2. 1 Culture Change Initiatives Implemented at CN Les Dakens dakens@sympatico.cadakens@sympatico.ca 416-780-0052

3. 2 The Change Continuum

4. 3 The Culture Change Journey New CEO 5 principles Hunter Camps CAW strike ABC training rollout EPS for unionized employees ABC practitioners Q4 leadership rollout Employee communications Top-to-Top Union-Management meetings Leadership assessments Hourly Rate Agreements People strategy UTU strike CN’s Negotiations Website Grievance Tracking System 2001 Our Foundation: Five Guiding Principles (HW3) USW/IBEW settlements Employee Dashboard Supervisory coaching 2004 2005 2006 2007 2008 2002 2003 CLMW book HW3 book

5. 4 Q4 Sustainable results. Engaged, committed employees Q3 Good short-term results. Fearful, uncommitted employees Q2 Poor results—go out of business. Contented employees Leadership Behaviours (Minimum) Discretionary Performance Want-to-Do Performance Have-to-Do Performance Results Negative Impact & Minimum Results Positive Impact Maximum Results What we believe in Q4 Leadership develops engaged and committed employees Q1 Poor results—go out of business. Disengaged employees

6. 5 B A C  Things people do or say Behaviour  Precede behaviour  Trigger a behaviour to occur Antecedents  Follow behaviour  Increase, maintain, or decrease behaviour Consequences 80%20% Time Impact 20%80% The Science of Behaviour Positive Feedback Constructive Feedback

7. 6 The Facts about EPS ?  Trained 40 HR representatives who delivered 155 sessions in 22 locations to 1,700 leaders  Produced over 55 different scorecards in both official languages  Involved 18,500 unionized employees represented by 7 different unions in Canada and 16 in the U.S.  Included 150 corporate and individual measures linked to several corporate and departmental systems Reached 96% completion rate in year 1 with over 80% employees rated as Outstanding or Skilled Railroaders Delivered within 9 months, with a core team of 9 individuals Not used or referred to in discipline process

8. 7 Build the foundation, obtain CEO endorsement Build the foundation, obtain CEO endorsement 1 Develop a solid product Develop a solid product 2 Train supervisors Train supervisors 4 EPS – How we Made it Happen? Learn from a pilot Learn from a pilot 3 Communicate 5 EPS sessions 6 Production and delivery Production and delivery 7 Report and celebrate successes Report and celebrate successes 8 February - MarchMarch - April May - October

9. 8 The Product : Scorecard ? Objectives –Make the Five Guiding Principles real and relevant to each employee –Recognize employee’s performance –Provide a roadmap for the dialogue Keys to success –Scorecards tailored to most functions –Hand-written comments on the scorecard –Ratings related to railroading –Continuously improved the material for the FLS From a two-page scorecard, added a definition page From verbal key messages, produced supporting documentation What to avoid –Introduce new measures –Validate scorecards with too many leaders –Large committees –Rush to rollout without checking data. No cross-check of systems Thank you! Overall Performance S/CB&WDoc

10. 9 Training ? Objectives –Understand the scorecard and its purpose –Anticipate employee’s reactions –Prepare and conduct an effective and positive session –Provide employee’s performance feedback Keys to success –Provide one-day training to all FLS –Learn and adjust quickly, even during the pilot –Continuously improve the training material From a ‘How to document” to a video From a paper document to a training job aid –Include role plays - practice, practice, practice What to avoid –Associate role plays and scorecards with specific functions –Assume supervisors’ understanding of group measures

11. 10 Communication ? Objectives –Explain the “Why”: continue the culture change process and engage all railroaders –Build better supervisor-employee dialogue –Recognize Outstanding Railroaders –Explain the “Why” to different audiences Keys to success –Immediate public recognition and monthly thereafter –Share employee’s feedback with FLS “I have worked for CN for 30 years and have never had a one-on-one review. It’s about time, great stuff, extremely positive!” “It felt good to be formally recognized for my good work.” –Inform union leaders early in the process In response to employees asking for more feedback and recognition, not about discipline Employees are employees first, union members second What to avoid –Rely on local leaders for employees’ communication and assume communication tools will be used –Share happy stories only

12. 11 Session ? Objectives –Understand the Five Principles and how each employee contributes –Engage employees in the business –Clarify expectations –Provide feedback –Recognize contributions and identify those who need coaching Keys to success –Start with Outstanding Railroaders –Listen and follow-up on suggestions and ask employees what they need for success –“All about me” What to avoid –Emphasize on group measures interpretation instead of dialogue –Focus on data instead of on the employee’s contribution –Meet employees without preparation, i.e. review employee’s file

13. 12 Delivery – Behind the Scene ? Objectives –Gather data from various functions and systems –Produce scorecards two weeks after each training session –Centralize production, compilation and reporting –Automate production Keys to success –Start with large functions –Coordinate with regional partners –Reach out – People are there to make it happen –Timely reporting What to avoid –Assume accuracy of data –Assume supervisors will come forward if a group is omitted

14. 13 Want to Know More? On the science ISBN: 0071490671 On CN Story Available October 2008 Wiley Publishing EPS Expected publication 2008 year-end http://www.wiley.com/WileyCDA/WileyTitle/productCd-0470283831.html Thank you! Overall Performance