By Theo van de Kletersteeg
It should come as no surprise to anyone that Canadian National Railways was one of three Canadian enterprises to appear on CDP’s Climate “A” list. For more than a decade CN has been the undisputed leader in North American rail efficiency, proving that when business owners streamline their operations to gain maximum productivity while maintaining safety, the environment gains. No, it’s not the reduction in the use of paper that drives measurable green achievements. In CN’s case, among other factors, it’s the utilization of well-maintained, highly efficient rolling stock, it’s the optimization of train lengths, locomotive pulling power, scheduling of crews, and the constant examination of processes and procedures to leave no stone unturned to identify additional opportunities for productivity improvements.
Generally, but not always, improvements in environmental performance go hand in hand with improvements in financial performance. When businesses learn to do more with less, without negatively impacting customer relations or safety, the utilization of fewer resources will typically result in financial savings. Lower headcounts can quickly add up to significant direct savings, but will also lead to savings in numerous office overhead expenses such as reduced payroll taxes, reduced travel expenses, reduced requirements for floor space, and numerous others. In multi-office environments, efficiencies can be enhanced by adding workloads to the most productive locations, while reducing workloads in others.
Many companies, large and small, operate on the basis of legacy systems, processes and procedures that were adopted many years ago or, indeed, many decades ago. Production facilities were not upgraded, resulting in high unit costs and possibly hazardous working conditions. Office processes may continue as before, relying on outdated IT equipment and outdated software, which invariably raise administrative costs to levels that are higher than they need to be. Most businesses have lots of opportunities to increase efficiency, to raise productivity and to lower costs. And, in the process, they will improve their environmental performance. Whether financial performance or environmental performance is the motivator, Canada will benefit from both. The country has long suffered from low productivity growth, as a result of which its export performance has been unsatisfactory. Canadian businesses need to make a serious effort to squeeze greater output from existing resources, or to reorganize and modernize to achieve the same output from lower levels of inputs. CN and CP are demonstrating that continuous improvement, through good times and bad, will lead to superior results, allowing them to remain in a strong competitive position, while protecting well-paying jobs, rewarding shareholders and doing their “bit” to reduce their environmental impact.
Managing corporations for optimum performance is a first priority for very, very few Canadian companies. Yet, Canadian companies must do exactly that to ensure their own well-being and, collectively, to recapture a share of Canada’s share of world trade that we have lost during past decades. We must learn how to compete more aggressively and part of that task must be margin improvement through productivity improvements. Margin improvement provides more “financial room” to accommodate increased marketing expenses to develop export markets but, equally importantly, is evidence of a company’s increased ability to compete. Lastly, margin improvement is evidence of management’s abilities to meet the challenge of doing more with less. Having met that challenge, export development should appear as less of a challenge than it did before the company reorganized for greater productivity.