A Guide to Building and Retaining Workforce Capacity for the Railroad Industry (2015)

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1A Guide to Building and Retaining Workforce Capacity for the Railroad Industry The U.S. railroad industry continues to face challenges related to the changing demographics of the railroad workforce, such as an aging population reaching retirement as well as a new outlook on employment and different needs in terms of work–life balance from the younger generations searching for work today. At the same time, the railroad industry faces an anticipated increase in economic expansion based on (1) government projections for the freight portion of the industry, (2) the development of high-speed rail, and (3) new technologies that are expected to improve the efficiency of operations. According to data collected by industry associations, cargo has steadily increased over the last several years. The Federal Highway Administration’s (FHWA’s) Freight Analysis Framework projects a 55% increase in tons moved by rail, from 2.3 billion tons in 1998 to almost 3.6 billion tons projected in 2020 (Association of American Railroads, 2013). These factors pose significant safety and efficiency risks, as well as threats to the railroad industry in building and maintaining strong workforce capacity. Previous studies have begun to address the issue of workforce capacity in the railroad industry, including a Federal Railroad Administration (FRA) sponsored examination of recruitment and retention issues for craftworkers specifically in the freight industry, conducted by Reinach and Viale (2007). The research provided insight into the challenges involved in recruiting and retain- ing qualified U.S. freight railroad employees to (1) replace the large number of employees who recently retired or who will be reaching retirement in the next several years and (2) meet the current and forecasted increase in demand for freight rail transportation service. In 2011, FRA developed a task force to examine workforce development initiatives through- out the industry. Its findings are documented in “Railroad Industry Modal Profile: An Outline of the Railroad Industry Workforce Trends, Challenges, and Opportunities,” which serves to describe the current state of the workforce. The task force did not attempt to instantly solve the rail workforce challenges. Rather its approach expanded on the identification of recruitment and retention issues to encompass the larger industry (i.e., all employees and types of carriers) and related supporting relationships (e.g., educational partnerships). This current effort builds upon the previous work by continuing to characterize the current state of workforce development issues in the railroad industry, including the business and execu- tive leaders, the engineering and operations professionals, and the craftworkers. This was done in an effort to identify strategies to build and maintain a strong, comprehensive workforce capacity. These efforts include a review of existing literature on workforce capacity in the railroad industry in the United States and abroad; an examination of the existing educational and training opportu- nities for current and prospective railroad workers; interviews with human resource departments of railroad agencies; interviews with business leaders and executives in the industry; focus groups conducted with craftworkers on the issues of recruitment, education, training, and retention; and surveys geared toward engineering and operations managers and craftworkers. S U M M A R Y

2 A Guide to Building and Retaining Workforce Capacity for the Railroad Industry Based on the data collected in this study, the research team developed competency models to provide insight into the key knowledge, skills, and confirming behaviors of effective workers throughout the railroad industry. These competency models were created so as to enable the develop ment of employee performance measurement tools and systems, which provide the foundation for highly effective employee development programs as well as guide university and technical college curricula. Competency models differ from other approaches to job task assess- ment in that they focus on performance, rather than credentials, and define exemplary, rather than minimal performance. Because competency models provide consistent and relatively unbiased criteria for exemplary performance in a role or function, they have utility in recruitment and retention, performance management, professional development, succession planning, compen- sation and benefits, and resource planning and staffing. The research team used those competency models to conduct a needs/gap analysis in an effort to highlight the discrepancies between the knowledge, skills, and abilities of those who are enter- ing the workforce with the current opportunities for training and access to educational programs. This needs or gap analysis was imperative in order to fulfill the next task of identifying effective strategies for building and maintaining the workforce. The following sections summarize some key findings in this study and successes in, challenges of, and suggested strategies for building and maintaining a strong workforce capacity. Key Findings • Passing along the knowledge. With a majority of the current workforce retiring or nearing retirement, there is a need to pass along information that these individuals possess. • Tailoring industry practices to fit the needs of multiple generations. Attrition rates are the highest in the first 2 to 5 years. During the recruitment process, the railroads provide a realistic job preview. Employees report that this outlook is often worse than reality, but unpredictable schedules still can greatly affect family relations. There is a need to take into account the needs of the younger generation of workers seeking employment now. • Disparaging outlook on labor–management relations. Throughout this study, a common theme was observed among craftworkers, an “us vs. them” perception about management. The overall sentiment was that these new managers do not understand the tasks at hand and take disciplinary actions that are short-sighted, and often times far too harsh. • Evolvement of recruiting techniques to embrace a technology-centered generation. Public rela- tions and social media are some of the strongest tools to brand a company and recruit new hires. Recruitment Practices and Recommendations Recruitment Successes • Increased use of the Internet for ease of application process. • During hiring process, more realistic outlook provided about working for the railroad. • Selling of the desirable aspects, including the competitive benefits and pay, of working in the rail industry. • Partnering with, or recruiting and hiring from, the U.S. military and railroad educational programs. Recruitment Challenges • Enhancing the railroad industry’s sometimes “outdated” image. • Poor visibility of the railroad industry as a career. • Lack of visibility of open positions, internally and externally.

A Guide to Building and Retaining Workforce Capacity for the Railroad Industry 3 • Lack of predictable schedule, resulting in poor work–life balance. • Hiring people with more railroad knowledge into management roles. • Recruiting individuals with the right disposition and skill set for the rail industry. Recruitment Recommendations • Focus on the marketing, branding, and promoting of the railroad as a serious contender high- lighting environmental conscientiousness and technological advances. • Create a strong presence in social media. • Encourage the choice of a rail career for younger generations through re-imaging the brand and introducing students at a younger age to the railroad, through programs such as science, technology, engineering, and math (STEM). • Highlight the benefits, stability, and longevity of a railroad career. • Increase visibility of open positions to current rail employees. • Capitalize on the high employee referral rate. • Focus recruiting efforts toward identified target populations, such as veterans, as well as women and minorities. Training Practices and Recommendations Training Successes • On-the-job training with skilled and willing mentors creates positive training experiences. • State-of-the-art railroad education and training centers, such as the Railroad Education and Development Institute in Atlanta, Georgia, with over 10,000 students participating in pro- grams geared toward conductors, locomotive engineers, management trainees, yardmasters, communications and signal workers, track workers, and more. Training Challenges • Catering training to the workforce’s varied education and experience levels. • A lack of consistency and standardization of time and material in training programs throughout the industry. • A lack of quality and experienced trainers to conduct training. • Experienced workers who can be averse to providing on-the-job training, afraid that, if they make a mistake, they will be held liable. Training Recommendations • Build world-class training facilities and programs where new hires receive high-intensity classroom training and extensive hands-on training. • Greater standardization and emphasis on training across all railroad companies. • Create and nurture a culture of preceptorship and mentoring. Retention Practices and Recommendations Retention Successes • Benefits, retirement plan, and pay were listed as the driving reasons for continued work in the industry. • Workers indicated they enjoy a sense of pride in their work as well as camaraderie with co-workers.

4 A Guide to Building and Retaining Workforce Capacity for the Railroad Industry Retention Challenges • With the unpredictable schedules, railroad employees said it could be difficult to maintain a family and social life and cited work–life balances as a retention challenge. • Many of the railroad employees, specifically the craftworkers, expressed a culture of animosity with management, stating it felt like us (craftworkers) versus them (management). • Railroad practices to hire people with college degrees without any experience in the railroad industry create a difficult dynamic between management and labor, causing a stressful work environment throughout the industry. • Passing on the knowledge of the experienced employees nearing retirement to the younger generations is a critical challenge facing the railroad industry today. • Harsh discipline policies were seen to be a cause of workers having increased stress and lower morale, and seeking employment elsewhere. • The promotion process may need to be revised in order to motivate workers to advance, as many stated that taking a supervisory position could result in a pay decrease from an inability to collect overtime. Retention Recommendations • Increase benefits by paying for medical insurance; providing more vacation time; and offering paid sick leave, a match to 401(k) retirement plans, and a stock purchase program. • Implement a rewards and recognition program as statistics show that younger generations have greater loyalty to organizations if they are recognized and rewarded for their contributions. • Improve disciplinary practices for both efficiency and appropriateness. • Encourage and incentivize experienced and willing employees to mentor new hires. • Implement practices that support a positive work–life balance.