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Union Pacific's Recruiting Overhaul On the Right Track

March 1, 2004
Seven years ago, the mighty Union Pacific Railroad was grinding to a halt. Slowing it were a messy merger with Southern Pacific, an unexpectedly large increase in business and a 50,000-person workforce heavily weighted toward retirement age.

    Because of a booming national economy, its tracks were badly congested, its freight backlog was mushrooming, its crews were exhausted and accident-prone, and its customers--who were collectively losing a billion dollars a month as a result of late and lost deliveries--were irate. Desperate UP clients even began paying sky-high air-freight rates to get their goods to market. Truck traffic ballooned, to the detriment of both the highway system and the environment. There were contentious congressional hearings on the railroad’s near collapse, sarcastic articles in national newspapers and magazines, and much talk of lawsuits and even federal intervention.

    New blood in the form of 6,500 new railroad employees, including everyone from track workers to assistant signalmen to locomotive engineers, was needed immediately. Unfortunately, the railroad’s recruiting and hiring system was mired in the manila-folder-and-paper-clip era. It was operating at full capacity at 1,200 hires per year, which was fine when business was flat, but ruinous when the company--frantically buying new locomotives and freight cars--needed to expand immediately.

    "We were drowning," says Barbara Shaefer, senior vice president for human resources. "Frankly, we just hadn’t done a lot of hiring in a lot of years." Shaefer was asked to solve the problem, part of a larger initiative to reduce back-office head count on a "shoestring" budget. In 1998 she decided to look outside the company for help.

No more cattle calls
    Enter Jolene Jefferies. The 34-year-old director of global human resources and education at Sitel Corp., a teleservices firm, often hired 1,000 new employees in a month. Jefferies says, "I thought, Six thousand new hires? Sure." That nonchalance came before she started her new job as manager of UP’s Agreement Sourcing Department, responsible for hiring the unionized employees who make up 85 percent of the railroad’s workforce.

    At UP’s Omaha headquarters, Jefferies’ 26 staffers sat amid piles of job applications stacked three or four feet high. Their phones rang nonstop, but their voicemail boxes were usually full. They weren’t equipped to prescreen applicants or connect applications to referrals or letters of reference. The company used a bewildering array of different manual application forms. At its tree-murdering nadir, each Union Pacific hire required 30 separate pieces of paper. Railroad executives and workers, eager to recommend friends and relatives for the openings they knew existed, discovered that their letters of reference sat unopened and unread.

    Although much of its machinery and communication systems was extremely high-tech, the Union Pacific Railroad, established in 1862, still found prospective crew members the traditional UP way. It periodically held cattle-call hiring sessions, announced with ads in local newspapers, in rented meeting rooms in hotels along the railroad’s routes. Anyone with a lot of free time and a yen for the unpredictably scheduled life of a railroader was invited to apply.

    If everything went just right, state employment agencies also would send over some warm bodies. Not surprisingly, many of the completely unscreened employees combined physical strength with weak social skills. One employee told Jefferies of being assaulted by an angry applicant. Another showed her the "No Guns" sign displayed prominently at every hiring session (despite the fact that in Texas, carrying concealed weapons is perfectly legal).

    With the wholehearted support of Shaefer and several human resources vice presidents below her, Jefferies plunged her department into the computer age. She convened her staff to pump them for bright ideas, then added a few of her own. The Agreement Sourcing Department recruited several in-house IT workers to cobble together some "quick and dirty" applicant-tracking software. This enabled UP to conduct physical exams and background and drug checks on applicants before interviewing them. It also greatly reduced the mountainous backlog of paper.

    The next step was the in-house implementation of an "employment information center," a multi-line interactive phone-answering system that consolidated eight different department phone numbers into one. When job hunters, applicants and employees called in, it robotically informed them of job vacancies, let them know the status of their applications and even connected them with a live person if they so desired. Then, in the face of great skepticism from union officials and railroad veterans, the department standardized its application forms and put them on the Internet. The results were startling enough to make Union Pacific the 2004 Optimas Award winner for Managing Change.

Slashing time-to-hire
    In the San Jose, California, area, one call for 20 track laborers resulted in 250 Internet applications. This led the company to post all union jobs online. It also led to a more sophisticated applicant-tracking system, devised by the AIM Institute, a local not-for-profit software think tank, and then computerization of all new non-union hiring as well. Currently in beta test is a system that enables managers to sort through résumés via their computer terminals and match skills to open positions, whether the applicant has applied for that particular job or not. Also online is an EnvoyWorldWide MessageBlaster that connects with applicants’ phones, cell phones, e-mail boxes, fax machines or pagers. It electronically invites them to hiring sessions, reminds them of appointments and notifies them of cancellations.

    To date, the new systems have enabled UP to reduce the Agreement Sourcing Department’s head count from 26 to 18. Union hiring peaked at 6,575 in 1998, and UP has easily handled lesser volume since. The average time from approval of job opening to hiring has been reduced from 72 to 51 days, or 29 percent. The total savings from mid-1998 through year-end 2002 has been calculated at $3,300,240.