Bulletin Board

 August 2003 Issue

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Questions & Answers to the CSXT Operations Reorganization

July 2003

The following is from a question and answer session with Al Crown, executive vice president and chief operating officer, as published in CSXT's Midweek Report on July 17, 2003:

Q: Exactly what changes have been made in the organization?

A: Changes are primarily focused in operations management, with the intent to "de-layer" parts of the organization that grew in response to the post-Conrail acquisition service problems. About 108 positions are eliminated from the ranks of mid-level operations management. Some of the managers have been reassigned to openings consistent with our new operational model, and many of those reassignments involve relocations. We sized the organization to reflect the mission to fulfill the operations plan.. From a functional standpoint, the regions will remain as overall coordinating entities, but they will be much smaller, more streamlined, and we will push more accountability to the divisions and division managers. The regions will be responsible for coordinating across the divisions, for budget oversight and continued implementation of Six Sigma. Division managers will be the key operating positions on the railroad and will now add responsibilities for mechanical and engineering to the transportation role. Division managers will have a superintendent of operations overseeing plan compliance, terminal operations and shipment management.

Q: No one is really surprised that change was needed after the first half's service and safety declines. But we are surprised to see positions cut in operations itself. How can that be a positive move?

A: The short answer is this: There were too many management layers, and the decision-making bureaucracy had gone beyond being helpful to being counterproductive.. Here's the long answer: Based upon our analysis of our current service situation, we found we had an organization built to address the service crisis that occurred after the Conrail integration. During that critical time when we were trying to recover, we were forced to improvise, to annul or consolidate trains depending on circumstances. We plugged holes and built up management layers to get us through the crisis. There were too many people making decisions who weren't accountable for the results. We have taken too much responsibility for decision making out of the hands of the front-line supervisors, the people closest to the work and those in the best position to see what needs to be done. This reorganization is all about restoring that responsibility where it belongs.

Q: What are you expecting of employees with this reorganization?

A: The answers are simple. We want to streamline this organization so that we run the plan; empower people, hold them responsible and make them accountable; and improve the quality of life for our front-line supervisors. I will require that those supervisors get time off, and that they take vacation time. I am holding Jim Fallon [senior vice president transportation] responsible for the overall execution of both our service plan and our "quality of life" initiative.

Q: We hear so much about being "fact-based." What were the facts involved in analyzing the service situation?

A: We looked at a wide variety of sources. We benchmarked with other railroads, particularly Norfolk Southern and Canadian National. These are the two Class I railroads that managed to keep their safety and service metrics up even while they experienced the same weather conditions we did. Regarding the service plan, Frank Pursley's group has reexamined all aspects of the plan, running it through the computer simulations that test its validity. We reviewed our service metrics against previous years, before and after the Conrail acquisition. We find that our own metrics reveal significant patterns in how our railroad responds to various levels of management and bureaucracy.

Q: Who will have ultimate responsibility for performance of the operations team?

A: Design of the plan lies with Service Design. Any variations to the plan will have to be approved by Frank Pursley [senior vice president service design] and his service design team. Jim Fallon will have the ultimate responsibility for execution of the service plan. And I will be overseeing the coordination of the service plan and its execution, consistent with the needs of our customers, as determined by Mike Giftos [executive vice president & chief commercial officer] and his commercial team.

Q: What happens to safety and the safety team in this reorganization?

A: Our collective goal is to get back on track in safety. Bob Downing's organization will be one that supports the divisions, but it will be that division manager, the trainmaster, the yardmaster, the roadmaster, and the shop general foreman who will become the "safety managers." Bob Downing's safety team here in Jacksonville will continue to collect and interpret the data and help coordinate the training. The train-accident prevention committees and the continued rollout of the safety leadership process will help us reduce injuries and train accidents and get us back on the path of becoming the industry's safest railroad.

Q: Why the big emphasis on The Plan? We've had it in place for years, and sometimes it works, sometimes it doesn't. We have to make decisions every day to save service to our customers in our location, and the plan doesn't take that into account.

A: As we know, a network runs on a plan because an action in Birmingham, Alabama, can affect something in Hamlet, North Carolina, or Selkirk, New York. That's the beauty of a network - and the potential downside if accountability isn't clear and the plan isn't used. The Service Plan must be adhered to for optimum effectiveness and in order to get all of the benefits of Shipment Management.. Here's an example from our experience: Some rock cars have missed their scheduled train and are waiting in the yard. Someone makes a decision to add those cars to the next outbound train, hoping to keep the customer happy. Good intention, but bad decision. The addition of those cars makes that train too long for the sidings on its route, so the excessive length train ties up the single track all the way to its destination. The rock cars are still late, and now, so are 10 other trains. This is an example of a well-intentioned act, but it's outside the Service Plan. People are making decisions based on circumstances and ignoring the plan.

Q: A new scorecard was introduced recently. Why are we putting new measurements in place at this time?

A: Our scorecard has to accurately reflect the work we're doing matched with the work that needs to be done. Under our more customer-focused business model, we have gone to great lengths to learn exactly the level of service they want from us. Our customers have told us that it's hard to do business with the railroad. They say that some of the railroad's measures have meaning inside the railroad but do not reflect their needs. We will still measure things like locomotives out of service, but that's an internal measurement that our customers don't really care about. What they care about is the delivery of their shipment on time, and we're adding measurements that tell us how effective our deployment of Shipment Management is.

Q: Will the new scorecard be a dramatic change?

A: Not at all. Our operating organization has been working with the new metrics for several weeks now and has adapted well. Much of the scorecard is familiar - safety, cars on line, train velocity and yard productivity. The Shipment Management piece is new. These are the measurements each location is responsible for delivering: Committed Time of Arrival, or CTA, compares the agreed-to delivery time to the actual arrival time. Span describes how broad a time period our shipments take. It demonstrates the time window customers may expect. As we improve our service through Shipment Management, the span of hours in which customers can expect their shipment will drop. Terminal Compliance tells us how well yards and terminals are doing moving Shipment Management cars according to schedule.

Q: How will the whole thing work, and will it be better or worse for operating employees?

A: The new service delivery process looks like this: Trainmasters are empowered to make decisions within the confines of the Service Plan. Roadmasters will be able to stick to their production schedules because they're dealing face to face with the people who can get them track time. Shop foremen will be able to take personal accountability for safety and reduce injuries. All of these people will be reporting to a division manager whose own empowerment, responsibility and accountability have been restored. A strong superintendent of operations will be in charge of compliance with the plan, day-to-day running of trains and shipment management. The regional vice president will coordinate across the divisions, monitor the budget, and use the power of Six Sigma where it can make a difference.

Q: Was the decision to eliminate jobs and restructure a financial one? Are we doing this to please Wall Street?

A: These actions were taken in accordance with our company's goals. We sized the organization to reflect the mission to fulfill the operations plan, not a financial one. The financial benefits will come from operating a more efficient railroad.

Q: Is this the end of this operations reorganization?

A: We will continue to monitor our operations in the effort to improve service to our customers, safety for our employees and cost efficiencies for our financial well-being. We will address any inefficiencies that are obstacles to our business goals.

Q: How do you see the railroad running six months from now under this new organization?

A: It will be a faster, more disciplined organization with decision-making in the hands of the empowered - those who have demonstrated the responsibility and accountability that is needed to fulfill our commitments to our customers. For example, I see our division managers as friends and true business partners. I see them working in a coordinated way to make our commitments to our customers. I can envision a manager on one division calling a colleague and saying, "Hey, we've got shipment X running late. Can you help me make up the time on your end?" Finally, I see Shipment Management becoming a reality across our network. We run to plan, safety performance improves, and we enhance the quality of life of those in the field. That's my vision, and I expect it's one I share with all members of the operations team.

[Officials mentioned . . . ]