Q&A with Watco EVP and Chief People Officer Rachael Peterson
1/10/2023
By Julie Sneider, Senior Associate Editor
In October 2022, Watco – which provides transportation, material handling and warehousing, logistics, rail-car repair and design and development services for customers in North America and Australia — was recognized as among Newsweek’s Top 100 Most Loved Workplaces® list. The list is based in part on surveys by workers judging how much they like working for their respective employers; an analysis of external public rating sites’ and from direct interviews and written responses from company leaders.
The Newsweek ranking was not the first time Watco ranked nationally for its work culture. In 2021, the company was named on the Forbes list of America’s Best Mid-Size Employers — the only transportation and supply chain services company awarded that distinction that year.
To learn more about Watco’s reported success in maintaining a workplace culture that’s valued by employees, RailPrime recently interviewed by email Watco Executive Vice President and Chief People Officer Rachael Peterson. We asked Peterson to describe Watco’s recruitment, retention, training and employee recognition practices. The company now employees 4,800 people and expects to add another 300 to 400 “team members” in 2023. Currently, the company is recruiting applicants for 160 open positions across its network.
In 2014, Progressive Railroading recognized Peterson as a “Rising Star” of the railroad industry.
RailPrime What are the most challenging positions to fill and why?
Peterson: I don’t think that we can pinpoint a most challenging position. What we see is more challenging geographies. Many of our railroads and terminals are located in fairly rural areas. The pool of candidates in these areas is simply limited by the population.
What we are also seeing appears to be a lessening interest in this type of work from the younger generation hitting the workforce. Five to 10 years ago, many of our applicants were just entering the workforce. Today, we are seeing increased interest from applicants who are more seasoned and have several years working in the transportation industry or similar fields.
RailPrime Does Watco do all the hiring at the corporate level or does that process also occur at the subsidiary level?
Peterson: We have a recruiting team at Watco that spends 100% of their time searching for great people to join the Watco team. They will provide as little or as much support for each individual railroad, terminal, port or department based on what the leader of that location wants or needs.
We have leaders who like to be hands-on through the entire recruiting and hiring process. They want to review all applications, select the candidates to interview, complete all interviews and make the hiring decisions.
We have other leaders who want the recruiters to narrow down the pool for them. They provide guidance to the recruiters on what they’re searching for and then allow the recruiters to simply provide a final set of candidates for a position.
However, the leaders of all locations own the hiring decisions for their properties. Although our recruiters provide feedback, the ultimate decision is owned by each location’s leadership team. They know their needs. They know their team. They will always make the best decision.
RailPrime Describe Watco's approach to recruitment and retention. How has the approach changed to adapt to today’s labor shortage?
Peterson: We’ve put a lot of focus into our company brand and sharing that brand. I think at one time we didn’t tell our story well. Watco has a great story to tell, and we now do a better job of telling it through our website, social media and our people.
We’ve also started thinking about pools of talent that we haven’t historically tapped into well. One of those pools is transitioning military members, who bring a skill set that matches well with the needs of Watco. We recently launched a new section of our website to focus on this group.
One other focus area is the importance Watco places on ensuring the candidate’s values and Watco’s values are aligned. What we’ve found is that if we can find people who value the same things that the organization values, those people tend to have much more long-term success here. Obviously, technical skills are important, and we can train those, but value alignment is more critical.
With respect to retention, we’ve increased our focus on ensuring that our pay is competitive. We’ve implemented referral and retention bonuses in tough-to-recruit markets. We have a longevity bonus program to reward and thank our long-tenured team members. We also have programs that reward our team members for their individual attendance and performance on a quarterly basis. This program allows people to choose what’s most important to them: additional paid time off or money.
Although we believe our culture is the largest factor in why someone stays at Watco, we know it’s important that people feel fairly compensated and rewarded.
The last thing I want to mention is that for many support or back-office roles, we now offer a hybrid work model. What we appreciate is that some team members can serve their customers from anywhere. They don’t have to be at a desk in the office from 8 to 5. Therefore, we now offer the option to work remotely up to a couple days a week, if a team member can effectively and safely serve their internal and external customers in that manner. We know not all positions can do that.
Obviously, we haven’t figured out how to move freight traffic from home. But for those who can work remotely, we feel it’s important to allow that option. I don’t think we will ever want our support roles to be 100% remote, as we feel that much of our success is due to our culture and our cohesive teams, which we fear could take a step in the wrong direction if teams went fully remote.
RailPrime What is Watco’s training process for new employees?
Peterson: Training is job-specific. For most of our rail transportation positions, our team members have the opportunity to attend a multiweek training at our Safe Performance Center in Fairfield, Alabama. In mid-2022, Watco expanded this training center to accommodate our team member growth. We can now train around 150 team members per day. The center offers training in classrooms, hands-on in the field and on locomotive simulators.
After completing their time at the Safe Performance Center, team members receive training and mentoring at their home railroad and are assigned a peer trainer.
All of this training that I’ve mentioned up to this point is job-specific. But just as important is the on-boarding that focuses on behavioral expectations for success at Watco. We want people to be set up for success from Day 1, and part of that success involves ensuring team members understand the behaviors that are expected, which includes everything from safety, to how to communicate and how to be a good teammate.
RailPrime What is Watco’s strategy for further developing existing talent?
Peterson: In 2010, Watco created Watco University, which centers on developing our current team members. Watco University utilizes a learning management system that can provide our team members access to thousands of online training courses — from “tips and tricks” in Excel to how to correctly remove your safety glasses.
Watco University also offers several instructor-led courses, including programs for new managers, leaders of our safety and improvement committees, and future leaders. Many of our team members didn’t have the opportunity to receive formal management and leadership training before coming to Watco, so Watco University’s programs give them this opportunity with the company. Since its inception, Watco University has trained nearly 7,000 Watco team members.
RailPrime What are Watco's "Be the Difference Awards"? How long have they been distributed and how many employees have been recognized?
Peterson: In 2021, Watco rolled out “Be the Difference,” which is one way that Watco expresses its gratitude to team members who live out the Watco values every day.
Three quarterly awards are given to team members who have been nominated by their peers and selected by a committee of Watco leaders. The One Watco Award recognizes an individual or group whose teamwork generates an exceptional result for Watco or a customer; the Extra Mile Award recognizes an individual or group who goes beyond the call of duty at work or in the community; and the Safe Performance Award, which recognizes an individual or group who takes action to ensure safety for fellow team members, customers, suppliers or property.
Since this program was kicked off in third-quarter 2021, 28 Watco team members have been recognized.
RailPrime Quality of life for railroaders was a primary issue in the recent contract negotiations between the major freight railroads and labor unions. How does Watco address the quality-of-life concerns of its employees?
Peterson: Quality of life for our team members is a big priority for Watco. The simplest thing our location managers do to ensure our team members have a good quality of life is to offer planned work schedules and days off so that our team members can organize their lives outside of work.
It’s important that we remove as much uncertainty as possible for our team members, although we know in this industry removing all uncertainty is impossible. Unexpected customer needs may come up and we have to rally together to meet those needs.
We also understand how important it is for our team members to have paid time off for rest and relaxation. So, in 2016, we introduced the Watco Incentive Exchange, or WIX. This program allows team members to be rewarded on a quarterly basis with additional paid time off or money, depending on what’s more meaningful to them.
At the beginning of 2023, we doubled the WIX opportunity because we know how important additional time can be to our team members.
