fs, likely due which has been common over the last six
to public funds use of more fixed-income years,” he says. “The evidence contradicts
assets than E&Fs. And public funds used those who say public funds can’t meet or
exceed 8 percent projections.”

1401 McKinney, Suite 1600
Houston, TX 77010-4035

www.GarciaHamiltonAssociates.com
Contact: Ruby Muñoz Dang
Phone: (713) 853-2359

[email protected]

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TEXPERS Pension Observer | www.texpers.org

UP-FRONT 7

LET’S SPREAD THE POWER
OF PUBLIC PENSIONS

by Allen Jones
Communica ons Manager, TEXPERS

COLUMN

As TEXPERS’ new communica- layout a magazine, or post to social media net- person was all that mattered.
tions and public relations manager, I works, but I need your expertise to offer pension His life experiences taught
work with the association’s staff, the management advice to your colleagues, and I
board of directors, member systems, need your contacts with pensioners who can tell him about an extraordinary power
and associate members to help tell me how pensions have benefited them. That is in humanity - people who work
the story of public pensions. teamwork. together can achieve anything,
including overcoming oppression.
As a former journalist, telling You can learn a lot about teamwork from Peekay and his friends risk their lives
stories is what I do best. I have a movies. I did. to stand against apartheid.
degree in journalism and mass com-
munications. I worked as a reporter Movies have a way with me. They take The power of one wasn’t found
and editor for a community news- me on journeys that trigger something special in Peekay alone. It wasn’t his race
paper group. I was a publications that can inspire me to be greater, to live a more that made him special. The power
manager for an international publisher empowered life, and to understand others better. of one was humanity as a single
of community lifestyle magazines that One thing I’ve learned is that each of us has an unit working together to achieve a
included nine in the Houston area. I ability and uniqueness that when combined with common goal.
also worked as a contract reporter for other personalities can make anything possible.
the Houston Chronicle covering com- I could go on and on about
munities surrounding Houston. I was in high school when the movie “The movies I love that depict some
Power of One” came out in 1992. The drama is element of teamwork. As a child, I
I’ve written just about any topic you can based on a novel by Bryce Courtenay. It is set cheered in a movie theater as I watched a kid
imagine. I enjoy telling stories. But telling com- in South Africa during World War II. about my age and his friends work together to
pelling stories isn’t something I do alone, despite help a little alien return to his spaceship so he
whatever talents and education I have. First, The story centers on the life of Peter Phillip could fly back to his homeworld. I cried when a
someone with a story to tell must confide in me. “Peekay” Kenneth-Keith, a white South African member of that team, E.T., told his friend Elliott
Others produce research I can rely on. Others boy raised under apartheid. He forms relation- goodbye.
share their expert advice. ships with a German pianist and an African Andrew Carnegie, the great industrialist that
boxing coach and grows up to fall in love with led the expansion of the American steel indus-
I also work with people who can proofread a girl from an upper-class family. His friends are try in the late 19th century and who became one
articles, take photos, design attractive graphics both black and white, wealthy and poor, male and of the richest people ever, said teamwork “is the
and help move a story to print. female. For him, none of that mattered. Being a fuel that allows common people to attain uncom-
mon results.”
It takes teamwork, people working together That is a huge concept. It is something we
for a common cause. In this case, it involves as TEXPERS staff, board members, system
working with you to make certain lawmakers, members and member experts can do to
taxpayers, and naysayers understand defined spread the message that proposals to drasti-
benefits for police, firefighters, teachers and cally reshape public-sector pensions or eliminate
other public workers should be strengthened, them in favor of 401(k)-style retirement plans are
not taken away. not in the best interest of our public servants or
our nation.
My job, in addition to producing this quar- Let’s work as a team to spread the word that
terly magazine, e-newsletters, and other com- when people retire, they will experience a reduc-
munications collateral is to help trustees and tion in income. Pensions make up for some of
administrators of pension systems understand this loss. Pensions also help boost the economy.
the communications tools they have and to help Let’s tell the story of public pensions. Let’s
formulate content that will emotionally appeal to tell your story. As a team, we can achieve retire-
people who may not understand the benefits of ment security.
public pensions.

I may write the stories, take the photos,

Is your pension celebrating a milestone? Have members elected new board trustees? Do you have a member that you think would make for an
interesting profile? Send story ideas to TEXPERS Communications Manager Allen Jones at [email protected] or call 713-622-8010, ext. 114.

www.texpers.org | TEXPERS Pension Observer

8 SPOTLIGHT MAY by Allen Jones
Communica ons Manager, TEXPERS
WORLD OUTLOOK
SHAPE
INVESTMENTS

CLIMATE CHANGE REFORM
PORTFOLIO

Intentionally or not, the more than $3.6 trillion mitigation or adaption strategy.
in investments managed by state and local public These are impacts to an investor’s portfo-
retirement systems in the United States may end
up shaping global climate change reform efforts. lio. However, new technologies are being devel-
oped to clean so-called “dirty” industries such as
In Texas alone, members of the Texas oil and gas, Iseri says.
Association of Public Employee Retirement
Systems, manage approximately $22 billion in “Maybe the industry isn’t the cleanest, but
assets. Public pension systems are investing in investors are taking a look at what steps the oil
stocks, bonds, and alternative investments such and gas industry is taking to reduce its impact on
as private equity, hedge funds, real estate and the environment,” he says.
commodities. The use of environmental, social
and governance factors to measure the sustain- He says fossil fuels are not going away
ability and ethical impact of those investments is anytime soon and are still relevant to the invest-
on an upswing, according to investment experts. ment market.

Regardless of an individual’s personal belief in geopolitical issues that could affect the ability to Regulation Reform
climate change, there are opportunities for invest- meet return objectives, Iseri says. In addition to a number of greenhouse gases
ments that give higher yields and that happen to the oil and gas industry release, investors are
be environmentally and/or socially responsible. Environmental investments in the financial monitoring U.S. and global production regulations.
For investors, this isn’t about being a responsible market are often deemed to be “green technolo- A consortium of 363 investors representing $19
custodian of the world – it’s about the exponen- gies,” machinery or applied sciences intended to trillion in assets views the U.S.’ recent withdrawal
tial growth of technologies and a drop in prices mitigate or reverse the effects of human activity from the Paris climate accord as an investment
that make climate-change investment opportu- on the environment. However, climate can impact risk. The group signed a letter May 8 seeking
nities prime. all general asset classes: equities, or stocks; fixed support from G7 and G20 nations to commit to
income from money lent to a company or govern- policy measures to mitigate climate change as
“Investors are looking at the sustainability of ment for interests, such as bonds; real estate, like safeguards of their investments.
cash flow, litigation risk, and regulatory risk,” says physical property; and commodities, which are TEXPERS associate members AXA IM,
Andy T. Iseri, a senior vice president with invest- natural resources like oil and metals. Barings LLC, BMO Global Asset Management,
ment consulting firm Callan Associates. “It would KBI Global Investors, OFIAM, Parametric Portfolio
be nice to invest with the purpose of benefiting the Oil and gas companies are often viewed as Associates, and Standard Life Investments are
planet, but that isn’t the goal.” the worst offenders when it comes to environmen- members of the investment consortium. The com-
tal pollution. The impact of oil and gas extraction panies behind the letter are asking for a policy that
Risk Reduction and processing varies by phase and include direct, supports investment in low carbon assets as well
Retirement funds are in the business of indirect and cumulative impacts. as the implementation of climate-related financial
ensuring they have enough money to pay out reporting frameworks that include climate related
future pension benefits. Investors put money According to the U.S. Environmental financial disclosures.
into financial schemes, property, and funds. But Protection Agency, the industry is a major source Money also is being transferred into climate
before they do that, they forecast and evaluate of emissions of methane, a powerful greenhouse change prevention to mitigate existing regula-
financial risks and identify procedures to avoid or gas with a global warming potential more than 25 tions. Last year, according to a Bloomberg report,
minimize the impact on investment returns. Long- times that of carbon dioxide. portfolio managers pledged to steer $2.6 trillion in
term investors, especially, recognize and manage investments away from fossil fuels. The amount
multi-decade risks and opportunities that could The oil and gas sector is already financially was an increase from $50 billion in 2014.
affect portfolios. vulnerable to extreme weather events such as
Investors define which impacts warrant con- hurricanes. Climate change is forecast to increase Cheaper Renewables
sideration beyond standard measures such as the exposure of oil and gas companies to climate, More environmentally friendly energy sources
market volatility. Investors are increasingly consid- energy and carbon price risks, according to the
ering environmental, technological, societal, and report, Assessing Climate Change Risks and See CLIMATE RISKS, pg. 9
Opportunities for Investors, a guide published by
Investor Group on Climate Change. However, few
oil and gas companies publically report having a
comprehensive, corporate-wide climate change

TEXPERS Pension Observer | www.texpers.org

SPOTLIGHT 9

CLIMATE RISKS, from pg. 8 KEY waterline, how many feet above the sea level it
FINDINGS is, how fortified it is against storm surges, and if
such as solar and wind are becoming cheaper there is access to emergency power.
to produce. Each year, renewable resources are A special focus on
adding more capacity to the U.S. electrical grid, climate change Rising sea levels have New York, New
according to findings released early this year by Orleans, Chicago, Miami, Boston, San
the U.S. Energy Information Administration. The Are you aware of your fund's investment risk exposure Francisco, Seattle and other cities on notice that
agency calculates 60 percent of all utility-scale to climate change? You probably should be, according to whole neighborhoods could one day become
generation capacity additions for 2016 was from Mercer, a global wealth advisory firm. bHere's why. uninhabitable. That’s just in the U.S. There are
wind and solar resources. Roughly 3 percent some small island countries where people are
came from hydropower, biomass, landfill gas and Economic Risk Factors being forced to evacuate due to swelling sea
other sources. Growth levels.
Four investment-related
Coal is another natural resource investors Future economic growth risk factors identified Climate change investment risk isn’t just
have an eye on for its impact on Earth’s climate. may not continue to rely by Mercer: about how bad an area may become due to
Air pollution from coal-fired power plants, for predominately on fossil shifts in weather habits and sea levels. As pop-
example, includes sulfur dioxide, nitrogen oxides, Technology ulations move and temperatures change, land in
particulate matter and heavy metals. The pollut- fuels. A substantial Resource Availability other parts of the world become more valuable.
ants result in smog, acid rain, toxins in the envi- structure change across (e.g. water)
ronment that affect human health, according to Impact (e.g. storms) “As they say, real estate is about location,
the EPA. Those impacts have many investors economies and Policy location, location,” Iseri says. “It always will be
looking at how companies are mitigating pol- portfolios is possible. when it comes to investments.”
lutants and at alternative energy sources such
as wind and solar power that are not depleted Quantifiable Changing Policy Investors also are looking at how prop-
when used. erty developers are incorporating environmen-
Financial impacts can Changes to policy and tally friendly resources into their projects. Think
When it comes to solar versus coal, Iseri now be gauged. industry sectors hare of rooftop gardens on multi-story office build-
says, solar is getting cheaper. According to a Fiduciaries are happening now. Climate ings, the use of solar cells to offset a facility’s
Bloomberg report published Jan. 2, the global increasingly expected to risk management is no energy needs, and structures created with envi-
average of solar cost may fall below coal within have considered climate longer an issue beyond ronmentally responsible and resource-efficient
10 years. Already, solar is cheaper in some parts risk. b investor time frame. materials.
of the world.
mercer.com Trends also include finding creative ways
Wind is also gaining popularity. The U.S. is to reuse existing structures in urban plan-
home to one of the largest and fastest-growing and increases in severe weather events in judging ning. Some land developers also are institut-
wind markets in the world. It is driving invest- the potential return of real estate investments. ing plans to capture and reuse water, such as
ments in wind research and development proj- treated wastewater to maintain lawns. It is an
ects on land and offshore. Property buyers used to focus on how close attempt to shape more sustainable places, com-
coastal investments are to lakes and oceans. munities, and lifestyles to consume less of the
This all means that, as risk factors decline, Although that demand remains high, real estate world’s resources. And it impacts a multitude of
climate change is a viable option and investment agents are reporting an increasing number of industries.
in renewable energy is long-term, Iseri says. But people asking how far back property is from the
climate change investment risk is about more Climate change deserves particular focus,
than the price of resources and new technology. Iseri says. He isn’t alone. According to global
wealth advisory firm Mercer, fiduciaries are
Real Estate increasingly expected to have considered
How weather and rising sea levels impact climate risk in technology, resource availability,
real estate are additional climate risk factors impact and policy.
investors are considering, Iseri says. Investors are
looking at where potential real estate investments The firm published a brief regarding climate
are located, changing temperatures in those change and long-term investment. According to
areas, changing population migration patterns, the publication, future economic growth may not
continue to rely predominately on fossil fuels, and
it is creating a substantial structural change across
economies and portfolios.

Investors are looking at the
sustainability of cash flow, litigation
risk, and regulatory risk. It would be
nice to invest with the purpose of
benefiting the planet, but that isn’t the goal.

- Andy T. Iseri/Callan Associates

www.texpers.org | TEXPERS Pension Observer

10 B E S T P R A C T I C E S

THE 5 PRACTICES OF
EMPOWERING LEADERS

by Kent Hutchison
Principal Consultant and Senior Parter, C.J. Baxter Group

BOARD RELATIONS

In our job as leaders, we achieve results When trust is low, relationships are charac- companies. These companies are not built solely
through the people on our teams, or boards when terized by alienation, competition, and conflict on an excellent idea or a charismatic leader,
it comes to pension systems. rather than collaboration and goodwill. Low-trust both which come and go with time. Instead,
relationships are adversarial, me vs. you; us vs. the founders of such legendary companies as
For decades, leadership has been the them. Rather than working from a shared vision Hewlett Packard, Merck, 3-M, General Electric,
subject of research which has led to thousands and purpose, we feel animosity and resentment. and Proctor & Gamble all took an architectural
of definitions. However, from the study of what Trust is not something that can be turned on and approach to building their organizations.
the most prominent writers say about the subject, off at will but can best be thought of as an orga-
five themes are instrumental as a template for nizational asset that must be built and sustained Practice #5: Empowering Leaders act
understanding the practices of empowering over time by deliberate actions. from positive beliefs.
leaders.
Practice #3: Empowering Leaders A wise man was sitting at a city gate. A trav-
Practice #1: Empowering Leaders have unleash motivation and commitment. eler approached him and asked, “Sir, I’m new
a driving passion for realizing their vision. here. Could you tell me what kind of people
The work of leadership is to unleash the cre- dwell in this town?” After pondering the wise
The most important theme of leadership is ative potential of individuals by creating condi- man asked, “And what are people like from
a vision. Great leaders have a clear picture of tions in which they can meaningfully contribute to where you have come?” The man replied, “They
what to accomplish and a passion for making their jobs. In traditional organizations, managers were foolish, vile, and unfriendly.” The wise
that a reality. This means knowing what you want issue orders and directives which people carry man responded, “And that is what they are like
and working passionately to make it happen, not out without a lot of input and thought. here also.” Not long after that, another traveler
allowing events and circumstances to determine approached the city and asked the wise man
what will happen. The vision allows one to rise The practice of issuing orders and direc- again what kind of people lived in the city. The
above adversity, setbacks, and even failure. tives alone stifles personal initiative and creativ- wise man asked, “What were the people like in
ity. People will wait to be told what to do and the land you’ve come from?” The traveler replied,
All leaders, whether controllers or empower- learn to do things by the book instead of using “Honest, friendly, and hard-working.” The wise
ers, have a personal vision about which they are their minds to improve the work they are doing. man responded, “And that is what they are like
passionate. However, what distinguishes control- here as well.”
lers from empowers is the form of power they One method for increasing motivation and
use to translate that vision into reality. Controllers commitment is learning to establish boundaries. We experience life not only what is “out
push, prod, and manipulate. Empowerers Leaders help define the boundaries but then there,” but what is inside of us that we project
inspire, encourage, and unleash the capabili- allow people the ability to be self-governing in “out there.” In fact, at any moment, the amount
ties of their followers. If we think of vision as the how they execute within those boundaries. One of data that impacts our senses is overwhelming
“what” of leadership, the remaining four themes way of thinking about this is that leaders deter- and cannot all be absorbed. We focus on only
represent the “hows” of empowering leadership. mine the “what” and people decide the “how” certain parts of the data, and what we focus on
for themselves. The main elements that define is determined by our belief system.
Practice #2: Empowering Leaders build the boundaries within which people work are
and maintain relationships of trust. expected outcomes, resources, time frames, and Unfortunately, many of our beliefs are neg-
constraints. How broad boundaries are depend ative rather than positive. We think the closet is
A second theme of empowering leadership upon some factors including willingness, experi- full of boogie men instead of guardian angels. If
is the ability to create and sustain healthy rela- ence, and skills of the people involved. our boss calls us into the office, we feel anxious
tionships based on trust. You can have an incred- and wonder if we are in trouble. A teenage girl
ible vision of an organization; but if confidence Practice #4: Empowering Leaders are who doesn’t hear from a friend starts to think
is low, then it’s a battle to implement that vision social and organizational architects. that friend must not like her. And on and on.
since it takes the collective efforts of many to Empowering leaders deliberately cultivate, within
realize anything worthwhile. Social and organizational architects are themselves, strengthening beliefs.
people who build the infrastructure of an organi-
The word “trust” captures, more than any- zation which includes such things as structure, Summary: Embracing these five principles
thing else, the essence of a healthy relation- systems, and processes of the organization. The will not only allow one to be an effective direc-
ship. Trust is confidence in your relationship with greatest leaders understand that their purpose is tor, but it also strengthens the leadership of the
others and consists of confidence in their com- more than their legacy. It is to create an organi- entire organization.
petence, integrity, and fairness. When we trust zation or institution which outlasts them and con-
someone we believe that this person can achieve tinues to add value for years to come. Note: Kent Hutchison will faciliate a work-
results, we can count on the individual to do what shop during TEXPERS’ 2017 Summer Forum
they say and that they care about our interests In the bestselling book, “Built to Last,” Aug. 13-15 in San Antonio.
as well as their own. the authors report on the qualities of premier

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