Interview with Darren Hockaday, HR director of London Overground
Perhaps it was a childhood spent watching Ivor the Engine or just the love of seeing new places, but I have always rather enjoyed train journeys. So the opportunity to travel in the driver’s cab to meet London Overground HR director Darren Hockaday was something I just had to experience.
The route was London's newest trainline, the extended East London Line, whose first phase was completed a year ago this month and connects the urban landscape between Dalston in the north of the capital to Crystal Palace and West Croydon to the south. Constructing the line involved new tracks and signals as well as repairs to existing Victorian tunnels and viaducts, including the historic Brunel tunnel under the Thames (between Rotherhithe and Wapping) and the Kingsland viaduct.
Here I have to confess a vested interest - I live along this line and have been a regular user since it opened. But sitting with the driver gives a whole new perspective (as well as some unusual glances from travellers on the platform as we pulled in). I now understand why commuting into the UK's capital during snow is such a nightmare: when the trainlines in the southeast were originally built, people in the garden of England and stockbroker country didn't want an intrusive view into their back garden, a classic case of nimbyism. Here one doesn't see the overhead power lines that are pervasive across most of the UK. Instead, trains run off a third rail mounted on the sleepers: which exposes the tracks to getting snowed under or iced over.
Last year's winter snow was an opportunity for London Overground Rail Operations Ltd (LOROL) to show its mettle. A joint venture between Europe's largest railway operator Deutsche Bahn and Hong Kong transit company MTR, LOROL runs the East London Line (ELL). While other train firms failed to get trains running in the harsh weather, it ran its services, albeit with some delays. During December, when railways across Britain were hit by extreme weather, it outperformed all other operators, with 93.5% of its trains arriving on time.
A modern operating fleet with four de-icer trains is one of the reasons for this, says Hockaday, who has been with LOROL since its launch in November 2007. More important, he says, is the culture of the organisation. For LOROL is not like most train companies in the UK. Rather than being a franchise awarded by the Department of Transport, it is a concession run under a contract with Transport for London (TfL).
"We are a showcase for taxpayer value," says Hockaday. So unlike the franchise setup, where if revenue goes down, there is what Hockaday calls a 'cap and collar' revenue support system in which the Government bails out the operating company if turnover drops below target, LOROL's business is totally based on outputs.
"We are paid to run a service, but if we screw up there are massive penalties. If we get so much as scratched glass graffiti on a train, a screen not working or a pigeon messing in the corner of a station, we face a £50 or even £100 fine for the day," Hockaday explains.
This means the priority for LOROL is to maintain and improve its assets - be they the trains or the people who work for the company. It also means that ticket revenue is not a key driver for business, unlike in the franchise model. LOROL takes just 10% of ticket revenue. Instead, ensuring targets set by TfL are met is the vital element. For example, for every minute a train fails to meet the punctuality target (trains must arrive at their destinations within five minutes for commuter services and within 10 minutes for long-distance services), the business is fined £50.
"If a freight train is holding up trains, it is not our fault, but if it is something caused by us - for example, a driver who does not turn up, messed-up rosters or a technical problem from which we do not recover service quickly enough - then for every minute delay we pay a lot of money out of our potential profits."
This model means that Hockaday has his work cut out recruiting the right types of people and constantly motivating them. As if that weren't hard enough, factor in the fact that LOROL was originally established to transform an ugly duckling: the city's north orbital railway that connects Gospel Oak to Barking eastwards, up to Watford northwards and down to Richmond and Clapham Junction in the south. This line, known as 'London's forgotten railway', had been under-invested in and under-utilised for years. The Barking route in particular was unreliable and infrequent and seen as a free ride for fare-busters and the wider criminal fraternity.
"Many people didn't even know this line existed and in some cases you could imagine tumbleweed rolling through. We were tasked to make a step-change in the passenger experience and increase ridership and revenue," says Hockaday.
To begin this step-change process, TfL invested £1.4 billion in the network, including the branding of the line as London Overground, with a distinctive orange logo. It added the line to the Underground map and introduced Oyster pay-as-you-go smartcards. Many of the stations have now received the secure accreditation mark, with better lighting, help points, CCTV and staff. Some £40 million is being spent on stations, about £1 million per station. The 40-year old fleet of trains on the ELL has been replaced with new, four-carriage stock, giving LOROL the youngest fleet in the business.
Across the network, there are now twice as many trains and 4% of all services on the UK run on the route, which makes up just 0.6% of the total national network. It is an intensive railway.
Focus has been put onto revenue protection, with barriers in all stations except Gospel Oak to Barking, which has the highest ticketless travel.
"We now have an effective revenue protection team and are seeing activity on Twitter when our inspectors are out there. The message is getting out," says Hockaday.
Ticket machines have been added to stations and, as with other elements of the contract, if these go down, there is a financial penalty.
While there is no doubt all these bells and whistles help transform the customer experience, the crux of the operation is its people. With the upgrade and extension of the ELL, a high-profile project, the pressure was on Hockaday to get this particular piece right from day one.
"The opening date for the line was announced publicly by London's Mayor Boris Johnson, so we had to work very closely with our suppliers and TfL. We needed new trains, new drivers, new station staff - there was a level of risk there," says Hockaday.
Despite teething problems, the line not merely opened on time but four weeks early. To staff the line, Hockaday had to find 300 extra employees. Indeed, LOROL is the fastest growing railway company in Europe, having doubled in size from 550 to nearly 1,200 employees in two and a half years. Most of the recruits are frontline staff.
The strategy was to recruit locally, so the workforce reflected the ethnic composition of London boroughs, "but also so employees don't have to go too far to work".
"We worked with community groups and jobcentres in local boroughs and targeted organisations such as Mumsnet to increase female representation. We now have a greater percentage of Black, Asian and minority ethnic people than London boroughs do," says Hockaday. "Diversity is important, to reflect the community."
Female representation has increased from 12% to 18% in the two and a half years, including 15 new female drivers.
Attracting recruits has not been a problem - the first advert for 30 posts on the Gospel Oak route attracted more than 2,000 applicants. More challenging was the continual danger of industrial unrest. Other staff were transferring from the previous operator and Hockaday needed to restructure the terms and conditions across 90% of the workforce, to enable improved customer service, increased revenue and growth - and in a sector that has some of the most militant unions, which historically have not been slow to threaten strike action.
"Keeping railways operational is all about relationships with the union and I initially had a rather frosty reception. Some of the early discussions were quite contentious and vocal - a lot of antagonism had built up," Hockaday admits.
"We wanted goodwill because we needed to change the terms and conditions to make them more flexible. For example, the previous franchise had booking office hours, but TfL wanted staff there 15 minutes before the first train and 15 minutes after the last. The T&Cs were from a bygone era when steam trains were running around."
The railway industry has some of the most favourable terms of any sector, with attractive salaries (up to £45,000 for drivers), great travel benefits and final salary pensions. According to Hockaday, benefits amount to about £8,000 per annum gross on top of salary and pension.
"Negotiating any change to this is fraught with the danger of strikes. I only had a minor role in this area previously, so it has been a challenge. But nothing surprises me anymore. Whether working with a local rep or regional official, it is a colourful and varied part of my role that takes up a massive amount of my time. As an HR director in rail, you have to be an enabler of change."
He obviously did something right, because the transformation of the service has all been achieved without unrest. The secret, says Hockaday, is to negotiate fairly and squarely, keep your word and build on the relationship.
"I have just come fresh today from negotiating a deal to get more flexible rosters on the Gospel Oak line and have been able to do that as we have a track record. The job of union officials is not easy either - they are there to protect their members and improve their conditions. We both want something, but if negotiations don't work, you could be looking down the barrel at a strike vote."
Hockaday is wholly accountable for this relationship. "I can never be in the position where I have lost control of the relationship and have to pick up the phone to my MD. He has a business to run," he says.
It is clear Hockaday relishes his role, which is his first HR director position. He initially joined LOROL as an interim for one month. "I got sucked into getting ready for an operational railway and loved it. So when I was offered the permanent role, I jumped at it," he says.
He runs a team of 10, including internal and external communications, at the firm's Swiss Cottage headquarters.
"Communication is a big part of what do. We have had to educate and get buy-in around the success criteria for the business. Someone being 15 minutes late on duty makes a big difference, whereas previously, if it was monitored, no action was taken. We need the previous workforce to understand their contribution to the way we present to customers."
This communication appears to be working, for engagement scores have improved dramatically. The firm's engagement survey, conducted by a third party, has seen a move from a 50% negative response to more than 75% positive in 53 of the 58 measures. More than two-thirds are positive regarding the other five questions. Some 96.8% say they support LOROL's aim of "transforming our railway, connecting communities across London" and 96% believe they can contribute to this aim.
Areas of improvement since 2008 include agreeing that there are appropriate health and safety measures in place (88.6% in 2010, compared to 58% two years earlier) and 'I am motivated to do a good job' (85% compared to just under 60% in 2008).
Hockaday puts this improvement down to leadership being visible. "We listen and when we commit to do something, we do it. Talking to frontline staff has directly influenced a lot we have implemented. The MD leads by example. He is the most visible person on the network and out most days talking to staff. There is no better way of testing strength and robustness of strategy than getting out there and talking to people. We have continually got a check and balance about how we are doing as a function."
Despite this, Hockaday is aware that keeping engagement is the big challenge going forward.
"We have had all these new toys in the form of branding, new uniforms, new trains and so on. Now we need to maintain levels of engagement. Leadership needs to make all the difference, helping our staff understand their roles in terms of the ongoing success of the business."
This is all the more important given the vision LOROL has set itself: to be the best rail operator in the UK. At the moment, it stands in fifth place, although it has excelled in certain areas. In January, it ran more trains on time than any of the other national operators (96.4% compared to a national average of 90.3%), topping the punctuality tables for the second month in a row.
Hockaday concedes that productivity increases required have not all been achieved and that there is still some work to do on rosters. While the contract means there is some protection from the wider economic outlook, TfL will come under greater scrutiny to save money and get better value, so LOROL will have to be acutely aware of its costs.
Success, says Hockaday, lies in attracting new customers. There has been a 60% increase in new 'ridership' on the North London Line and 20,000 people use the ELL each day. A new link between the two routes opened in February, three months ahead of schedule, enabling passengers to move swiftly between north London, the City, Docklands and the south. Some 33 million passengers are expected to use the route this year.
Then there are the Olympics - one of the main reasons investment has been made in the railway. Enhanced services will be run during the games. In addition, a line connecting east to west in south London will be opened by late 2012/early 2013, finally connecting the entire orbital route.
So there is plenty to keep Hockaday busy. On top of this, LOROL shareholder Deutsche Bahn took over the Tyne and Wear Metro last April and also runs the Chiltern line, as well as recently acquiring Arriva. Hockaday is taking the lead in sharing best practice: the employee survey is being rolled out, while there is to be collaboration on employee relations and talent management, including the planned creation of a mentoring scheme.
"We are the first venture by TfL into big railway. It is like being in a goldfish bowl. TfL is keen to make it a tremendous success and so are we, as our shareholders want to grow their business in the UK. It has been a privilege as an HR director to be involved in such an exciting operation," Hockaday says. It should keep Ivor the Engine happy.