Management control systems in public transport : an objective

study of Karnataka State Road Transport Corporation

Abstract

Public transport systems present an interesting situation where the objective of the company is

public service as well as self sustaining profits. For the purpose of achieving both these opposite

facing goals, organizations employ various mechanisms of control systems. From the point of

view of goal congruence, such management controls are extremely delicate to balance in cases

such as public transport. This paper studies Karnataka State Road Transport Corporation as an

organization from the point of view of the control systems that have been implemented at the

ground level and the effectiveness of the same. Further, the drawbacks and tradeoffs are

examined and recommendations are made for arriving at the optimal tradeoffs between the

opposing goals of public transport systems.

1.0 Background

The Karnataka Road Transport Corporation was established in August, 1961 under

provisions of Road Transport Corporation Act 1950 with the objective of providing ‘adequate,

efficient, economic and properly coordinated road transport services’. Karnataka state has four

corporations. 1) KSRTC 2) BMTC 3) NWKRTC 4) NEKRTCi . (Refer Figure 1)

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KSRTC has 69 depots, 14 divisions, 124 bus stations, runs 7011 buses, operates 23.74

lakh effective kilometers per day on it’s total 6463 schedules. The daily average traffic revenue

is 523.70 lakhs, from an average 24.57 lakh passengers who travel in KSRTC buses. KSRTC has

33843 employees and 792 officers in its three layers of organization structure. KSRTC has been

continuously a profit making organization since the year 1999 and it is second Road Transport

Corporation in India in terms of profit margin (first is BMTC) in India. In 2009 KSRTC made

250.87 crores profit. The percentage of return on capital employed in 2009 is 14.35, at par with

industry standards. KSRTC has bagged many prestigious awards like Golden Peacock Award for

services, National award for Exemplary implementation of e-Governance initiatives.

2.0 Organization structure.

The organization structure is divided into three layers, termed as Central Offices at

Bangalore, Divisional Offices at district level and Depots at Taluka level. (Refer Figure 2)

At every level there is a clear hierarchy as shown in figure 3 (Centre Office), figure 4 (Divisional

Office, also known as district office) and figure 5 (Depot Office)

2.1 Relationships and power structures among Depot, Divisional Office and Central

Office.

In this study paper, we take the Depot as our unit of study since it is the actual point of

action and revenue generating unit for KSRTC. The Depot Manager heads the depot level

operations and he reports to the Divisional Controller. Apart from that, the Depot Manager is

also supervised by the Divisional Traffic Officer for traffic related issues. Divisional Mechanical

Engineer supervises the mechanical parameters of the depot. Other officers like Accounts

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Officer, Store Officer, Labor welfare Officer, and Statistical officer (Head - System department)

assist the Depot Manager to run the depot efficiently. It is mandatory for the divisional officers

to visit the depots, once in every week and to oversee their respective departments. The resources

like buses, materials, tyres, men and money is provided to the Depots from Divisional Office.

The bus schedules are planned by the Divisional Traffic Officer in concurrence with

Divisional Controller. In practice the routes are planned either because of the public demand,

revenue opportunity or because of local political pressures. The buses run in monopoly routes

where only KSRTC can operate and non monopoly routes that are open for competition. Apart

from this, the bus operation can be mainly divided into ordinary schedules that run mainly in the

village areas and express schedules that run between city to city. The price structure is less in

ordinary routes as compared to express routes. The pricing structure is decided by the Transport

Minister and neither the Divisional Controller nor the Depot Manager can increase the price for

the passengers. Only in case of high private competition in non-monopoly sector the Divisional

Controller can reduce the price with the permission of the General Manager Traffic department.

The purchase of buses is decided by the Central Offices. Director Mechanical

Department decides on the bus allocation to the divisions. Further at Divisional level, Divisional

Controller and divisional Mechanical Engineer decide the bus allocation depending on the

requirement at the depots based on the Depot Manager’s request for resources. The types of

routes, age of the vehicles, addition of the new routes, profits are the main criteria for the bus

allocation to the depots. The purchase of the materials like tyres, tubes, FIPii, engine (costly and

high consumption materials) is done at Central Offices. Minor requirements (in urgent situations)

are purchased at Divisional Office level, however there is a cap on the local purchase amount for

the divisions depending on the type of the vehicles and volume of operations.

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Though Depot managers may propose routes, it is mandatory for them to run the vehicles

as per the schedules ordered by the Divisional Controller. Divisional Controller has the powers

to penalize the Depot Manager as well as officers by way of salary recovery or increment cuts.

Employees below the Depot Manager level can be dismissed by the Divisional Controller.

In the light of the above, if we examine the span of control, the Central Office has

different heads for different departments and the head of the departments directly talk to the

concerned officers of the divisions. Even though the Divisional Controller is accountable for the

Division Performance, in practice department heads at the divisional office level are questioned

by the Central Office. There is a monthly review by Managing Director for the Divisional

Controller as well as for the department heads of the divisions at Central Offices. While Depot

managers are reviewed monthly at division level, underperforming Depot Managers are reviewed

by the MD. Apart from these meetings, regularly the Directors and HODs visit the divisions and

take review meetings. There is no positive incentive system for Depot managers for better

performance. But there are penalties and transfers (commonly called “punishment postings”) for

underperformance. In most cases, penalties are subjective. Divisional Controllers may consider

the factors like behavior of the Depot Managers, honesty, effort put etc. Since KSRTC is PSU

there is also a lot of political interference for such decisions.

The vigilance wing at the Divisional Office level directly reports to the Director and MD

who cross-checks the revenue realizations and other procedures which in turn reinforce the

processes of revenue realizations on track.

2.2 The roles of depot employees.

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The Depot Manager is responsible for daily administration and is empowered to direct the depot

employees. Job assignment to the employees inside the depot is done by the Depot Manager.

There are no fixed schedules to be operated by the Depot Manager. The mix of express and

ordinary schedules is dependent on the local requirement. Every Depot is given 8% extra buses,

and 13% extra employees to compensate the absenteeism. (This ratio may vary slightly.)

Following are the persons who work under Depot Manager.

1) Traffic Inspectors - Inspectors look after the duty allocation for conductors and drivers.

They maintain the attendance and allocate the leaves to the crew. They operate the

schedules as per the target given to the Depot. The Traffic Inspectors are also responsible

for the earning target given to the Depot.

2) Drivers - Are monitored for the timely arrival as per scheduled timings, driving without

damage and for diesel consumption. The target for diesel consumption is measured by

Kilometer per Liter (KMPL) of diesel. Drivers are monitored for vehicle damages and

accidents.

3) Conductors are measured by the amount of revenue they bring in. The target revenue is

fixed for every schedule based on pilot survey and experiments. The earnings per

Kilometer (EPKM) is the measurement for the conductors performance. In case of lower

revenue realization, depending on the explanations the conductor are penalized or warned

by the traffic inspectors.

Both the conductors and drivers have to sign a register two days which conveys them their

expected time of reporting and their work schedule. There are clear instructions in writing

regarding duty allocation which insists that the crew and vehicles should be fixed to the

schedules.

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There is 1% incentive for the crew in the revenue they realize. Both drivers and conductors are

monitored for their behavior with the passengers. Any written or oral complaint regarding

misbehavior is of serious concern.

4) Assistant Works Superintendent.

AWS work under the Depot Manager and are responsible for the mechanical

maintenances of the buses. AWS plans the docking schedules which depict which bus

should be taken for repair at how many kilometers and is accountable for break downs

due to mechanical failures. They monitor the vehicle damages and KMPL achieved by

the drivers. An important measurement of AWS is number of off-road vehicles at the

depot waiting for repair.

5) Mechanics.

The mechanics who repair the bus are called Helper-A and Helper-B. Their duty is to

make the necessary repair work and they have to make necessary preventive

maintenances called docking. They are measured by the breakdowns due to the

mechanical failures and also based on bus docking.

6) Accounts supervisor.

Accounts supervisor looks after the ticket issuing and cash collection works. Accounts

section at the depot has junior assistants who issue tickets and collect the cash. Accounts

Supervisor monitors proper ticket issue and cash collection. He has responsibility of cash

collection from commercial establishments and also from pass issuances. He is

responsible for proper distribution of salary and incentives to the employees.

7) Administration Supervisor.

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Administration Supervisor monitors the absenteeism of employees and leave status and

day to day administration works like correspondence etc.

8) Store Keeper.

Store Keeper maintains the receipt and consumption records of the store items. He has

the responsibility of ordering for the important items like diesel. He has to maintain the

items in optimum level so that buses do not go off road because of shortage of items.

9) Statistical Assistant.

Statistical Assistant looks after the data maintenance and he is the one who prepare the

data of the depot in prescribed format.

3.0 Performance Appraisal of Depot Mangers- Study of an example.

Performance evaluation is an important means of promoting the operation efficiency in

public transport systems (Feilding et al., 1985 ; Gomes, 1989). Hence it is very much necessary

that we should look at the performance matrix of the Depot Manager.

Table 1 (see annexures) provide an example how Depot Managers are reviewed. We can

see that the parameters are reviewed for achievement of current target as well as comparison

with previous year.

Table 2 (see annexure )reflects the financial parameters on which the Depot Managers are reviewed.

4.0 Management Control Systems in KSRTC- In the frame work of four

levers of control.

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KSRTC is a PSU and its primary objective is defined as that of providing ‘adequate,

efficient, economic and properly coordinated road transport services’. But in practice the

objective of KSRTC is not only providing the service but also to make profit which is what may

be able to fund the primary service objective. For the purpose of meeting these goals the

organization may be viewed from the perspective of the framework of 4 levers of Control

proposed by Robert Simon (Anthony and Govindarajan, 2007 ). (refer figure 6)

1) Core values and belief systems.

KSRTC is highly customer centric for both internal and external customers. The bus station

Infrastructures and facilities of KSRTC are state of the art. KSRTC has introduced online ticket

reservation which is most innovative. KSRTC floated accident relief fund which pays up to two

lakh rupees in case of accidents. KSRTC is increasing its services by establishing depots in all

talukas of Karnataka. Public complaints are properly responded to in KSRTC. The alternative

arrangements for the bus service in case of break downs are very quick. KSRTC is the pioneer in

bringing Volvo and Mercedes Benz services among all the state run PSUs. There is strong

culture in the organization that “passenger satisfaction is most important”.

The conductors and drivers are provided with lot of facilities like scholarship facilities for

their children. In many places employees are given accommodation. KSRTC is pioneer in

introducing electronic ticket issuing machine which has reduced the effort of the employees.

KSRTC owns two hospitals where in employees can take treatment and has tie-ups with

prestigious hospitals such as Jayadeva Hospital Banglore, Narayana Hridayalaya Banglore where

employees can undergo surgery at the cost of the organization. Employees are trained in the

training institute owned by KSRTC. Officers are absorbed in transparent manner and whole

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process of examination is conducted by prestigious institute like IIM Bangalore. All the officers

are trained by Central Institute of Road Transport, Pune. Employee complaints are handled with

lot of concern and Central Office carefully observes the behavior of the officers with the

employees.

Penalization in KSRTC is also strict and dismissals on account of breach of belief systems,

especially customer satisfaction, are not rare in the organization. There is strong culture of

Customer and employee orientation in KSRTC.

2) Boundary system.

In KSRTC the rules and regulations are well documented and circulated among the

employees. Invariably any deviation from the duties is punished severely. There are circulars for

every act and all the officers and employees have to adhere to the rules and procedures. Conduct

and Discipline of Employees 1971 Act is applicable to KSRTC which commands employees to

behave in certain manner. For example employees cannot consume alcohol on duty and he

cannot be seen in public places in intoxicated condition. For Depot Manager the duties and

responsibilities are clearly mentioned in the form of circulars and he has to adhere to them. Any

deviation is severely penalized by salary cut.

Every employee has to submit the assets and liabilities to the corporation and has to take the

permission from the Divisional Controller before he purchases any assets. Owning more assets

than the known source of income may attract investigation. This acts as control over any rent

seeking behavior of the employees.

3) Diagnostic Control.

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At the depot level as already mentioned above, the drivers and conductors are closely

monitored for KMPL and EPKM respectively. The performance of the AMS and Traffic

Inspectors is also closely monitored. There are weekly meetings at the Depot level headed by the

Depot Manager. He plans work for coming week and assigns individual responsibilities. The

Duty Rota system plans the duty allocation before a week and the driver and conductors sign the

duty chart two days before. The fixed duty acts as a formal control wherein drivers and

conductors adhere to a particular system. Kundapur Depot in South Kanara district is best

example wherein for continuous two years no single schedule was delayed even for a minute and

no kilometer cancellediii. Invariably conductors are not only checked for earning but also for

pilferage of passenger money. If conductor is caught pilfering, he is penalized depending on

severity of the case.

The performance of the Depot Manager is done based on more than 35 key parameters. The

Division Controller takes the review meeting once in a month. But in practice DC visits the

Depot every week. The departmental heads at Central Office collects day to day details. Control

Room established at Central Office Banglore collects each detail regarding late departures and

daily break downs and summarizes it depot wise and submits to concerned departmental heads.

Any major deviations in bus operation are informed to the Directors and Managing Director.

Every day the Depot Manager has to submit depot performance in a prescribed format to Central

Offices.

The variable pay system is not adopted in KSRTC. The incentive system is introduced for

drivers and conductors only (1% Of the revenue realized.) Some times, drivers who bring more

KMPL consistently are rewarded.

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But apart from this incentive system KSRTC has no incentive system for performance.

Rather the system has more of punishment than incentive. No other employees are measured in

terms of money value. For example the work done by the mechanics or Store Keeper or

Accounts Supervisor is not measured in terms of money value. Even though the Depots are

SBUs the performance of the Depot Managers are not linked with the performance.

4) Interactive Control.

The employee trainings are mandatory. Drivers are trained at the Divisional level itself when

they are newly appointed. Employees are trained at Training Institute Banglore especially in

team work, leadership etc. Officers are trained in Central Institute of Road Transport Pune and

also in Industrial Academy Delhi.

At the depot level the suggestions given by the employees are considered and same are

conveyed to Divisional Offices. In practice any changes required in routes to realize higher

revenue such as changing the timings are done quickly.

5.0 INFORMAL CONTROL SYSTEMS IN KSRTC

1) Emergent trends.

Gone are the days for KSRTC that employees were less educated. In recent days KSRTC has

been employing a lot of highly qualified people. The bottom of the pyramid is also strengthened

by educated employees. The majority of the work force can understand the needs of the

individuals and their duties and responsibilities forcing KSRTC has to tailor its attitude towards

employees. The public sector has to be aware of the needs of the employees and has to act

accordingly. If internal customers are satisfied, they are intrinsically motivated to satisfy and

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delight external customers (Tam and Hui, 1996). The emergent trend in KSRTC is that even

lower level employees are aware of the competition. We can see a lot of drivers and conductors

struggling for revenue and emerging trend of active participation by the employees in

competition is also acting as a control system in aligning the employees towards achievement of

the goals.

2) Implicit hierarchies.

We can observe that the officials having more interactions with the employees are more

respected. For example the checkers who frequently check the employees have more contact

with employees and employees conveying the official and non official matters with them.

Another example is that even though the Depot Manager is the official reporting authority for

mechanics, the loyalty of the mechanics is always towards the DME. KSRTC should understand

these implicit hierarchies and act accordingly.

3) Organizational stories.

The stories decide the image of the organization in the minds of both internal and external

customers (Friend and Costley, 2010 ; Norton, 2010). In the present context gossips in the bus

stands, halting places, among the employees as well as with the passengers have a major impact

on the public image of KSRTC. Since KSRTC officers are the protagonists of these stories the

new employees as well as the public have a precast organizational image shaped by these

protagonists in their mind. Ultimately, the organization itself lies in the minds of the people.

Especially the officers, who take ‘punishment decisions’ against the employees should needs to

be careful about the stories built around them. The proper story about the officials or about the

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management decides the behavior and attitude of the employees (Hyde, 2008; Bolino et. al,

2004). Hence KSRTC needs to deliberately float positive stories about its image.

4) Tacit knowledge.

The Depot Manager knows exactly how many extra buses he can operate, he knows better

than anyone else that how much profit he can make. A conductor knows how much revenue he

can bring in a particular route. A mechanic can easily tell which rubber works better and which

will not. But these things are not discussed in a formal set up. Many employees discuss in the

rest room about the improvements required in route or in a depot. Their experience builds certain

knowledge within the employees that they can exactly assess the results or lacunae in the system.

(Erden et al, 2008). Many young officers can stretch beyond their boundaries. Giving an ear

towards the tacit knowledge is most important and KSRTC should create a platform where

informally these issues are discussed and discussions can be used for improvements. Leveraging

the talent among the officials benefits the corporation.

5) Entropy.

It is very common in the large organizations like KSRTC that employees are confused about

their roles. The clear instructions about the roles of employees should be given during the

training itself. Furthermore, there should be a clear matrix for navigating the entire organization

so that there is no confusion among new employees while seeking help for work related or

administration related issues.

6) Star profiles.

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In every depot, in every group of employees (say driver, mechanics, inspectors) we can get

star performers. The best example we can get in the system is extra operation specialists who can

manage the large bus operation, accident specialists who can manage the critical scenarios like

accidents or bandhsiv. They are the ones whose skills are time tested and with the deep

knowledge of the prevailing system, they can come out as good performers. We can get the star

performing depot managers also. KSRTC has to identify these performers who are suited to that

particular locality and has to encourage getting the work done.

7) Signals.

In KSRTC employees discuss about the actions of the management. Right signals in the

system give positive results. The recognition of the employee as well as punishment of the

employee reflects the attitude of the management. Transparency in the system gives right signals

to the employees that everything is going in right direction. The intention should be reflected in

actions which should have goal congruence with the objectives of the corporation.

8) Management styles- Done or not done.

It is critical that KSRTC has to be objective in its management style. The parameters to be

achieved must be followed and at every level the message should be clear that unfinished tasks

do not go well with management style and is strictly viewed.

6.0 Gaps in Control System of KSRTC.

1) A Depot manager has to operate the buses on both ordinary and express routes. The ratio of

ordinary and express routes varies from depot to depot. Naturally, the buses that run on

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ordinary routes have low KMPL and low EPKM since ordinary routes are in village areas

with bad road conditions, frequent halts and relatively less passenger traffic. In contrast the

express routes have more EPKM and buses ply in these routes have more KMPL for the

converse reasons. We have to note that the pricing is also more for express routes rendering

depots having more express routes more profitable. If we analyze the performance metrics of

the Depot Manager, the ordinary and express operation are not separated. At the same time,

neither is the economic value added towards the society measured nor is the opportunity cost

of the ordinary routes considered. Capability Approach (Sen-1992) can be considered here

for measurement. The capability approach measures performance according to the extent by

which the public transport system is able maintain or increase the ability of the people to

employment and education. (Sen-1992). Presently a Depot Manager has no incentives or

motivation to run the ordinary vehicles since he is measured by revenue or by profit. Hence

he only runs the mandatory ordinary routes and focuses more on express routes, which is

against the primary goal of service.

2) The objective of the KSRTC is not only making profit but also to provide the economic

service to the rural public. Even if the Depot Manager operates the buses in most efficient

manner in the ordinary routes his depot may be in loss due to inherent characteristics of the

routes. Since the Depot Manager is evaluated based on the revenue growth, he is not

incentivized to operate the buses in efficient manner in ordinary routes which is the main

stated objective of KSRTC. This can be overcome only when the economic value added (by

subsidized service, by improvement in the rural economy etc) is considered by every

kilometer of operation in ordinary kilometer and is quantified. We can take into account the

opportunity cost of the resources which Depot Manager operates in ordinary routes.

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Lau (1997) mentions that evaluation of public transport services can be divided into two

aspects. First one is to evaluate the public transport based on their efficiency. (For example

the relationship between cost and operation output of the transport system). The second one

is to evaluate the system on their ability to meet basic objective like service to the public. The

objective of Public Transport is to provide an effective transport service to the population.

The effectiveness may be derived through internal efficiencies and equity that is concerned

with economy and fair non discriminative accessibility to all facilities.

Worldwide several researchers have worked on quality and efficiency of the public

transport system. For example Sampaio et al. (2008) point out several characteristics for a

good performance of public transport system.

1) System accessibility and greater geographical area coverage.

2) Travel time determined by geometry and velocity of routes.

3) Trustworthiness determined by uncertainty of time of schedules.

4) Frequency-Determined by time gap between the trips.

5) Load factor- determined by maximum passengers in peak hour as compared to

capacity of the vehicle.

6) Vehicle characteristics which include age, type and other technological

components which determine passenger comfort.

7) Information given to the public with respect to time and type of buses availability.

The main purpose of bringing this issue here is even though above said factors determine the

quality and efficiency of service in public transport, the performance metrics of the Depot

Manager used for his appraisal do not consider these points.

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The performance of the Depot Manager is not linked with incentive. Depot Managers are

not incentivized for more profits. Rather the Depot Managers are work out of a fear of

penalty. Further when we look into the research studies in Depot Performance it is found that

the incentive system plays major role in determining the performance efficiency. Amaral

(2008) investigates why the private management outperforms the public management in

public transport. As per his research study, following internal and external control

mechanisms are the reasons.

1) Internal controls.

The definition of incentive system related to the performance and ownership diffusion. (It

is highly diffused in public system). In public systems the incentives are not linked with the

performance parameters and ownership of the public system lies with the public.

2) External control- Poor corporate governance

The reason to mention the above said fact is that the researches done world wide proved

that incentivizing the performance of the Depot Manager brings the efficiency in the system.

Another important issue to be discussed here is incentive system. In the present situation,

state transport incentivizes the conductors and drivers based on the revenue they generate.

But this incentive has its negative side effects as well. If both conductors and drivers are

after revenue they may run the vehicles with over capacity which may be a potential cause of

accidents. There should be incentive systems for cleanliness, behavior with the passengers,

timely operation etc.

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Even if State Road Transport decides for parameters based incentive for Depot managers

then the question arises, what should be the performance metrics? Jansson and Pyddoke

(2010) opine that the linkages between incentive and parameters should be fewer.

3) The decision rights like cancellation of kilometers in the time of low traffic time are not

with the Depot Manager. This leads the Depot Manager to run non profit kilometers. Neither can

the Depot Manager plan the routes as per his profit plan, nor can he do so as per his service plan.

4) There are some employees whose jobs are not quantified in terms of money. For example

the mechanics may use the serviceable items which cost less or they may use new items which

cost more. The Store Keeper can control the material consumption if he is evaluated based on his

performance based on economic value addition he does.

5) No mechanics are incentivized to reduce the cost and the salaries are not linked to the

performance. There are no metrics to measure the performance of the mechanical staff and the

present measurement mechanism is more of subjective in nature. For Account Supervisors and

for Administrative Supervisors there are no structured metrics to measure the performance.

6) Depot Managers are measured by too many parameters. Many of these parameters must

be applied down the line so that he can concentrate more on profit and service aspects. It may be

better, if Depot Manager is measured by fewer but effective KPIs such as Profit, customer

satisfaction etc. Feilding (1985) also holds the opinion that too many performance parameters

create confusion.

7) The informal systems are not effectively used by the organization to achieve the goals.

Employees are back bone of the corporation. Hence it is very much necessary that employees are

satisfied with the administration of the Depot Manager. But as of now in the parameters of

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performance metrics of Depot Manager ‘Internal Customer’ has no place. KSRTC may do well

to look into this aspect.

7.0 Depot as Profit Centre.

Presently in KSRTC, Depot is working as Strategic Business Unit but not as a profit

centre. There are ambiguities in objectives and performance measurements. Some of the

performance metrics are not in congruence with the goal of the corporation. The efforts put by

the Depot Manager in efficient operation of ordinary routes takes back seat when profit is

measured as performance. Hence KSRTC can achieve its objectives by transforming Depots as

Profit Centers. Following are some possible alternatives to convert the Depot into Profit Centre.

1) The Depot Performance may be linked with incentive of the Depot Manager. The subjective

parameters like honesty, regularity, good behavior with the employees can be considered for

evaluation. 360 degree appraisal from superiors as well as subordinates is a good option to

measure the performance. ‘Customer satisfaction’ must be given importance for while

measuring performance.

2) There may be a measurement system to measure the trade off the Depot Manager has made.

The performance metrics may be crisp and easy to asses. The economic value added and

opportunity cost of the ordinary or non profitable routes must be calculated for the

performance metrics.

3) The performance parameters of other employees may also be in economic value and must be

incentive linked. The role of the every employee should be towards the objectives of the

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corporation. All the supervisors in the depot must be roped in the objective of serving the

public as well as achieving the profit.

4) Depot Manager may be given with the decision rights to use his resources. Depot Manager

should have rights to cancel the unwanted kilometers and non profitable kilometers. The

customer service parameter in performance evaluation will ensure that he does not go

overboard in cutting all ordinary routes and expanding only on express routes.

5) The interference from the divisional office in the decisions of the depot manager must be

limited. Too many officers interfering in the Depot Management spoil the decisions.

6) Under performance may be penalized by linking it to the promotions.

8.0 Conclusion and Recommendations

Ideally organizational control systems must be used to design performance parameters

and measurements so that the organizational goals and individual goals are aligned. In this paper

we have analysed KSRTC’s control systems through Simon’s Levers of Control Framework.

While connecting this analysis to the recommendations that follow, we may say that KSRTC’s

core belief is customer centric service and employees centric administration. But in any of the

parameters in the performance metrics of Depot Manager does not reflect the said beliefs.

Neither the customer satisfaction nor employees satisfaction parameters are incorporated in the

performance metrics.

Similarly boundary system restricts the employee’s behavior. For example bus crew is

supposed to behave in a cooperative, pleasant and helpful manner with the passengers, superiors

as well as with the co employees. But in practice, only the financial goals of the corporation are

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measured by assessing EPKM and KMPL for conductors and drivers respectively but

behavioral aspects of the crew is not assessed.

On the same lines, with reference to diagnostic control systems, the measurements must

be in various areas such that a holistic view of the organization may be obtained. In practice

Depot Manager and below employees are assessed by different parameters which are in

congruence only with achieving the financial goals, but not with service goals of the corporation.

Further, employees like Assistant Store Keeper, Accounts Supervisor and Administrative

Supervisor are not measured at all. For example Store Keeper can be measured for cost control,

Accounts Supervisor can be assessed for timely issue ETMs, Collection of commercial revenue,

and Administration Supervisor can be assessed for leave control, cost control in terms of

absenteeism control, cost control in terms of planning the schedules based on age and experience

(Depending on salary) of the employees. The goals of the corporations should be met by defining

the Key Performance Indicators for the designations.

Within informal control systems, similar measures may be undertaken. Emergent trend can

be en-cashed for the goals of the organization. For example, nowadays the emergent trend is

increase in the percentage of the educated employees. This trend can be en-cashed by KSRTC by

utilising crew in planning the schedules, schedule survey, monitoring the schedules, analyzing

the data, brain storming sessions to improve the depot. Since employees know the ground reality

they are best people to come up with the suggestions.

Implicit hierarchy can be used for the benefit of the organization. For example Accounts

Supervisor may be a well respected person in the depot. During the time of Jatras (Fairs) or

during the emergency/extra operations, his involvement in the bus operation will get good

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results. Any employee who has loyalty (but not basically traffic or mechanical man, say

administration man) can be utilized in revenue improvement of the depot.

Organizational stories are very important aspect of the informal control systems.

Management has to give an ear to the stories. Many of the stories reveal popular opinion. It is

important to have access to such information so that deviations from norms if any may be

rectified before they get worse. The recommendation is that vigilance wing of the corporation

can collect the stories floating around and rectify the system.

Ground level workers have a lot of tacit knowledge and can come up with many

improvements but they hardly get chance to express their views. The recommendation here is

that the tacit knowledge can be used strategically for the improvement of the system. For

example a tea party with the conductors can give us lot suggestions to improve the routes. The

challenge here is how do we systematize such process and and make use of the tacit knowledge.

Another example is that a newly recruited driver might have worked in private sector who knows

about the strategies of the private bus operators. That knowledge of this driver can be used in

planning of the routes.

To capture performances through informal control systems, KSRTC may add parameters

such as innovative contribution, extra value addition and incentives linked to them.

Basic argument of the paper is that Depot Manager should be assessed by main

parameters or outcomes like 1) Depot EPKM 2) Depot KMPL.3) Revenue increase. 4) Total cost

5) Net Profit. Apart from these important parameters other mechanical parameters or outputs like

1) Battery performance, 2) Tyre performance 3) Vehicle utilization 4) FIP performance 5) cost

on spare parts should be assessed for Assistant Works Suprtendant and below ranking

22

employees. In the same way, the parameters like 1) Commercial revenue, 2) Kilometers

cancellation, 3) Absenteeism percentage etc should be assessed for traffic personnel like

Assistant Traffic Supervisor and Traffic Inspector. Apart from these revenue parameters, we

should add the service parameters for Depot Manager, for example Customer satisfaction and

Employees satisfaction. Depot Manager has to be assessed not only by superiors and customers

but also by subordinates. These parameters may be assessed by a third party or by any officers of

different non-related unit. Assistant Traffic Supervisors and Traffic Inspectors can be assessed

by service parameters like regularity of the trips. AWS can be assessed by cleanliness and

mechanical soundness of the buses. The ordinary schedules operated by the Depot Managers

must be taken into account by adding the opportunity cost of those resources to the depot

revenue only for assessment purpose.

This paper does not recommend in any way any structural change in public transport

organizations such as KSRTC. The effort is to make the organizational structure effective

through the implementation of appropriate measurement metrics using the intrinsic control

systems that prevail in organizations. Depot managers cannot and must not be made accountable

for things in which he does not have any control. Appropriate officers having specific powers

must be accountable for execution of those powers.

Finally, this paper makes a passing reference to responsibility centres when it talks about

depot as a profit centre. More research may be conducted in this area of responsibility centres.

23

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16-

25

Figure 1 : KSRTC : Geographical Spread

Source : KSRTC

26

Figure 2 : KSRTC Organizational Layers

27

Managing Direc

tor

KSRTC Central OfficesBanglore

divisional Controller

s

Divisional OfficesIn District head quarters.

Depot

Managers

DepotsIn Taluka level

Figure 3 : Organizational Hierarchy (Central Office)

28

Figure 4 : Organizational Hierarchy (Divisional Office)

29

Figure 5 : Organizational Hierarchy (Depot Office)

30

Figure 6 : Simon’s 4 levers of control

31

Belief systems

Core Values

Boundary SystemsRisks to be avoided.

Interactive SystemsStrategic Uncertainties

Diagnostic systemsCritical

Performance

Variables

Business Strategy

Table 1

Depot wise Mechanical Parameters For the Month of Apr-10 to May-10

SL NO

PARTICULAR  DEPOTSA B C D E F DIVI

1 SchedulesTarget 86 64 58 45 46 26 325Cr.Yr 91 62 59 45 47 21 325Pr.Yr 113 56 59 50 37 0 309

2 Fleet HeldCr.Yr 100 66 63 48 50 23 350Pr.Yr 128 64 67 54 46 0 361

3 New Vehicles AddedCr.Yr 2 2 1 0 1 4 10Pr.Yr 6 3 1 0 0 0 14

4 % Spare FleetCr.Yr 9.9 6.5 6.8 6.7 6.4 9.5 7.7Pr.Yr 13.3 14.3 13.6 8.0 18.4 0.0 11.0

5 % Off-roadCr.Yr 5.7 4.7 4.6 3.7 5.6 5.0 5.0Pr.Yr 5.6 6.2 9.4 2.9 3.4 0.0 6.4

6 % Fleet utilizationCr.Yr 92.6 94.8 93.9 94.9 93.6 83.0 93.3Pr.Yr 95.6 95.1 95.1 96.5 87.1 0.0 92.6

7Cancellation(in Lakh)                

a Want of VehiclesCr.Yr 0.00 0.03 0.01 0.02 0.01 0.04 0.11Pr.Yr 0.00 0.00 0.01 0.00 0.00 0.00 0.02

b Vehicle RepairCr.Yr 0.03 0.05 0.06 0.02 0.03 0.02 0.20Pr.Yr 0.12 0.04 0.12 0.01 0.00 0.00 0.34

9 % Of Dead KMSTarget 4.0 2.9 5.4 4.8 3.5 4.5 4.1Cr.Yr 4.7 2.0 3.8 4.1 4.0 3.2 3.7Pr.Yr 3.3 1.5 4.3 0.9 4.20 0.00 3.2

10 Vehicle UtilizationTarget 347.1 342.3 344.4 335.0 349.5 0.0 347.2Cr.Yr 326.8 359.9 342.3 333.5 318.1 290.4 330.2Pr.Yr 336.5 350.4 296.2 348.5 333 0 335.4

11 K.M.P.L(HSD)Target 5.34 5.36 5.10 5.38 5.13 5.11 5.26Cr.Yr 5.21 5.29 5.11 5.30 5.07 5.00 5.19Pr.Yr 5.20 5.30 5.00 5.30 4.84 0.00 5.13

12 Engine Oil KMPLTarget 10000 10000 10000 10000 10000 0 10000Cr.Yr 8456 10914 11213 13213 34447 7826 10491Pr.Yr 10496 10181 11835 7072 8638 0 9696

13 Tyre Performance                

a New Tyre ConsumedTarget 74 55 54 42 32 14 271Cr.Yr 132 66 81 54 56 24 413Pr.Yr 158 70 113 66 30 0 543

32

b R/C Tyre ConsumedTarget 229 184 178 139 129 85 944Cr.Yr 455 281 314 334 348 86 1818Pr.Yr 373 184 230 228 71 0 1345

cNew Tyre Life (in Thousonds)

Target 44000 44000 44000 44000 44000 44000 44000Cr.Yr 43969 47101 36674 40137 34447 0 41397Pr.Yr 42946 39546 43344 35033 0 0 38719

dResoled Tyre Life.(in Thousonds)

Target 25000 25000 25000 25000 25000 25000 25000Cr.Yr 27992 23382 19275 22500 17381 0 22906Pr.Yr 25705 18561 16854 17735 0 0 22090

e Total avg (in lakh)Target 1.20 1.20 1.20 1.20 1.20 1.20 1.20Cr.Yr 1.46 1.28 1.13 1.19 1.00 0.00 1.28Pr.Yr 1.21 1.02 0.82 1.03 0.0 0.0 1.0

f Retreadability FactorTarget 3.04 3.04 3.04 3.04 0.00 3.04 3.20Cr.Yr 3.65 3.46 3.96 3.50 4.39 0.00 3.76Pr.Yr 3.02 3.39 2.31 3.30 0.00 0.00 2.75

14 Avg.Life of BatteriesTarget 3.00 3.00 3.00 3.00 3.00 3.00 3.00Cr.Yr 3.12 2.91 2.95 3.88 2.59 0.00 3.21Pr.Yr 0.00 2.40 2.53 2.86 0.00 0.00 2.63

15 Engine Performance                

aAvg.Life of New Engine (in Lakh)

Target 5.00 5.00 5.00 5.00 5.00 5.00 5.00Cr.Yr 4.83 3.38 6.31 0.00 0.00 0.00 4.26Pr.Yr 3.06 0.00 4.55 0.00 0.00 0.00 3.72

b ReconditionedTarget 2.50 2.50 2.50 2.50 2.50 2.50 2.50Cr.Yr 3.32 0.00 1.33 0.00 0.00 0.00 2.92Pr.Yr 0.71 0 0.19 0.00 0.00 0.00 0.36

16FIP PERFORMANCE                

aAVG Life of FIP a) New (in Lakh)

Target 4.5 4.5 4.50 4.5 4.50 4.50 4.5Cr.Yr 3.08 3.97 3.72 0.00 0.00 0.00 3.66Pr.Yr 2.29 3.47 0.19 0.00 0.00 0.00 2.33

b b)ReconditionedTarget 2.00 2.00 2.00 2.00 2.00 2.00 2.00Cr.Yr 0.25 0.45 0.75 0.00 0.00 0.00 0.55Pr.Yr 2.69 2.14 0.00 0.00 0.00 0.00 1.97

17 No of Break Down Cr.Yr 14 8 10 4 17 6 59Pr.Yr 17 12 6 6 0 0 48

18 Rate of Break DownCr.Yr 0.07 0.06 0.08 0.04 0.18 0.19 0.09Pr.Yr 0.07 0.09 0.05 0.06 0.00 0.00 0.06

19Cost on HSD (Paise/km)

Target 771.9 750.4 806.8 761.2 788.3 798.6 776.5Cr.Yr 788.6 733.1 800.8 765.9 805.2 800.3 778.9Pr.Yr 678.3 657.8 709.9 653.9 740 0 688.5Vari 110.3 75.3 90.9 112.0 65.2 0.0 90.4

20 Cost on Spares Target 21.7 13.4 18.2 21.0 11.6 16.7 32.0

33

(Paise/km)Cr.Yr 34.0 30.6 30.1 26.5 27.3 23.5 41.4Pr.Yr 26.9 30.9 49.4 26.5 21.3 0 39.80Vari 7.1 -0.3 -19.3 0.0 6.0 0.0 1.6

21Cost on Tyre (Paise/km)

Target 69.2 66.7 83.2 81.3 66.1 73.1 72.8Cr.Yr 115.0 85.9 123.2 114.7 126.3 112.3 118.1Pr.Yr 77.2 66.3 107.5 85.9 55.4 0.0 82.6Vari 37.8 19.6 15.7 28.8 70.9 0.0 35.5

22Cost on Lubricants (Paise/km)

Target 12.6 11.9 15.1 12.6 13.1 13.4 13.0Cr.Yr 15.0 12.0 8.6 10.1 12.1 7.4 11.7Pr.Yr 10.6 15.0 11.2 9.8 7.8 0 11.1Vari 4.4 -3.0 -2.6 0.3 4.3 0.0 0.6

23Battery & Elec.items (Paise/km)

Target 4.2 2.2 3.8 4.1 3.6 3.8 3.6Cr.Yr 3.9 2.2 6.3 3.4 4.0 5.2 4.0Pr.Yr 1.7 4.4 4.4 0.8 6.3 0 3.1Vari 2.2 -2.2 1.9 2.6 -2.3 0.0 0.9

(Source : KSRTC )

34

Table 2 :

Depot-A Month- August-2010.

Parameters Target inIn lakhs

AchievementsIn lakhs

Per KilometerTarget(In Paise)

AchievementsPer kilometer(In paise)

Effective Kilometers

14.98 15.32

TrafficRevenue realized(In Rupees)

286.01 293.91 1909.3 1918.5

Other revenue(In Rupees)

20.81 22.80

Total Revenue 306.52 316.71 2048.2 2067.3HSD + Mechanical cost ( HSD+ Tires+ Tubes+ Battery)

186.84 187.47 1247.3 1223.7

Vehicle Tax 16.20 105.7Cost on employees+ Depreciation+Central Office Over head+ Accident Relief fund.

116.67 126.82 778.8 827.8

Total Cost 319.24 330.49 2131.1 2157.2Profit -12.42 - 13.78 -89.9 -89.9

(Source KSRTC)

35

Notes

36

i KSRTC - Karnataka State Road Transport Corporation ; BMTC – Bangalore Metropolitan Transport

Corporation ; NWKRTC – North West Karnataka Road Transport Corporation ; NEKRTC – North

East Karnataka Road Transport Corporation.

ii FIP : fuel injection pump. It is a vital part of the vehicle.

iii Documented evidence with KSRTC internal depot records.

iv Bandh – commonly used Indian word for a protest strike