Employee Relations 101

Employee Relations 101

to better address management-employee relations

Copyright 2003, Traffic World, Inc.

Union Pacific Railroad is trying to transform millions of dollars in employee claims from a balance-sheet cost item into labor-management gold.

That was a challenge that UP Chairman, President and CEO Richard Davidson put to UP Vice President of Law Michael Hemmer when Hemmer came on board a year ago as the railroad''s in-house counsel and leader of a staff of 250.

"We''re trying to reach out more to our own employees so that we are all more aligned with our business objectives," Hemmer said. "We have a long way to go. There''s 140 years of tension between labor and management in the railroad industry. One of the things we''re trying to do is give (the law department''s) field managers more time to be in direct contact with employees so we can build up a personal relationship."

It comes down to money. Hemmer estimates the railroad industry pays $800 million to $900 million in claims in connection with employee injuries. By conducting joint investigations with the operating department - where most employee injuries take place - the law department can gain valuable feedback on safety issues and obtain insight into why injuries are occurring. "There''s a huge opportunity there for us to make a contribution to cost savings for the company," Hemmer said. "We tend to put out the fire after it happened. We want to be more upfront about it."

Prying managers away from their computers has been a priority. "We discovered we were requiring those managers to spend a lot of time filing reports. We''ve reduced the burdens on them so that they can spend time with the operations people," Hemmer said.

Hemmer''s task is made more difficult by the fact that his department''s budget is cut each year. It''s gone from $74 million in 2001 to $65 million this year. The trend will continue next year. "It''s really hard," he said.

In addition to mining labor relations for cost savings, there are ways to upgrade how the law department deals with the marketing side of the railroad.

"Marketing is under tremendous pressure to be customer responsive, and to provide faster and more responsive rate quotes and contract drafting than had been the case 20 years ago," Hemmer said. He explained that in the push to get the business, administrative issues - like making sure the contract is actually signed sometimes are overlooked.

"Sometimes we don''t get the full documentation that we need and by then shipments have started flowing. We had a lawsuit in which there was loss to a shipment and the court concluded that the shipper had a good claim because we never got a complete agreement on the terms of the transaction."

Hemmer concedes that a big way to help ease labor-management tension is to adjust the railroad environment to better reflect employee expectations.

"In order to attract thousands of new employees in an era where people emphasize lifestyle, we have to find ways of making their assignments more scheduled," he said. "It''s a joint effort with labor unions. Some unions are very supportive, others are not. But we have to get there because I think there''s a relationship between developing scheduled assignments and labor relations. ... In a large service organization, we need everyone on the bus moving in the same direction."