CEO PERSPECTIVE: Investing in People to Deliver Growth

Written by Joe Hinrichs, President and CEO, CSX

Joe Hinrichs, President and CEO, CSX

As part of a special series in Railway Age’s April 2023 issue, 13 chief executives of leading North American companies answer the single-most critical question: What is the biggest challenge facing the North American rail industry? Joe Hinrichs of CSX is the third to share his perspective.

Last year, Railway Age asked CEOs for their thoughts on how we can grow the rail industry’s top line. I did not arrive at CSX until later in the year, but when I looked back at the responses, I found myself in total agreement with the theme that ran throughout every one of them: We grow by leveraging improved service and our environmental advantages to win market share from trucks.

This year, as I think about the biggest challenge facing our industry, it comes down to a single word—delivering. Speaking for CSX, we know that we need to grow the business, but the question is how we are going to deliver that growth. I believe we have some great answers that are already being put into practice and are starting to provide results.

Growth is driven by service. The principles of scheduled railroading produced dramatic improvements at CSX before the pandemic upended the global economy in 2020. Supply chain congestion and labor shortages overshadowed much of the progress we had made, but the foundation remained intact, and over the past six months we have succeeded in replenishing our train-and-engine workforce and restoring network fluidity.

So far in 2023, our operating performance metrics have largely returned to pre-pandemic levels, and we are providing some of the best service in our railroad’s history.

To me, what is most exciting about our service performance is how we are accomplishing it. The most significant, sustainable impact we are having on service is coming from our efforts to build trust with our employees and improve their work experience. We are engaged in transforming our culture to create a self-reinforcing cycle that occurs when employees see how providing great service directly benefits their work experience.

For example, last year at this time, on any given day CSX had an average of more than 200 T&E employees stuck at a location for more than 30 hours. They couldn’t be home with their families, and they couldn’t maximize their productivity and earnings. This year, that number is down to just 50—and we will keep working to reduce that further. Much of the improvement is the result of the success of our T&E hiring efforts throughout 2022, and much of it is also due to a more fluid network. But the “X” factor that elevated the improvement from good to great was the effort from our leaders to get out in the field and listen to our front-line employees and work to solve the problems they raised. We made sure everyone in our company knew who provides the service we get paid for—our front-line employees. I believe that if you want to build trust, you must invest your time in building relationships. It starts with our employees.

After last year’s difficult and contentious rail labor negotiations, we recognized that our railroad could never achieve its full potential if the distrust between our front-line workers and the company continued. We could not deliver transformational growth if we continued to be a house divided against itself. So we took what we learned from our visits to the field and what we heard from unions during the bargaining round to meet with labor and take a fresh approach to addressing issues.

The result has been a series of agreements with our labor unions on providing paid sick leave, adjusting our attendance policies, as well as other process and policy changes, both large and small, that have demonstrated how we are committed for the long haul to improving the work experience of our employees. Improving their work experience does have a small cost component, but we believe it is an excellent investment, because it rewards the people who are ultimately responsible for delivering our service product to our customers. And when the employees who create value for our customers feel valued, included, respected and more engaged in our railroad’s mission, our service improves—and the self-reinforcing cycle is set in motion.

Our industry faces other challenges, and economic uncertainty will continue to impact volumes. But these are business challenges that we are confident can be handled effectively as we work together as ONE CSX team. The game changer, we believe, is a cultural transformation in our ONE CSX workforce that engages our employees and enables us to deliver on our growth potential by providing better service to our customers. This improved service gives us the permission to talk about growth with our customers. And so the cycle continues …