Abstract: "The Company Could not Take Complete Advantage of its Bigness": Managerial Culture and the Pennsylvania Railroad's 1955 Corporate Reorganization

Albert Churella

Abstract

The 1955 reorganization of the Pennsylvania Railroad (PRR) illustrates that firm's periodic attempts to reinvent its corporate identity. One such transformation occurred in 1920, when the PRR joined Lines East and Lines West into a "Three Region" organization. The Railroad's "Nine Region" plan, which took effect on November 1, 1955, created an even more decentralized organization, with each Region controlling operations, marketing, real estate, and engineering. PRR president James Symes is widely credited with personally advocating the 1955 reorganization, but the management consulting firm Robert Heller and Associates played an even more significant role. The new organization merely exacerbated the PRR's problems by tripling the PRR's overhead at a time of declining revenues and plummeting employment. The company's marketing efforts suffered, since the people who solicited business and those who ran the trains reported to two separate lines of authority. The PRR reverted to the old Three Region plan in 1964.

BEH On-Line Paper