21 December 2017 0 Comments Posted By : Alicja Siekierska

'I'm flesh and blood and I'm here to help you': Hunter Harrison's transformation model

After taking the reins as chief executive officer of Canadian National Railway Co. in 2003, E. Hunter Harrison — the legendary railroad leader who died last weekend due to severe complications from an illness — was determined to make sure his employees understood the high standards he expected of them.

So he held a series of what were known as “Hunter Camps” — intimate three-day retreats that saw groups of employees, included everyone from supervisors to conductors, gather with the CEO to learn the ins-and-outs of his precision scheduled railroading model.

“At the beginning of the camps, he would just sit there and not say a word,” recalled Les Dakens, a long-time colleague who served as CN’s chief human resources officer for eight years during Harrison’s tenure. “All these people were very nervous.”

Harrison, after all, had a reputation for being a tough boss with very high standards, who gave few second chances.

“When I would introduce him, the first thing he’d say is, ‘Folks, you can relax. I’m not a monster. I’m flesh and blood and I’m here to help you.’ And the temperature in the room would go down.”

Altogether, Dakens said he helped Harrison run more than 75 of these camps with more than 1,800 employees during his rule at CN, starting with what they felt were the employees with great leadership potential and working their way through the ranks.

The model

The camps were a means to an end, a part of Harrison’s mission to transform the culture at CN through what he called precision scheduled railroading — a model that improved efficiency, reduced costs and ultimately improved service.

“Before Hunter’s arrival, the U.S. railroads were always seen as the benchmark. Everyone said the Canadian railways could not be as efficient or as profitable, especially as the ones that operate in Texas, and he proved them wrong,” said Mark K. Wallace, who first met Harrison while working at CN in 1998.

During his tenures as chief executive of Canadian National Railway Co. and later at Canadian Pacific Railway Ltd., Harrison turned both into efficient railways that boasted record operating ratios, a metric key to his model that involved running trains on a strict schedule, regardless of whether they are empty or full.

“There is no doubt that he completely transformed the Canadian industry,” said Wallace, the only executive allowed to be recruited from CP to join Harrison as he began implementing his model at U.S. railway CSX Corp.

Before CN’s $2.4 billion purchase in 1998 of Illinois Central — the railway where Harrison had began his executive career at — CN’s market capitalization was $5.76 billion while adjusted revenues topped $4.35 billion. Harrison became chief executive in 2003 and by the time he retired in 2009, market capitalization sat at $27.01 billion while adjusted revenues were $7.38 billion. CN’s operating ratio, which measures expenses as a percentage of revenues, fell from 89 per cent in 1998 to 61 per cent in 2006.

Harrison was able to accomplish this by shedding costs through his precision scheduling model, said Anthony Hatch, a railroad analyst at AFP Consulting who first met Harrison in 1990.

For example, Hatch said once Harrison put his model in place there was no longer a need for additional equipment, so the number of cars controlled by CN and its customers went down. The system also eliminated the need to have extra crews waiting around, because the network was more reliable.

“He reduced cost, made CN more efficient, which led to a better service product,” Hatch said.


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