Pesec Creative Management

Culture Analysis and Recommendations for a Public Transit Authority

Creating a culture for performance in the 21^st Century

Table of Contents

Executive Summary   3

History   4

Reasons for the Study   6

Survey Methodology   6

Results   8

Recommendations   9

Conclusions   12

Appendix A   14

Appendix B   15
 

Executive Summary

PCM performed a Corporate Checkup™ of an Ohio Public Transit Authority. This study required developing a formal survey and administering it to the four major departments in the Authority: Information Technology, Finance, Training and Human Resources.  The results are presented in this report, including specific recommendations to implement the changes required to address the high priority problems uncovered during the Corporate Checkup™.

Overall, there are several initiatives, that when fully implemented will assist in the transition to a better, more efficient workplace.  Some of these key initiatives are:

·         Bringing the employee salaries in line with the private sector.  This will allow the Authority to attract and help in retaining valuable employees.

·         Performance based reviews.  This process directly ties individual performance to merit pay increases.

·         Continuous Improvement Teams.  These cross department teams will improve the communication and sense of community.  This last process, however, has the lowest probability of success.  History in similar organizations has indicated many of these teams have become ineffective.  These teams must be monitored to ensure they maintain their value.

Clearly, the authority has embarked on the road to change. It is PCM’s opinion that implementing the recommendations within this report will also reduce the transition time.

History

Pesec Creative Management (PCM) has completed a Corporate Checkup™ of a Regional Transit Authority.  This analysis was prompted by a concern that the organization is not prepared to move aggressively into the future. The future vision of the organization is to provide excellent transit service to the entire community in a cost effective manner. This is not to say, the Authority currently is not cost effective, but there are several service related initiatives that could change the complexion of the organization. 

The Authority was formed in the mid 1970’s through an act of the Ohio Legislature.  The Authority’s charter is to provide public mass transit services to residents within its geographical area.  To provide the best possible service in fulfillment of the legislature’s charter in light of the new initiatives, the authority has decided to review its internal and external cultures and develop specific steps to make significant improvements where feasible.

The Authority’s primary funding comes from a sales tax approved by the voters within the service region.  This sales tax comprises almost 60% of the operating revenue, grants from other various public funding sources account for approximately 30%, with the fare box making up the remaining 10%.  One of the authority’s goals is to become more self-sufficient through increasing the percentage of fare box revenue.  This increase can be accomplished either with a increase in fares, or to reduce the non-fare funding which in effect will increase the fare box percentage.  To accomplish this reduction, the authority must improve the productivity of all the associates. Unfortunately, the survey indicates that because of the high level of burnout within the organization, this increase is highly unlikely without taking specific steps to correct the burnout. Reducing burnout must be the highest priority.

There are six major departments within the organization each with a Vice President or Director.  Each of these department heads is a representative on the Executive Management Team.  An overview of the organizational structure is contained in Appendix A.

PCM primarily looked at the internal culture and how it is communicated within the organization, concentrating on the Information Technology Department (IT), Training, Human Resources and Finance.  These limits were established primarily for two reasons:

1.      To determine the optimal method to instill a new culture within the organization.  These departments because of their size and having all the employees in a small geographic location, allows quick evaluation of the effectiveness of the recommendations.

2.      To diagnose any major issues that should be corrected in the new organizational culture to be implemented by the CEO.

Additionally some ancillary information was gathered from interviews with selected vendors regarding these vendor’s impressions of the Authority.

Reasons for the Study

The reason for this study is an uneasy feeling within management that rapid hiring is causing severe problems within the organization along with the possibility of burnout.  The most visible symptom is an increase in the tension level and squabbles between the members of the Executive Management Team.  In addition, a noticeable drop in productivity is occurring despite the additional staff. The Authority is doing less with more, clearly not a desirable process.  Both of these symptoms are indicators of burnout.  These issues must be addressed if the organization is to make any improvements.

Survey Methodology

The first step in the process required a survey of the Authority’s nonunion employees in the selected departments.  The survey was developed to avoid influencing the subjects about the information to be collected.  The unionized employees were specifically excluded because any recommendations developed would require changes to the existing collective bargaining agreement.  The current agreement, was just negotiated within the past year and remains in effect for the next three years.  Because of the contract’s remaining duration, any suggested recommendations would be likely outdated prior to the next collective bargaining agreement.

The survey was administered to twenty employees via an in person interview.  The employees were from the following departments based on the relative size:

·         Information Technology

·         Finance

·         Training

·         Human Resources

The survey is composed of a series of both formal questions and informal questions.  The informal questions were developed by using information determined during the interview process and were unique to each session.   A copy of the formal survey is contained in Appendix B. 

The formal questions cover various aspects involved of the formal culture.  Included are general questions about how the employee perceives the culture and the impact of the culture on the employee. 

This primary communication takes place during the new employee orientation that occurs within the Human Resources department soon after the employee joins the Authority.  This initial orientation continues within the individual departments.  The departmental introduction contains areas of culture that are unique to that department.

Results

A key to being successful in the future is having an educated staff.  This requires continuing education both in technical skills but also in managerial skills. The training department indicated an understanding of this need, however there are no funds available.  The need for training is increased because of the rapid growth in the management ranks.  An example of this is the addition of three individuals within the IT department, a fifty percent increase.  While these individuals are “professional hires,” each still requires training on the unique ways the authority is structured and the requirements to be successful.  In addition, new technologies are being rapidly introduced each of them requiring additional training.

Along with growth, there has been an increase in the level of the paperwork, policies and procedures being generated.  The additional paperwork is viewed by many employees as unnecessary, extremely counterproductive and an utter waste of time.  These feelings primarily are concentrated within the IT and HR departments.  These feelings are expected because these departments are the vanguard in implementing these procedures.  Unfortunately, the other departments are now sensing the resentment and are responding in kind. 

Lack of formal procedures and accountability is causing individuals to duplicate work.  The cause of this is the rapid growth that has eliminated time to develop formal procedures.  Additionally because there are no clear delineation of roles and responsibilities, people are able to avoid responsibility, in effect playing the blame game, there can be nothing more damaging to the organization.  This belief is typified with a contractor’s comment - “We (referring to the contractors) are the only people doing anything here.”

Recommendations

·         Train the staff in technology, managerial techniques and new culture.

Experts have identified that having a highly trained and dedicated team is the cornerstone to a highly motivated and effective staff.  Too many companies in America have reduced work to “just getting a paycheck.”  The key factor in changing the existing attitude is to infuse the employee with the sense of meaning and being in control of their job.  With the tight labor market, even during the current recession, finding good employees is extremely difficult and retention should be paramount concern because of the high cost associated in training new employees.  Additional funds need to be allocated to provide the required training. 

The additional training must be of sufficient quality, quantity and timeliness ensuring that the staff is able to be immediately productive when the new systems are in production. This action will strengthen the perspective that management is willing to provide the tools and support to the staff.

·         Promote responsibility for actions both good and bad.

To often within the Authority, there is an attitude of “it’s not my job.” Nobody is willing to take ownership of problems and follow through to make sure they are resolved.  This applies to both issues identified by the public and employees.  This attitude is creating a very negative attitude within the authority.  A classic example of this problem is taking in excess of six weeks to pay an invoice that was over four months old.  Upon each inquiry the answer was the same, it has been paid, yet the vendor never received payment, and in actuality the payment authorization was being held up because of lack of procedures.  Finally, it took a meeting with the CFO, Director of Finance and the CIO present to finally pay the invoice. 

·         Instill a sense of community in the Authority.

To become an organization of the 21^st century, and to reduce organizational fatigue, the spirit of innovation and cooperation must be instilled within the organization.  A major obstacle to implementation is the many turf battles within the organization.  Many department heads are trying to build empires.  These actions unfortunately, many times, are at the expense of the overall organization.  Concurrently, with these actions, are the tendencies of managers to avoid making any decisions that benefit other departments. 

The concept of taking responsibility for actions needs to be reinforced.  To change this will require each department head to have clearly demarked responsibilities.  These responsibilities must be communicated to the staff.  If an issue or project does not entirely fall within a department, some agreement must be arrived at for ownership.  From then on the responsible department head is solely responsible.  When the staff observes that the department heads are held accountable and no excuses or making excuses are allowed, the staff will begin to imitate the process.

·         Provide for input from the regular employee.

Currently the only method the employees have to make suggestions is through the CIT teams or suggestion box.  Neither of which are viewed as viable.  The challenge is to devise a way that allows for the employees to have both significant input and to also receive some of the benefits of their suggestions.  Employees, those that are performing the work have an innate understanding of how to improve the process.  Because of the shift to performance based salary increases, unless fairness is ensured, such that the employee who suggested the improvement receives some type of reward, the perception of the transition will be that only management benefits.  This will be counterproductive, to improve the work environment, fairness must be maintained.  The recommendation is that a formal method be established, within the HR department to receive these suggestions.  The suggestions will then be forwarded anonymously to the EMT for consideration.  The anonymity of the author of the suggestion will provide a protection against any fears an employee may have should they question a policy or procedure. A response will be communicated back to the employee indicating the EMT’s response.  A fund will be established to reward the employee’s who make suggestions.  The amount of the reward will be proportional the savings or increased revenue the suggestion generates.  For example, the total savings and increased revenue for a year is $100, the fund total is $1000.  Joe Smith’s idea generated $50 of the $100. Thus he contributed fifty percent of the savings/increase, so he would receive $500.

Conclusions

Changing the culture of an organization is not easy, it requires dedication from everybody, the CEO to the workers.  It will not happen overnight, and changing any one area, will have repercussions in other, the entire culture should be viewed as an ecosystem.  A living, breathing living system, composed of distinct individuals.  This is a radical departure from the traditional view, however, looking at organizations today, both employees and organization are self-destructing.  Clearly, something is wrong, the old methods are not working, it is time to try something new.

Transferring the private sector profit motives, to the authority will be both extremely difficult and lengthy.  There will be many false starts and missteps. However the process must be started and emphasized, because being successful at this transition is extremely important.  This transition is paramount due to the continuing reduction in public funds - both the sales tax revenue, and from the Federal Government.  The challenge will be the introduction of profit driven processes and procedures there will be increases in the stress levels, leading to increased burnout.  This must be faced and dealt with of the organization will experience more dysfunction.  The procedures outlined in our recommendations should reduce the effects of this transition.  With the reduced funding levels, becoming more self-sufficient, customer focused and efficient will allow the organization to fulfill the mission “to provide world class transportation into the 21^st century.”

Appendix A

Appendix B 

Dear Associate,

Below is a survey to determine the working environment of your company.  All answers are confidential, with the results being reported only as totals.

We would appreciate you taking a few minutes to provide us your answers to the survey below. This information will help us help you.

Thanks for your assistance.

Demographic Background.

Before we start, we need to know something about you. 

What department are you in:

How long have you been with the company:

Sex:

Age:

Now we will look at how you view the future of the company.  Please indicate your response using the following scale.

Other comments.