The ongoing turmoil at Boeing makes me remember a post from not too long ago about railroads.

The recent spate of rail accidents such as the Norfolk Southern derailment in Ohio has led to speculation that the management of the nation’s railroads are underinvesting in maintenance and safety. If that turns out to be the case, I can think of one reason why.

Early in my PR career, a client said to me, “You need to understand that this company exists for one reason only: to enrich seven people. All of the other 25,000 employees are merely soldiers in this cause.”

It seemed rather cynical at the time, but as I wended my way through a 40-year career on both the agency and client sides, I began to understand what my client was talking about.

How else can one explain the massive disparity between worker pay and CEO compensation? And even if you manage to reach the lofty heights of upper management, you’re still not part of the “Seven Club.” You may pull down a fat salary and bonus, but it ain’t eight (or nine or even ten) figures and it never will be. Your business card may say “Senior Vice President,” but you will nonetheless be expected to put in 12-to-14-hour days and be on call seven days a week while the CEO nibbles a danish in Davos or a muffin at Milken. You will also be deemed dispensable at any moment the “Seven Club” feels their dynastic wealth creation is in jeopardy because of your fat salary and bonus. (BTW, I call it the Seven Club, but it could be the “Six Club” or the “Ten Club.”  But it’s never the “Fifty Club.”)

Maybe I’ve become cynical (“Ya think?”) but it’s a cynicism borne of decades of observation of companies (some with which I was associated, some not) behaving in inexplicable and sometimes horrifying ways. The “Hall of Shame” is long indeed. Recent additions include United Airlines, Bristol Myers Squibb, Volkswagen, and Wells Fargo. And Wells Fargo. Also, Wells Fargo. (Did I mention Wells Fargo? For crisis counselors, it’s the gift that just keeps on giving.) But these companies are merely at the end of a long line that has included Enron, Worldcom, BP, GE, Salomon Brothers, and so many more.

Understanding the nature of the Seven Club helps to explain the decision-making that drives these colossal freak shows. A lot of bad behavior is driven by the primacy of the shareholders (including, of course, the Seven Club). Underinvesting in safety, training, new facilities, and environmental safeguards can help goose C-Suite pay in the short term but may prove has often proven devastating later.

Is that any way to run a railroad?

(Update July 28, 2023: The NTSB has found that a 2021 Amtrak derailment, in which three passengers were killed and 49 passengers and crew were injured, was due to the decrepit BNSF tracks the train was running on — tracks that had not been inspected in a timely manner because the BNSF track inspector (one of the few BNSF still employed) was overworked and had not had time to make an inspection. NYT article here.)

(Update Feb. 3, 2024: The Washington Post reports that in spite of Norfolk Southern’s pledge to make sure these accidents don’t happen again, some of the nation’s leading freight railroads including Norfolk Southern have joined in a bid to weaken newly proposed safety legislation, threatening to leave millions of Americans nationwide at risk of deadly derailments and dangerous chemical spills.)