A Railroad Needed Cultural Change To Stay On Track

CLIENT

A major railroad.

PROBLEM

In late 1995, a freight railway was given a new lease on life when it became the most successful IPO in Canada’s history. But a Board of Directors, corporate governance, quarterly financial disclosure, railway analysts and annual meetings of shareholders were all new to this 70-year old Crown Corporation.

Two other things were also new: Running on a schedule and making money.

But an employee attitude study revealed a disturbing fact: Despite all evidence to the contrary, employees believed that the line was as good as any railroad in North America.

Yet in 1995, the line was spending $1.07 to earn $1 of revenue, far above the industry norm. It was on track to go broke.

To prepare for the IPO and cut costs, there were widespread layoffs. This hit employees particularly hard because many believed they had escaped the downsizing axe hitting other Canadian businesses. The layoffs generated employee resentment because many families had worked for the company for generations.

OPPORTUNITY

To create and manage a change-based employee communications strategy that supported the business goal of becoming a profitable scheduled railway by eliminating unprofitable routes, doing things smarter and reducing costs.

DELIVERABLES

Front covers of CN Magazine, 1997 to 1998. The publication was sent to 26,000 CN employees six times a year and featured articles on business metrics, culture change, communication, customer case studies, the results of corporate research, and employee profiles.

The centerpiece of an employee communications strategy was the line’s new internal brand, “To foster initiative, creativity and instill a sense of urgency,” the key employee attitudes we needed to change.

Because only 2,000 of 26,000 employees had access to a computer, the program was based on a series of national and regional print publications.

We told the employees “how it really was,” not sugar-coating the reality of the situation. We ran articles in the publications about what needed to change and why change was the key to survival. We also explained how things were done at other railroads. We published financial results, performance numbers and business goals. Senior management shared the business plan with all employees every year.

RESULTS

In just three years, employee attitudes were shifting and the line was becoming a competitive business as operating ratios dropped by 40-cents to $0.67.