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Putting people


With a move towards longer franchises looking as it if it is on the cards, Catherine Noah looks at the implications for the workforce

he debate about the case for letting longer franchising contracts, typically operating for 10 years or more, looks likely to come to a positive conclusion under the new coalition government. While this is part of a move to encourage

innovation and investment in the UK railway’s physical

development, there is a very human perspective to consider. In our assessment, the benefits of longer franchises will be felt by virtually everyone involved – the franchisees, the customers and the employees. You only have to look at the goodwill associated with Chiltern Railways to see this. In shorter franchises such changes are possible, but the returns diminish as the uncertainty of the contract renewal process kicks in. This is not to say that bidders should ignore the workforce in bidding for any length of contract. By carefully planning

the environment for the employee, with an emphasis on delivering a step change in the customer experience, shorter-term improvements can be gained through people. With short-term franchises the main emphasis has been on

service performance, revenue maximisation and cost reduction. There has been little incentive for change and no need to consider the organisational culture, itself a longer-term process. The long-term approach is different and encourages a bolder response. It can take years to build up a powerful brand with a reputation for quality, but well-established research on the service-profit chain – the link between companies with a reputation for excellent service and profit – married with the assertion that happy staff equals happy customers, is disputed by few. So why do UK railways not deliver more in this regard? One of

the implications for bidders is that, as well as painting a compelling vision of the future, it will be crucial to demonstrate how innovation and change will be handled over the life of the contract. For those who get it right, the rewards are there for the taking. The response to the question ‘How well does this bidder demonstrate how the change envisaged will be delivered?’ could become an important differentiator between bidders in future contract negotiations, as optimistic revenue forecasts are consigned to history and aggressive

PAGE 28 JUNE 2010

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