Conrail Bridges The Experience Cliff

EDITOR’S NOTE: Attendees of last night’s New England Railroad Club 136 th Executive Night Dinner Meeting were treated by FRA Administrator Ronald L. Batory to a “round” view of today’s challenges and opportunities facing our industry.
An issue that arose during Mr. Batory’s remarks, and again in the ensuing Q&A is how the industry is going to handle a coming wave of retirements, and who will be the new generation of railroaders who will “fill the bench.”
Within the contraints of last night’s event, Mr. Batory summarized his thoughts on the issue. Fortunately, a deeper take on his theories on this critical issue is available. In 2016, your editor worked with Mr. Batory and Conrail Shared Assets senior staff to explicate the successful program that the organization had implemented to overcome the looming loss of 3000 years of experience, through retirement.
Conrail Bridges the Experience Cliff was published in the January 2017 issue of Railway Age. (The link will bring you to the publicly available online. For easier reading, below is the original copy submitted for publication.)

January 2017 issue of Railway AgeFormed in 1976 to consolidate eight bankrupt eastern railroads , Conrail’s greatest challenge was to pare a vastly oversized workforce and asset base. Since that time, the rail industry has transformed by the discharge of passenger service to Amtrak and other consolidation efforts. Conrail’s evolution has been dramatic, from government-born behemoth with dominion over a third of the nation’s rail traffic, to private terminal and shipping agent, maintaining efficient competition in three of the nation’s busiest rail hubs.

A vexing result of that successful change, though, is that Conrail now stands at the edge of an “experience cliff.” After concentrating its talent for nearly 40 years, management is stratified in a narrow age bracket. By 2020, more than 3000 years of experience will exit into well-deserved retirement – leaving a corps of mid-career managers whose total experience is measured in mere centuries.

Conrail’s nearly 40-year progression from regional monopoly to local “equalizer” has made it in some ways unique in the industry. That uniqueness has benefited its owners, Norfolk Southern and CSX, such that Conrail endures as a successful operating entity well past anyone’s expectations. In 1999, Conrail was split between its new parents, who absorbed 92% of the Conrail assets into their own operations. But the dense Northern New Jersey, South Jersey/Philadelphia, and Detroit locales were too tightly weaved to split equitably, and so the buyers agreed to operate them jointly as Shared Asset Areas (SAA). Conrail was retained – as a much smaller entity – to independently manage the SAAs. The company continues in this role today, maintaining fair competition for shippers located within the Shared Asset Areas.

In the pre-Split era (1976 – 1999), the extreme headcount reductions necessary to concentrate eight bankrupt railroads into one profitable one naturally involved retaining the best management talent and expanding those managers’ individual responsibilities. In the 16 years post-Split, “Small Conrail’s” headcount concentrated still further by 34%. From 2000 to 2010, management turnover was especially low as Conrail-specific expertise accrued in what was a specialized type of rail company.

Conrail’s success beyond expectations is broadly considered to have benefited northeast shippers as well its Class 1 parents, and its performance to date has given the company a much longer “run” than anyone anticipated back in 1999. By 2010 it had fulfilled its unusual assignment so well that the parent companies were content to continue the Shared Asset arrangement. Any ideas once held about Conrail being a placeholder solution to the eventual split of the Shared Asset Areas were filed under “moot.” Suddenly, a “temporary” organization was posed with “permanent” expectations.

A big part of “Small Conrail’s” success derives from the high degree of management expertise now concentrated on the verge of retirement age. In 2010, Conrail COO Ron Batory recognized the looming management shortfall. If Conrail was to continue indefinitely, three millennia of YOS-based expertise would need to be replaced in a decade’s time. Additional obstacles to that mighty challenge were the necessity of adapting to major industry changes such as remote-control switching, satellite tracking, PTC, and other technologies, along with increased regulatory scrutiny, major changes in freight mix, and the rail industry’s own never-ending commitment to safety improvements – all in the midst of the worst economic downturn in decades. The new generation of managers would need to grasp the age-old demands of running a railroad and also learn new skills, some of which didn’t yet exist in the industry.

Even if it was possible to simply replace the retiring bodies by recruiting experienced managers from other railroads or related industries, Batory recognized that he would be risking the unique Conrail culture that had developed since the Split. At the same time, he perceived that the inherited management development process had no hope of producing the necessary talent in so short a time. The only answer was to create a synergistic, strategic program to 1. Recast Conrail’s management ethic to value learning ability and specialized training with the respect traditionally granted to YOS experience, and 2. Create a culture of strategic teamwork where individual expertise is considered “common property” to be shared and nurtured across departments. Batory also recognized that good management practice was necessarily based on real “on-the-rails” craft experience, ensuring that decision-making remained grounded upon the timeless realities of the rail industry. Formed from these objectives, the strategy comprised four core tactics:

  1. Focus recruitment and hiring practices on craft candidates with post-secondary education or training,
  2. Engage new hires with management,
  3. Develop multiple, complementary layers of expertise,
  4. Weave a collaborative culture where all managers know how to incorporate colleagues’ expertise.

Recruiting for Management Potential

Finding employees at any level who can successfully adapt to the rigors of working on the rails is a challenge. To also gauge their potential for management and their likelihood to stick with the company requires the imposition of higher criteria for all candidates. A good high school education is still considered adequate to succeed in the craft positions on most railroads, but Conrail seeks candidates with at least some post-secondary education as an indicator of a person’s problem-solving skills and initiative. Many “new generation” Conrail managers didn’t see management potential in themselves when they entered their craft role. Work Force Planning Manager Lisa Jones entered the company as a Brakeman, and never considered a management role until she came to “envision [her]self as capable of [management responsibility] due to the support of co-workers and managers.”

 

In addition to elevating the recruitment standards for all positions, Conrail seeks candidates who already have pertinent experience or education. The U.S. Armed Forces is a source of disciplined individuals accustomed to large-scale logistics operations. An active college internship program is a primary channel for new employees with management-level experience.

Desire for advancement is the common criterion in Conrail hiring. Whether a new hire enters Conrail with a degree completed, unfinished, or only dreamed of, they are given every opportunity to further their education. Training and education through NS Railroad University, CSX REDI, REB, and other industry-specific training institutions is strongly supported for all employees. Generous tuition reimbursement policies aid manager-prospects who aspire to a pertinent college degree. For managers who display potential leadership qualities, Conrail annually enrolls several in the Michigan State University Railway Management Program.

Engaging New Hires

It’s one thing to recruit individuals with a theoretical potential for management responsibility in the transportation industry. It’s another for new hires to commit to the unique rigors of a railroad career. The longevity of the retiring generation of Conrail managers testifies to the work’s rewarding nature, but how many hundreds found the work unpleasant or irreconcilable with family life, after the company had invested years in their development? To minimize attrition, Conrail leadership pays close attention to new hires with the purposes of coaching their development, ensuring their job satisfaction, and guiding them to turn a job into a career.

Extensive training in all aspects of the job ensures that new employees are versed in the rules, processes, policies, and practices that are essential to safe, efficient rail operations. One-on-one peer task training provides the personal coaching to focus new hires on learning valuable techniques and developing a vigilant commitment to safety in every aspect of the job.

Throughout the year, Batory holds a series of “Listening to the Future” lunches with first-year employees. These intimate, comfortable meals are meant to honor the completion of what most railroad employees of any generation consider to be the toughest year of their career – the first. In a relaxed but elegant environment, Batory honors the rookies’ accomplishment, and listens closely to their impressions and ideas. In Conrail’s quarterly employee newsletter, Shared Track, New Hires and First Anniversary employees are recognized on par with Retirements and Injury-free YOS milestones. Close contact assures new hires that they are important, but just as importantly, it helps Batory and his senior staff maintain their own awareness as leaders of what railroading is like today for a novice on the tracks.

Developing Expertise

As a complement to the general recruiting process, awarding internships to enrolled college students who display interest in the rail industry views the management prospecting effort through the other end of the scope. Conrail interns are typically intent on entering the rail industry, and gaining management experience is the essence of their role. But the internship channel presents a different challenge to Batory’s imperative that a manager have mastery of a craft. Assistant Terminal Engineer Adam Baginski had anticipated a railroad career since high school. He interned with Conrail continuously throughout college, graduating with every intent of putting his engineering degree right to work. “The surprise was that I [came] up through the operating crafts,” says Baginski, who was hired as a Conductor. “The lessons I learned in the craft gave me a significant advantage as a manager.”

All new employees complete Conrail’s thorough in-house training program in craft technique, railroad safety and operations, rules and standards, and numerous other complex subjects – emphasizing safety in all phases of the job. Individuals who successfully assimilate the material naturally get eyed for advancement. Preparation for a management role presents a whole new level of commitment between the individual and the company, which expends considerable resources to equip the prospect with the knowledge and skills they will need to progress. In his eight-year rise from Car Inspector to Supervisor of Car Department Operations, Brian Taylor has attended numerous technical training and management educational opportunities including Certified Air Brake Instructor (CSX Philadelphia, 2009), Locomotive Familiarization (EMD LaGrange, 2013), Hazmat Sentinel Training (SERTC Pueblo, 2013), Hearing Officer Training (AARS Newark, 2013), Derailment Investigation Seminar (AARS Boston, 2013), Freight Car Billing Training (NS Training Center McDonough, 2013), Michigan State University Railway Management Program (Lansing, 2014), High & Wide Training (CSX REDI Center Atlanta, 2014).

Integrated Management

Each of the management development tactics makes sense on its own. But it is by their strategic combination that they will, in relatively short order, gel into an energized, empowered management corps that can replace millennia of experience with versatility, expertise, and teamwork.

Facing an epochal transition, Conrail can’t depend on a strong teamwork culture maturing in time through typical work association. For that reason, Batory has initiated a far-reaching team-building strategy to task the new generation with developing modern solutions to perennial railroad challenges. Five teams of managers were composed of various disciplines within the company, and assigned to tackle a classic challenge that will continually arise in evolving forms throughout their railroading careers, such as “Reducing Risk From Work Errors.” The exercise was kicked-off on an overnight train trip along the famed Philadelphia-to-Pittsburgh corridor, passing through Altoona’s Horseshoe Curve. Many teammates had never met before, and the restored Pullman cars provided an on-rail “working clubhouse” environment to share their individual railroad histories, and focus each teammate’s particular expertise upon the assigned problem. Over the two days, and in virtual meetings afterward, the teams combined to develop innovative solutions.

While new solutions to perennial railroad challenges are valuable in their own right, the true value of the Five Teams program was to “multiply” the several years of expertise possessed by each team-member by the number of members; in effect, to generate 40 years of combined experience out of ten years’ actual time. With shared on-rail craft experience, a diverse mixture of hourly, collegiate, and military background, and broad functional expertise gained through training and education, each team classified its assets into a seasoned consist of energy, enthusiasm, and expertise beyond its youthfulness. The solutions arising from the exercise were presented by team representatives before the entirety of Conrail management last March at the annual Management Meeting, and several are already implemented.

Five years ago, Conrail was ordained a future that it hadn’t fully prepared for, and consequently was at risk of failing by its own success. Action was imperative to replace 3000 years of experience in ten years’ time. The strategy implemented by Ron Batory and his Conrail senior staff drew from the past, present, and future of railroading to build an integrated system of professional diversity upon a solid bed of traditional railroad experience. The result stands as a transformation of the railroads’ legacy human capital development process.

With the new management generation already assuming major responsibility throughout the Conrail system, Batory is confident that, as long-serving managers take their invaluable experience into retirement – including his own 42 years begun as a Brakeman, the company will thrive in a new railroad era to the increasing benefit of its ownership and customers in the Shared Asset Areas.