Case Study: Roadeway Express
Meet the Freight Fairy
Teamsters and managers writing business plans together? This is how James Staley hopes to save Roadway Express from Consolidated Freightways’ fate.
It was a scene not often seen in the history of labor-management relations. About 150 truck drivers, dockworkers and mechanics, most of them Teamsters members, piled into a conference hall to hear the president of Roadway Express tell them they had to work more efficiently.
“We’ve all seen how the union sector has steadily gone downhill,” Roadway’s James Staley told them at a three-day meeting in November in Winston-Salem, N.C. Two months before, competitor Consolidated Freightways filed for bankruptcy and 15,000 Teamsters lost their jobs. Nonunionized carriers like CNF are picking off business with a lower-cost and more flexible work force. To compete, he insisted, all Roadway Express’ workers–management included–must change how they do their jobs.
“We just don’t have time at this point in the company’s history for you to sit on the sidelines,” he warned.
Remarkably, the workers didn’t storm out. For Staley, who has seen hokey workplace programs come and go, it was a start. “This is not a religious experience, but in trucking it’s as good as it gets,” he said later.
Staley, 53, is attempting what even the sympathetic say is daunting: persuading Teamsters and other union members to be more efficient, and breaking down hostility between workers and management. Part of the plan is teaching a bit of capitalism to the workers. His staff runs classes explaining income statements and operating ratios–intended to drive home that Roadway needs to cut costs. At other sessions it’s more touchy-feely: Workers and supervisors brainstorm and enact skits to find ways to improve productivity by, say, getting workers to load more boxes onto a truck.
Such programs have a way of producing a short-term glow and not much lasting change. Union bosses assume that efficiency is just a fancy way of saying that some workers will be canned and the rest made to work harder. “It is exceedingly rare that a union will say to management, We can help you save money by efficiency gains,’” says labor consultant Brent Yessin.
Staley figures a sense of urgency will help sell this. Roadway Express, the largest subsidiary of $2.9 billion (2001 revenues) Roadway Corp . based in Akron, Ohio, saw operating income sink 14% to $130 million (net before interest, taxes and depreciation) during the first three quarters of this year. Revenue dropped 7% to $1.8 billion. Roadway is a less-than-truckload carrier, meaning its trucks can carry freight for more than one customer at a time.
Staley doesn’t have much room to maneuver on wages. His company is heavily organized–20,000 of its 27,000 employees belong to the Teamsters or other unions. They are paid $29.17 an hour on average (including benefits), 5% above nonunionized competitors. In the first three quarters of 2002 compensation consumed 65 cents of the Roadway Express revenue dollar. That compares with 53 cents in 2001 for Conway Transportation Services, a division of CNF. The difference helps explain why Roadway Express is shipping a quarter less tonnage in its 25 largest markets since 1998.
Staley can’t anticipate much relief from current contract talks between the Teamsters and big trucking companies. The existing contract, covering 65,000 workers, expires March 31, and the union wants a decent raise. Its argument: Consolidated’s collapse has helped the remaining companies.
Staley is asking, in effect, that four workers do the work done by five. “But in the long term,” he says, “I want to secure enough business that I’ll need eight people to handle the load.” And perhaps surprisingly, at least one local Teamsters boss, Stephen Deal , echoes management. “Times have changed,” says Deal. “If we don’t work together, and smarter, we won’t survive.”
Roadway is using a kind of group therapy program called Appreciative Inquiry. Developed by organizational psychiatrist David Cooperrider , a professor at the Weatherhead School of Management at Case Western Reserve University in Cleveland, the program has been used at GTE, American Express and the Navy.
“People are dying at every level of a company to be tapped on the shoulder and asked for their opinion,” says Cooperrider. A three-day seminar costs Roadway about $100,000. At a recent session in North Carolina workers were asked to recall ideal work experiences–when they were treated with respect, when trucks were loaded to capacity or arrived on time. Assembled into nine groups, they were then prodded to devise moneysaving ideas.
A team of short-haul drivers came up with 12 cost-cutting and revenue-generating ideas. One of the most ambitious: Have each of the 32 drivers in Winston-Salem deliver just one more customer order each hour. Using management data, the drivers calculated the 288 additional daily shipments, at an average revenue of $212 each and with a 6% margin, would generate just about $1 million a year of operating profit. It’s unlikely they’ll reach that goal, but the drivers are working on increasing daily shipments.
The existing union contract permits the company simply to increase the shipments, but it does not guarantee cooperation. Better to have the workers come up with ideas.
One success story from an earlier meeting: In Akron the distribution center is saving $118,000 a year because workers discovered that some trucks carried more fuel than needed, adding unnecessary weight.
A few percentage points count. John Bronneck , Roadway’s vice president of operations, told workers in Winston-Salem that high costs had chased away 15 accounts with $21 million in revenue. “On one $2 million account that we lost, all we had to do was cut $120,000 in costs,” said Bronneck, who at one point during the meeting taped red paper wings to his back to play the role of a “freight fairy” who had come to make workers’ dreams come true.
Yet the difficulty in changing workplace behavior is seen through the experience of 36-year-old dockworker Roger Bayne . A 13-year veteran and union representative, he’d been accused of instigating worker slowdowns and engaging in screaming bouts with supervisors. Now he’s a new man, in part because of the business education he got from Roadway. At a seminar on Roadway’s finances in April he was shown a graph illustrating how unionized trucking companies’ market share has slipped from 75% to 50% since 1990.
“Suddenly my ability to support my wife and two children depended on the security of the company,” recalls Bayne. He wrote a plan to improve service in his Greenville, S.C. facility that includes teaching dockworkers to use computers to communicate with customer service reps and keep them up-to-date on the status of freight. These days, Bayne says, he enjoys his work.
Happy ending? Not completely. Some of his co-workers accuse Bayne of being a management “suck-up,” and he was physically threatened recently. He also resigned as a union representative. Even some supervisors have been reluctant to accept his new attitude. Years of hostility don’t easily fall away.
This summit was led by FLI's Strategic Advisor David L. Cooperrider. For more writings, reports, or information on this case example feel free to email David at email@example.com.