BNSF Railway’s historic choice for its next CEO

Posted by Bill Stephens
on Thursday, September 17, 2020

Katie Farmer, executive vice president operations at BNSF Railway, will become the first woman chief executive at a Class I railroad on Jan. 1, 2021. BNSF Railway photo.
When BNSF Railway made history this week by naming Executive Vice President Operations Katie Farmer as its next chief executive – making her the first woman to lead a Class I railroad – perhaps no one was more pleased with the news than Kathryn McQuade.

McQuade, now retired, blazed a path for women railroad executives. She was the first woman to be named a chief operating officer at a Class I and served in C-suite positions at both Norfolk Southern and Canadian Pacific. 

“After working 32 years in the rail industry, I am so happy to see women finally being given the opportunity to lead the industry,” McQuade says. “With Cindy’s [Sanborn] recent appointment to COO at NS and now Katie being named CEO of BNSF, we can no longer say that women appointments are just token.”

And she adds: “I am hopeful that future female appointments are not seen as something special.” Amen to that.

But when railroads have lagged other industries on gender balance, it’s newsworthy when a milestone is reached, like last year when Isabelle Courville became chair of CP’s board of directors, a first for a big North American railroad.

Women make up less than 10% of the Class I railroad workforce, versus 44% in S&P 500 companies. And perhaps because of this railroads have slightly trailed their large company counterparts in the number of women represented at the highest executive levels.

That seems to be changing. At NS, fully half of the executive vice presidents are women now that Sanborn joined the railroad on Sept. 1 after a stint at Union Pacific. She previously served as COO at CSX Transportation. 

And with Farmer set to lead BNSF, the railroad industry will leapfrog ahead of other large companies in terms of the percentage of women serving as chief executives. At the end of 2019, only 6.4% of S&P 500 companies were headed by women, according to Catalyst, an advocacy group that tracks workplace inclusion. By virtue of having a woman CEO at one of the seven Class I systems, the rail percentage jumps to 14% from zero.

Still, much remains to be done to expand the number of women in the rail industry, and all of the Class I’s say they are committed to making it happen.

UP CEO Lance Fritz told an investor conference last week that he wants to double the percentage of women in the railroad’s workforce over the next decade. Currently about 5.5% of UP employees are women, a figure that includes two of the railroad’s executive vice presidents.

To reach that goal, UP will have to improve its hiring process, Fritz says. First, job descriptions must be written to appeal to women so that the railroad receives more applications, particularly for the union jobs that comprise more than 90% of the workforce. While nearly a third of UP’s office workers are women, only 3% of union employees are female, Fritz says.

UP will have to adjust its training process, as well, so that men and women make it through in equal percentages, Fritz says. “Right now that doesn’t happen,” he says, citing the physical performance test that knocks more women out of the process when training for union positions.

Railroad jobs offer great pay and benefits, Fritz says, and should appeal to women whether they are just out of school or re-entering the workforce after raising a family. “We are firm believers that a more diverse workforce is a better workforce,” Fritz says. “Plus, we open up the universe to the full talent pool.”

And speaking of talent: It should go without saying that Farmer earned the top job at BNSF because of her blend of talent and the experience gained at the railroad over the past 28 years. In fact, BNSF’s news release made no mention of Farmer being its first woman CEO, aside from Berkshire Hathaway Chairman Warren Buffett’s oblique reference to it being “a historic day.” That is, as McQuade says, the way it should be.

While it’s hard to ignore the significance of Farmer’s promotion, it’s important to note that her appointment to the top job brings no apparent change in strategy for BNSF, the lone Class I that has not officially adopted the late E. Hunter Harrison’s Precision Scheduled Railroading operating model.

“The biggest part of the story is the historic nature of this appointment in what has been regarded as a very traditional and male-dominated industry,” notes intermodal analyst Larry Gross, who praises Farmer's selection. “Setting that aside, Ms. Farmer’s background is heavy on intermodal experience and marketing, although she certainly has operating department experience as part of her preparation for the top job. BNSF could have chosen a PSR disciple but they did not. Her appointment is an indicator that BNSF will continue to be growth-oriented.”

You can reach Bill Stephens at bybillstephens@gmail.com and follow him on twitter @bybillstephens

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