Mark,

I really liked your editorial this month (p 6, April TRAINS) especially your comment about how the problems of the railroad industry cannot be solely attributed to the need for "better management." It is entirely too easy to scapegoat management while ignoring structural problems that have adversely affected the industry, such as the trucking industry's access to a publicly subsidized infrastructure, while railroads continue to have to pay taxes on theirs.

The commitment of "old line" railroaders to the success of their industry can hardly be questioned. They have dedicated their whole lives to the railroad, working long hours, moving frequently, often sacrificing family in the process.

The problem lies not with railroad people, but with railroad culture. This starts with the way railroads treat their contract personnel and moves right up to the way they treat management personnel. Larry Kaufman's recent editorial in Traffic World focuses on this, explaining what happens to the careers of management people who try to innovate in the railroad industry.

The problem is that traditional railroad command and control structure is well suited for maintenance of what exists, but is not well suited for fostering innovation and technological change. Individuals who try to improve things from within the organization are viewed as threats to the command and control structure, rather than as assets to their companies.

One can replace all the railroad management people, but so long as the focus remains on command and control rather than on process improvement, the result will be the same. Good people are caught up in a system that suppresses their individual creativity, producing chronically poor results. Those results will not change until the system itself is changed.

Some carriers have started to make moves in the direction of changing the traditional railroad culture. For example, in their relations with contract personnel, CSX Transportation changed from a police-state enforcement mentality, to a more supportive and tolerant environment of labor-management cooperation. This improvement in labor relations definitely paid big dividends for CSX, as it helped cushion the initial impact of the ConRail integration, and continues to reflect in CSX's better financial performance post-merger compared to that of its close competitor, Norfolk Southern.

Another important innovation has been ConRail's Local Area Management system. Under this system, local management is given a set of financial incentives and then empowered to make the right decision about how to best provide local service to customers. Local Area Management is as much about trusting people as it is about improving service.

The question is whether railroads will be able to expand and generalize this culture change to create an environment more receptive to needed innovation and change. To borrow a old saying from the literature of Total Quality Control: "The PROCESS is the problem, not the PEOPLE."

Chip Kraft

Last Updated: July 15, 2001