Structuring Union Pacific for Success

By Jim Vena, Chief Executive Officer

Nov. 1, 2023 Message from CEO Jim Vena | LR

UP Team, as I mentioned in my previous letters and during our recent earnings town hall, we have work to do on our journey to be the best at Safety, Service and Operational Excellence. We must reset our culture to create a solid foundation for how we approach our work. We are doing this while facing a tough economic landscape of high inflation, lower volumes and rising costs.

Note: In this letter to employees, Jim shares organizational changes announced today.

A strong company deploys resources responsibly to achieve the greatest value and outcomes. Today, leaders are speaking with their teams across the company, activating changes that will make us stronger. This work isn’t easy, but it’s necessary.

Over the last several weeks, each department examined opportunities to reduce layers, increase spans of control, and restructure teams and processes to better empower employees to make decisions. The approach to identify opportunities was not “one-size-fits-all.” Each department reviewed how they are working today and how to re-prioritize work and better focus their teams and resources to deliver the greatest value.

As leaders identified ways to work more effectively, I also asked them to factor in anticipated attrition and ensure we have a buffer of resources to handle the expected ebbs and flows and cyclical nature of our business. After taking all of this into consideration, leaders designed more effective organizational structures for their departments. For some teams, that’s meant small tweaks; for others, the changes are more significant. In every case, we looked to minimize the impact on the number of jobs and identify talented employees who might be able to contribute to our railroad in different ways.

There are critical and meaningful projects across the company that need additional support, and there are talented employees impacted by departmental resets who can help. Our senior executives identified 23 strategic projects spanning nine departments, which is where we will deploy some of these employees. Each project has an executive champion and a team lead. More than 100 employees have been offered the opportunity to join these teams. Upon completion of these projects – which span several months – these employees will be prioritized to backfill future attrition, as well as fill future roles our organization needs.

We are taking every step we can to make sure every employee has the option to remain part of our Union Pacific team. We have many critical craft professional roles to fill in the field, and as we have conversations with impacted employees, we’re encouraging them to consider some of these craft professional roles as an opportunity to stay with us.

The organizational changes announced today impacted employees in the following ways:

  • The majority of our management workforce – more than 95% – will remain in their existing departments and continue doing great work with even more empowerment, collaboration and focus.
  • More than 100 talented employees were identified to work on 23 strategic projects spanning nine departments.
  • Some employees were offered different jobs at different levels and or locations.
  • Other employees were given the option to depart Union Pacific or remain on our team by considering a role as a craft professional.

Becoming a winning team requires leaders to make courageous and unpopular decisions. In its totality, the number of management employees directly asked to take different roles, move to project teams or depart Union Pacific is very small compared to the size and scale of our railroad. However, I understand these changes will be felt by everyone in some way. Changing culture is hard. Demonstrate compassion for the significant impact these changes will have on those individuals who are directly affected, and always treat one another with the dignity, confidentiality and respect everyone deserves. Always remember our values.

Because change is difficult, it is easy to slip into a mindset of fear and frustration. It will be tempting to equate business courage to a lack of compassion. Many people may believe the sole purpose of these changes is financial. That could not be further from the truth. This cultural transformation is essential for us to succeed. As we run more responsibly and effectively, the results will resonate for everyone.

We all have a stake in our future – and we all have stakes in this railroad. Our families need us to go home safe; our communities need us to move the goods that fuel this nation; our customers are counting on us to deliver what we sold them, and to help them grow and win; and our shareholders expect us to treat the resources they’ve invested in us responsibly. When we grow and we win together, everyone succeeds.

I am confident these changes better position us to tackle the challenges we are facing and the ambitious goals we share. Many stakeholders are counting on us, and we will deliver. We have everything it takes to be the best – and I am counting on you.

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