It also says something about the approach of managing director Eric Prescott and HR director Terry OBrien that the assessors who visited the company came away impressed with the approach they had taken so much so that they felt their methods could and should be used as a model throughout all of the Railtrack industries.
For BBRR is one of six companies that makes up the Balfour Beatty Rail Division a key supplier to Railtrack. It was formed following the purchase of a package of rail activities in the privatisation of British Rail in 1996. Its heritage is therefore entirely BR, and its work totally bound up with Railtrack either directly, or to contractors supplying Railtrack. You can imagine what this meant in terms of culture: people were stuck in the past, there was overstaffing, antiquated union agreements, little trust and a barrier to change at middle-management levels. On top of all that, only the managing director and the HR director out of the top 15 had any experience of business planning.
So what Prescott and OBrien have managed to achieve is nothing short of remarkable. Visit BBRR now, and you find HR assisting line management in demonstrating how vision can be turned into reality, there is an excellent employee communications strategy and implementation, a strong emphasis on measurement, and substantial progress in a comparatively short time. The company is now profitable and there have been no industrial relations problems to speak of.
Its market share is approximately 18% number two after Jarvis (which has 40%). BBRR might also have gone out of business in 1999 had it not taken a staff reduction of 25%. HR interventions have been critical to this turnaround.
A cynic might argue that, in terms of profits, a rail renewals business couldnt go wrong after the Hatfield crash when, on 17 October 2000, a GNER train, travelling from London to Leeds at over 100mph came off the rails at Hatfield in Hertfordshire. Four people were killed and 35 injured. A broken rail was found to be the substantial cause of the accident and since that time as many delayed travellers will be all too well aware Railtrack has embarked on a huge track replacement project. However, the BBRR turnaround was well under way long before this terrible disaster happened.
If you look at business performance, the company was privatised in 1996 and the next two years saw it lose money. After OBrien joined in late 1998, BBRR was restructured. The first full year of OBrien and Prescott 1999 saw a profit of 10,000 which takes into account all the restructuring costs but not the fact that there wasnt a lot of rail renewal work around.
The financial year at BBRR runs from January to December and renewals work has certainly escalated since Hatfield. As OBrien points out, last years figures 2000 will show a significant profit. Increased workload was certainly a factor in the current years success but, says OBrien, it only accounted for maybe 10% of the 2000 profits. The turnaround is predominantly down to the management of people in the business, once wed taken out the wasted costs.
For OBrien herself, a career in HR was more an accident than planning. She was formerly with the Evode Group, makers of Evostick sealants. She joined the group as an 18-year-old, working as a junior secretary in the finance directors office. She took this role because it enabled her to continue her study of languages. After a period as joint secretary to the MD, she went to work for the group director of personnel.
I realised I enjoyed it more than finance, she says, which should not come as a shock to anyone reading this; she studied for CIPD qualifications and was offered a role as a personnel officer, looking after six factories and 600 employees. She did this for five years and spent 14 years altogether at Evostick in Stafford.
Then she saw a job advertised at Tarmac (as it was then) and moved there as HR manager for the building division in Wolverhampton. She remained at Tarmac for nine years, working in different parts of the business, eventually becoming head of HR for Tarmac Quarry Products, its largest division.
Then, in 1998, she was approached by Prescott to join BBRR. I knew Eric and trusted him, she says. He was ex-Tarmac too and although they hadnt worked together before, she knew him by reputation. Prescott had moved in the mid-90s but they kept tabs on each other through a mutual friend.
She joined BBRR as HR director, and says, From Erics description, I knew there was a huge HR challenge and a lot of cultural change required. OBrien felt she could add a lot to the organisation in these areas but it was her first time at an organisation that has gone from public to private.
The public sector way of doing things, she asks, is very different from the commercial way. Its not so much the bureaucracy, its more the softer things. Her immediate problem was that in October 1998, no one identified with Balfour Beatty. People in the rail industry had a huge pride in it were very passionate and were one big family then they were all split into different organisations and mentally they had not made the shift. There was very little understanding of the customer/supplier relationship all of a sudden, people had these things called customers, where all theyd had before had been passengers. The commercial relationship was new to them.
OBrien identified a need to build trust in BBRR people didnt know the company and therefore didnt trust it. They didnt know where the business was going, what the plans were or what sort of organisation it should be.
Communications were very poor, but, as OBrien points out, Ive never worked anywhere thats got it completely right. Nor will most people reading this. But OBrien has made great strides.
For, in 1998, the management team at BBRR discovered that the average reading age of its staff was the same as the national average a surprising seven years. What this meant, says OBrien, was that we realised we needed to communicate in a language that people could understand and relate to. Previously, most of our communication had been aimed at graduate level, which was clearly inappropriate for some people. However, the com-pany does not do anything specific with regard to training in literacy skills, as it is not a day-to-day issue.
Its main communication tool is a monthly newsletter called The Team Works as well as notifying staff about changes to such things as terms and conditions, role profiles, sales figures and profits, there is also a substantial list of Q&As each month. Employees raise issues at team briefing monthly meetings, and anything not answered there goes to the newsletter. Any issues that crop up that the management want to deal with, can also be addressed. For example, OBrien notes that there have been a few instances of fingers getting stuck under rails recently and of people having car accidents outside work so editorial coverage has been given to these issues in the hope of cutting back on accidents. The business plan is also communicated face-to-face and a written summary goes to all employees. In the 2000 survey, 72% of the employees said they understand the overall goals and aims of the organisation.
The Team Works is clearly an excellent communication process. As only 30%-40% of staff have regular access to computers, the most effective means of communication is the monthly team briefing process together with this feedback loop .
Examples of Team Works questions include, Is it possible for new starters to be given an explanation of payslips? [Answer: Yes, it will be incorporated into the induction process.] Can the windows be repaired so they can be opened? [Answer: No, they are so old, its impossible to locate spares.] and Does the company envisage any staff reductions as a result of the merger with BBRML? [Answer: At this stage, no staff reductions are envisaged.]
Other problems OBrien identified soon after she joined were that, Most people didnt know their role, who they reported to, and we were way over-staffed people didnt have a lot of work to do.
There was also a strong union presence for the new management to deal with. OBrien chooses her words carefully, the TSSA [Transport Salaried Staff Association] is reasonable, she says and, after a pause, adds that the RMT has strong views. You can read into that what you will, but as the business had not made any money since its 1996 privatisation, strong action was needed. In 98, there wasnt a lot of renewals work the work comes in peaks and troughs, you replace tracks only when theres a need, every few years... there was a very sensitive situation regarding redundancies, we couldnt carry on with the level of staffing and the level of work we had. We would have gone out of business, with no income to cover our costs.
We consulted with the unions, says OBrien, and explained our finances. Were very open, and weve built up a level of trust which, compared to what it was, is very high. We dont try to hide things after all, the union is there as a third party to represent their members it leads to fairness.
The company asked for volunteers for redundancy, and 70% of those who left in mid-1999, were volunteers. In total, some 25% of the workforce left the company. This could have left a skills gap, if the ones who leave are the ones who hold the knowledge... It was easier to retain those of supervisor level upwards, recalls OBrien, Below that, there was a RMT agreement of first in, last out, in place.
She admits, We did lose some whose skills wed like to have retained, but those who remained had good skills too and we made a pledge to invest in the training and development of those that remained. We had to streamline to be viable, but were willing to invest in staff. The trade unions agreed to that they understood we had no choice. We tried to find the best way, so we asked for volunteers. We gave good severance packages, spent a lot of money on outplacement consultants and the like. Its a sign of success that BBRR has had no industrial action or claims against it over this period.
OBrien is proud of the way staff have been developed at BBRR. Previously, a lot of safety/technical training was done but people who had been supervisors for 20 years had had no other type of training. There was little understanding of how to manage customers, suppliers or sub-contractors.
With those who remained at BBRR, there was a lot of work to be done on where the future was and removing the feelings of insecurity confidence levels had nose-dived. There were a couple of weeks when people felt let down, says OBrien, but its not been mentioned since, and people dont bear any grudges.
The redundancy period also meant a lot of work for her HR team. It was quite distressing for them sometimes having to tell their best friend that they didnt have a job any more, recalls OBrien. We had 650 employees originally, lost 25%, went down to 475 and, with the increased workload, were back up to around 560 now.
OBrien tries to reward people for their achievements. After the restructuring, there were no pay increases. But the company said simply that when it was doing better, it would share the success with the workforce. I dont think they believed me, says OBrien. But this last year is the best weve had and weve kept the promise. It wasnt a one-off. People were sceptical but they will get another bonus next year as well.
If you ask OBrien what she is most proud of, she says its seeing people in the business completely change. They were quite lost before, they didnt belong. Now they are in touch with where the business is going, they know their own contribution and have embraced training and development in, for example, communication skills, customer relationships and people management skills. At the end of the day, she adds, its the same business as before, but people know what to do, how to achieve and if they know theyll be rewarded for it, they will push themselves. I take my hat off to them.
The companys activities are mainly based in the south of England and London but it is currently exploring expansion opportunities as Railtrack increases expenditure. Recently, Balfour Beatty announced a new structure for BBRR. There used to be three divisions Signal Systems, Electrification and Track Systems with 110 people employed in Signal Systems offering a complete design, supply, installation, test and commissioning service; 50 in Electrification carrying out both overhead and third rail works; and 240 in Track Systems providing a complete service of large-scale renewals and associated works including the provision of new and remodelled track and track welding.
From 1 July, Rail Renewals has been split into two withsignalling and electrification transferred into a bigger division concentrating on project work. The remainder track renewals is in a new division with the existing Balfour Beatty rail maintenance division (1,000 people). Prescott is to be the MD of the new division, and will transfer best practice into it, looking at cultural issues and change management. OBrien will remain the HR director of track renewals. She remains very clear about the future direction of the business. If the HR Excellence Award judges had any reservations, it was to do with the short timescale involved there was still a lot of work to do. Now there is even more but its work that the HR director is all too happy to take on.
