I’ve seen it in every type of organization: military, government, non-profit, and private sector. If you make middle managers’ careers dependent on metrics, they will inevitably find a way to game the metrics. But as SD70 said, it’s hard to blame them if their continued employment depends on it.
Sales manager: So how is the new sales associate working out?
Sales associate: He is really difficult to work with and disruptive of our team. Anytime he disagrees with you, he tells you to “go jump in the lake!” If we tell him that we will discuss his disruptive behavior with you, he says that you can go jump in the lake.
Sales manager: Hmm, let me look up his record. It shows here than since joining us a month ago, he has sold 5 million dollars worth of our company product. I don’t know how you and your fellow team members feel, but my take is that for the money he is bringing in, I can always go buy a new suit.
At ANY LEVEL where metrics will be the criteria for one’s job performance - the metrics will be ‘managed’ to any and all extents possible.
With CSX, since EHH was the boss and could not get the established metrics to tell the story he wanted, he canned those metrics and created his own.
In the First Quarter 2025 issue of the B&O Historical Society’s ‘Sentinel’ a notation that CSX was in the process of upgrading facilities at Cumberland (PSR eliminated the hump and hump tower, removed some tracks and stub ended others) to be able to handle merchandise traffic efficiently again. The note states data that was presented at the Amelia Island Investor’s Day that putting Cumberland back in the operating mix would reduce cars 'out of route mileage by 29 Million miles reduce the number of car handling by 55K and reduce overall transit time.
PSR as we all knew was a hoax.
Anyone with a brain could have told you that years ago. EHH was fired from the Frisco and BN for trying to do this stuff in the 80s. The only reason why it worked out at the IC was it was a perfect storm there an overbuilt system for the amount of traffic it carried and the cost savings were enough to make the railroad look better on paper.
PSR did exactly what it was supposed to do. It wasn’t meant to improve service or even to run the railroad in a more efficient manner. It was meant to wring out every cent possible to return to shareholders. It was meant to lower the operating ratio, a simple but incomplete view of how the company is doing, thereby impressing Wall Street. PSR was not meant to grow the business but to grow the stock price.
A few years ago, after EHH had left CN, there was a Railway Age article about then current CN. There wasn’t many kind words for EHH. It was costing them more to restore some infrastructure or catch up on projects that had been cut back or eliminated. One of the tenants of PSR was that once you’ve made the cuts and “balanced” the operation, then you start to grow business. Except there is no room or assets to grow the business.
While PSR is still practiced, there has been some easing of some parts if it. There has to be if they want growth.
Jeff
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