The post privatisation generation

A new generation of managers are coming up through the ranks of the public transport sector

As we enter a period of austerity, it is clear that investment in public transport is going to dry up. There will be less money for new infrastructure and new vehicles, and this is causing anxiety throughout the sector. However, little or no mention has been made of the threat to one of the most important investments made in public transport - it’s management.

Public transport requires a wide range of skills. It requires people skills: even junior managers in this labour-intensive industry can find themselves responsible for hundreds of staff. It requires operational skills: public transport is an essential public service which people depend upon. It requires commercial skills: devising new ways to grow revenue has become a key feature of rail franchise competitions and bus operators’ efforts to attract people from their cars. And it requires political skills: public transport cannot succeed with the support of a range of different stakeholders.

The challenge for those who are planning for the future of public transport is to make sure that there are enough talented young managers, with this range of skills, moving up through the ranks.

This issue of New Transit casts the spotlight on 40 young managers, all under 40 years of age, from the world of UK public transport (see pages 14-21). These people, and those like them, are the people on whom the future prosperity of this sector will rest. They are the post-privatisation generation. Only the oldest of them begun there careers in the days when public transport was owned and run by the state. All 40 have spent either all, or the vast majority, of their careers in the post-privatisation era.

The investment in this generation and those that follow them is even more important because although the sector faces some difficult challenges in the years ahead, it can look forward to a period of growth rather then decline. Public transport is recognised as a part of the solution to combating climate change while meeting the growing demand for travel, and improving and quality of life in our towns and cities.

Two years ago, Peter Hendy, London’s transport commissioner, addressed the first Passenger Transport Management Awards. What pleased him most about the event was the Young Passenger Transport Professional of the Year Award. “They are going to be the people who are going to take our work on for the next 20 or 30 years,” he explained. “We need them and we need a lot of them, and actually we need a lot more of them than have come through in the past 15 years.

“It’s a real delight to see all the major transport groups, and some the of the smaller ones too, taking on great swathes of people to make this industry go forward.”

But, as Hendy pointed out, it wasn’t always this way. The ‘40 under 40’ list of young managers that New Transit has produced would have been harder to put together in the wake of privatisation, when there was a lost generation.

The need to recruit and develop the next generation of managers was something that had been understood by Hendy’s predecessors. “The old monolithic state organisations took graduate trainees as a matter of course and many of them are my friends, my age, in the room, and people who make the industry run at the moment,” he said. “There was a time in the eighties when all that faltered a bit, but it’s actually very very pleasing to see it come back.”

The disbandment of the graduate training schemes run by the National Bus Company and British Rail created a void which was not filled properly for years. In the early days of the privatised bus industry, companies weren’t of sufficient size to warrant having well developed succession management programmes. They had neither the resources nor an immediate need to bring through a new generation of talent. Nor was there an industry body with a remit to plan for the future requirements of the industry as a whole.

It took 15 years for attitudes to succession management to change significantly. Bus operators, which even after the initial waves of industry consolidation were fairly small businesses, suddenly became major Stock Market-listed public transport groups with the privatisation of the railways in 1996 and evolved into organisations which had a clear motive to address the situation and the corporate structures to do so.

By 2000, the gap in talent in the bus industry was glaringly obvious. It was also becoming evident in the rail industry. The BR management training scheme had been wound down in the years running up to privatisation, and had not been replaced. It was at this time that the new transport groups began their first graduate training schemes. However, First Great Western managing director Mark Hopwood, 38, who was in the last intake of BR management trainees, recalls that the results from the early graduate programmes in the privatised rail industry were very mixed.

“It did take several years after privatisation to get schemes up and running again, but a number of people on them didn’t stay long in the industry for a variety of reasons,” he says. “Clearly, there was a gap, and to be honest, that is probably one of the reasons that I have progressed as fast as I have.”

The real change in emphasis came several years after the graduate programmes had begun. The performance meltdown in the years which followed the Hatfield crash made the industry painfully aware that there had been a huge loss of knowledge, and that acted as a spur to focus more attention on graduate schemes.

“There was a recognition that we really needed to turn things round,” Hopwood says. “The good news is that things have changed with the graduate schemes run by the groups and Network Rail now. I feel much more optimistic than a few years ago.”

The hiatus in graduate recruitment was not the only issue the industry faced. In March 2006, a new Young Professionals Network was launched by the Institution of Railway Operators, with one of its specific aims to improve the career prospects of junior and middle management, and help those in non-management roles to progress. Chris Loder, 28, then performance manager at Arriva Trains Wales, said at the time that it was very noticeable to new rail managers that the vast majority of senior roles were still filled by people with a BR background. Many new recruits left the industry believing that their career was going nowhere.

“It’s disheartened me to see a lot of good people have left.” Loder said in 2006 as he assisted IRO with the launch of the new network. “When I’ve asked them why, they said they found it hard to see how they would move into more senior management.”

As with the development of graduate programmes, Loder says there has been real change in operators’ approach to career development in recent years with the Young Professionals Network and continuing professional development gaining greater support in the industry. At the end of last year, the Young Professionals evolved into the Young Railway Professionals bringing together all the industry’s professional institutions and offer new training options. In June, the pilot programme for a new mentoring scheme was launched. It will offer opportunities for younger professionals to learn from experienced colleagues in areas from operations to infrastructure, rolling stock, HR, signalling and performance.

“I think a number of things have changed in the past few years and there has been much more emphasis on developing younger people in the industry,” Loder told New Transit.

In both the rail and bus industry, the major groups now have structured programmes in place to identify young staff with management potential as well as graduate schemes. “It’s not just about graduates, we look throughout the business for supervisors, engineers or people in any role, who are talented individuals, and have a programme to bring them through,” says Matt Darroch, Stagecoach UK bus training and development manager.

The programme involves nine months of intensive mentoring to give them a grounding in management skills and provide them with them with the knowledge and abilities to progress. As well as on the job training, it includes six, week-long courses covering subjects such as operations, commercial management, health and safety and employee legislation. There is no promise of an immediate management role at the end of the programme, but if a vacancy arises it offers a fast track route for progression.

“It means people are ready for promotion when the opportunity arises and several are rising through the business,” says Darroch. Along with the group’s graduate scheme and monitoring the wider market for potential recruits, the programme to spot talent and develop existing staff is a core element of Stagecoach’s succession planning. “You need all three to be successful,” Darroch adds.

The moves to attract and develop young talent have not only begun to fill the gap in management talent that had developed, it has brought new perspectives to the industry that have had a real influence on service quality. At last year’s Passenger Transport Management Awards, FirstGroup chief executive Sir Moir Lockhead said that he had been staggered by the way the company’s new generation of managers had injected dynamism and new ways of thinking into the group through the way they approach their work. “They are better at it than we are,” he said simply.

Jack Wheale, HR support manager at the Association of Train Operating Companies, observes that the way train operators have developed their business strategies in recent years, with a broader mix of skills required, has created new opportunities for younger managers. “A lot of TOCs regard themselves as retail organisations now and the ability to manage that interface [with passengers and operations] is vitally important to success and retaining franchises,” he says. “Clearly, TOCs still need experienced people,” Wheale adds, “but in some areas, the ways of working that older managers grew up with may not be appropriate any more, and younger managers may have less pre-conception about how things are done.”

The change in train operators’ business strategies has led some TOCs to reform their HR departments so that they now play a more strategic role. At Northern Rail, where the board is aiming to develop the business through creating a more dynamic and innovative management style, recruitment processes have been completely revamped. The primary aims are to attract higher quality applicants and tap into a wider audience including younger people and women who have been traditionally under represented in the rail industry. Whereas recruitment advertising used to be almost solely through local newspapers, new locations include cinemas, shopping centres and community events.

New talent management and succession management processes are also being put in place to enable employees at all levels to progress their careers more rapidly. This will allow the Human Resources department to make an assessment of how long it should take for people to be ready for promotion, establish where there are skills gaps in the company and take action to address them.

The system is not specifically aimed at identifying younger management potential, but one impact is likely to be greater potential for early promotion. “This is about providing people with the chance to advance their careers and about identifying senior management skills,” says Helen Norman, Northern Rail organisational development manager. “The advancements in recruitment and talent management are now creating opportunities for us to identify people who have the potential and ambition to progress and develop their careers.

At First Great Western, Mark Hopwood has also acted to ensure there is a blend of management skills at the company, including identifying younger staff for fast track management development programmes. “What we need is a mix of skills and educational backgrounds, and different levels of drive, determination and experience,” he says. “Certainly that’s what I want.”

While graduate programmes are now well-established, some younger managers in the industry have expressed concern that financial pressures on the railways could see training schemes curtailed. Wheale agrees that it is a potential problem, but believes that cut backs will not have a significant impact on the career prospects of junior and middle managers.

“As the economy gets tougher, that may have an impact, but an equal pressure on TOCs is they will have to do more with less,” he says. “Young, talented people cost less and can be more effective. Lots of development can take place on the job and with mentoring, which isn’t expensive.”