BACKGROUND INFORMATION

Transportation is an integral part of modern life. According to Kumari et al. (2010) and

Rehrl et al. (2007), a good transportation network is one of every modernized city’s initial

priorities because today’s modern society needs mobility in every aspect of life. Every day,

people need to go to work, children need to go to school, and products need to reach the other

end of the supply chain and these events needs to be done on time to avoid unnecessary

aftermaths.

Bus terminal, or terminus, is the point where a bus route starts or ends, where vehicles

stop, turn or reverse, and wait before departing on their return journeys. It’s also where

passengers board and alight from vehicles. It also often provides a convenient point where

services can be controlled from. This operation in bus terminal is schematically shown in Figure

1.

In this case, the General Manager of a bus terminal declares an “on-time policy” so that

buses will depart on time and meet the customers’ satisfaction about the timely departure they

secondarily prioritize in the survey and safety is their first priority. Since, the bus company and

his competitors are offering about the same level of competitive edge, the General Manager

thought that announcing this kind of policy will have a good outcome in the company especially

the quality of service they want to offer to their customers’.

PROBLEM STATEMENT

Main Problem

Implementing of the “on-time policy” for timely departure greatly affects the employees

(e.g. drivers and staffs) as well as the passengers of the bus terminal. Lack of strategic plan of the

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General Manager to execute this kind of policy will result to disaster in the organizational

structure of the company (e.g. employees: drivers and staffs) and it will also affects’ the

customer.

By using Ishikawa principle, cause and effect where listed to provide the main problem in

this case.

Causes of the Main Problem

 Based on the customer survey, timely departure is their second priority to get on time in

their destination.
 Since the priority of the customer is a must for the management of the bus terminal. The

General Manager declares the “on-time policy” for timely departure.

 Since the bus company and their competitors are offering about the same level of

competitive edge. The general manager wants to step-up the game in order to satisfy the

priorities of the customer. Announcing the “on-time policy” for timely departure is what

he had to offer to his customer.

Effects of the Main Problem

 Drivers refuse to leave on time because of incomplete passengers in their bus.

 Sales revenue is declining because of half-full of passenger in the bus that departs on the

designated time.
 Drivers are protesting since on-time policy affects their pockets / commission that are

based on the load factors of each trip.

 Passengers are protesting because of the drivers refusing attitude to leave on time.

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ANALYSIS OF DATA

The General Manager declares an “on time policy”, in order that all buses will depart on

time. After one (1) month of the implementation of this policy, negative effects appear one by

one.

After one month of implementing this “on-time policy”, some negative effects happen in

the terminal. First, is that buses are not full when they depart on time. Second, bus operators

protesting and refuses to leave on time in spite of the warnings from the dispatchers because of

this half full of passengers inside their bus greatly affects their commissions. Commissions that

are based on the load factors of each trip. Third, sales revenue is declining because of buses

leaving on time but not all the seats are full. So, the sales department becomes lukewarm to the

on-time program. Fourth, instead of satisfying the customer because of the “on-time policy” it

also affects them because they arrive early just to see the bus operators casually refusing to leave

on time as scheduled.

Based on the analysis of the case, by using the Pareto principle, eighty (80) percent of the

main problem of this negative effects happening in the bus terminal is “on-time policy” that the

General Manager implement to his bus terminal. Lack of strategic plan to execute this kind of

policy to serve quality services might affect the organizational structure, communication and

motivation of the employees as well as the passengers.

If quality service is the important objective that the General Manager wants to set in the

bus terminal. He must consider all the possible solutions that will be listed in the next section of

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this paper. In order to provide a higher service quality to ensure its dominance in transportation

and avoid the loss of passenger flow caused by various reasons.

DISCUSSION OF SOLUTIONS

In this section, possible solutions will be discussed in order to solve the problem or if not,

because of some unpredictable changes or events, will at least lessen the problem.

Planning, Organizing, Leading and Controlling for proper execution of Policy

Planning

Planning is concerned with future actions and decisions of management. By setting

objectives and establishing a course of action, management commits to “making it happen.”

Planning is the easiest where change happens the least. Planning is the most useful where change

is the greatest, according to Peter D. Mauch.

The General Manager set his objectives to ensure the quality of service given to his

customers. So, he implemented a policy based on what the customers prioritizes in the customer

survey. But he didn’t foresee all the effects whether it is positive or negative that his

implementation of “on-time policy” will encounter.

Organizational goals, policies, and procedures are not mutually exclusive components

(see Figure 2). Each is related to the other; for example, policies relate to objectives, while

procedures relate to policies. Similarly, they are an integral part of the organizational structure.

Policies identify what departments do, whereas procedures tell us how to do it. Goals are

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achieved through policies and procedures. In and of themselves (employees), they can do

nothing unless senior management is dedicated to making them happen.

For executing the “on-time policy” properly without any negative effects. The first step is

to identify the customer, how the customer buys, and how the customer can be reached. Second,

top management must determine customer needs. Top management should determine what the

present and future business should be.

According to Peter D. Mauch, policies exist at all levels of the organization. A typical

organization has policies that relate to everyone in the company. Policies outline a general course

(or framework) of action to be followed and do not precisely describe how to achieve specific

objectives. A general outline for writing a policy statement is as follows:

1. Describe the major activities and sub-activities.

2. Identify the objective.

3. Define the department that is responsible.

4. Identify the associated procedure.

5. State the policy.

In order to follow the policy properly without hesitation, procedures and rules define in

step-by-step fashion the methods through which policies are achieved. It must outline the manner

in which a recurring activity must be accomplished.

Organizing

The purpose of organizing is to establish lines of authority. A line of appropriate authority

creates order within the company. This is necessary in order to prevent chaos where everybody is

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trying to do everything at once. To create synergism, departments and individuals need to work

together in a coordinated effort resulting in higher efficiency. Another benefit of organizing the

business is more efficient communication and reduced conflict by ensuring that authority and

responsibility coincide.

Leading

According to Peter D. Mauch, Leadership is closely linked with the idea of management.

The two are synonymous; management is a subset of leadership.

In order to satisfy the needs of the passengers because of their priorities when travelling

and to work-out the policy. The General Manager must be autocratic or authoritarian manager in

making all the decisions, keeping the information and decision making among the senior

management. Objectives and tasks are set, and the workforce is expected to do exactly as

required. The communication involved with this method is mainly downward, from the leader to

the subordinate. According to Elton Mayo, this method may lead to a decrease in motivation

from the employee’s point of view. The main advantage of this style is that direction of the

business will remain constant, and the decisions will all be similar.

Control

According to Peter D. Mauch, an organization should have a set of objectives. The

General Manager of the organization must require information for determining how well these

objectives of the “on-time policy” have been achieved. This should focus on two factors:

1. Whether the goals have been met (effectiveness). If the “on-time policy” is effective

on ensuring the customers prioritizing in timely departure.

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 2. Whether they were able to provide products and services with minimal

nonconformities (efficiency). If the “on-time policy” is efficient on the customers wants to

depart on time.

In general, the purpose in measuring value is to help management control the activities.

In order to maintain stability, the General Manager must be sure that the organization is

operating within its established boundaries of constraint.

The next concern is objective realization, which requires continual monitoring of the

“on-time policy” to ensure that adequate progress is being made toward the accomplishment of

established objectives.

Seeking for Chance Passengers

If filling up all the passenger seats is the top priority of the bus terminal management.

Having a grace time of fifteen (15) minutes after the designated departure time should be

implemented for “chance passengers” who just arrived on the bus terminal that wants to ride the

bus immediately. If not and the bus must leave on the designated departure time, those

passengers who are waiting on the bus stops will be the one to fill up the empty seats. Every

time, a passenger will alight to the bus there will be more seats that are available for “chance

passengers” who are still waiting on different bus stops. It can be the solution for the declining of

revenue because of half full passengers in the bus that departs on time.

Pareto Principle for Achieving Quality Service for Customer

The Pareto principle is also known as the 80/20 rule. For example, 80% of our business

comes from 20% of our customers. The principle itself states that 80% of the effects come from

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20% of the causes. The reason that the Pareto principle is used together, is that the bulk of the

profits and long-term relationships will probably arises from 20% of the customers. Therefore,

we need to know as much about our customers behavior, needs and wants.

Customers’ priorities is a must. So, if the passengers’ prioritizing to depart on time,

declaring an “on-time policy” for departuring even though the seats are not completely filled up.

Since it will affect the sales revenue. The bus terminal should have a plan about that like the

seats that are not taken will be filled up by “chance passengers” who are waiting on different bus

stops. And every time a passenger will alight to the bus there will be more seats that are available

for “chance passengers” who are still waiting on different bus stops. So, twenty (20) percent of

the passengers’ as the customers’ will be greatly affect eighty (80) percent of the business and

sales revenue.

Two Factor Theory (Motivation-Hygiene Theory) by Frederick Herzberg

Based on this, he developed the theory that people’s job satisfaction depends on two

kinds of factors. Factors for satisfaction (motivators/satisfiers) and factors

for dissatisfaction (hygiene factors/ dissatisfiers).

Based on the illustration shown in Figure 3, Performance, recognition, job status,

responsibility and opportunities for growth all fall under motivators/ satisfiers. Hygiene

factors/dissatisfiers are about salary, secondary working conditions, the relationship with

colleagues, physical work place and the relationship between supervisor and employee.

In his theory, Herzberg claims these factors function on the same plane. In other words,

satisfaction and dissatisfaction aren’t polar opposites. Taking away an employee’s dissatisfaction,

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for example by offering a higher salary, doesn’t necessarily mean the employee will then be

satisfied. The employee is just no longer dissatisfied.

Using the two factor theory, the General Manager should motivate his drivers for them

not to refuse orders. Since the drivers of the bus terminal is refusing to depart on time because

their commissions are based on load factor on each trip. According to Labor Secretary Silvestre

Bello III, the bus drivers should be paid with the right salary and overtime pay unlike before that

it is based on commission. He also said that bus operators should welcome this measure as it is

another way to ensure a safe transportation for commuters because of some drivers and

conductors are involved in accidents; as some drivers are resorting to some ways to have plenty

of passengers in order to have more commission and it’s actually dangerous.

Based on the National Wages and Productivity Commission (NWPC) Guidelines No. 1

Series of 2019, bus operators shall implement “a mutually-agreed upon” compensation scheme

for drivers and conductors, taking into consideration the revenue, ridership, safety, specific

conditions of routes, and “other relevant parameters.” Also, NWPC stated that, “The fixed wage

component shall be an amount mutually agreed upon by the public utility bus owners and/or

operators and the driver/conductor and shall be paid in legal tender. It shall in no case be lower

than the applicable minimum wage for work performed during normal hours/day.” The NWPC

also said that bus drivers and conductors are also entitled to other “wage-related benefits” such

as overtime pay, nightshift differential, service incentive leave, 13th month pay, and holiday and

premium pay.

The General Manager must remove the dissatisfaction of his drivers by motivating them

through fixed salary price and wage benefits as stated by the National Wages and Productivity

Commission (NWPC) of the government of the Philippines. This kind of approach of the

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General Manager to the drivers will fall under the category of “high hygiene & high motivation”,

drivers will have no complaints because their salary is not based on their commission anymore

and it will them motivate more to follow the policy and ensure safety of the commuters.

Consumer Behavior Theory

According to Han et. al (2018), based on the consumer behavior theory, passenger’s

choice behavior in bus station is rational, and the optimal travel mode will be chosen according

to the utility maximization hypothesis. Before traveling, passengers will make their own travel

plans mentally based on their existing experience, including selecting bus station, routes and

departure times. On the way to the bus terminal, most of them have to make a decision about the

bus route and bus station they plan to take. They hope to spend less time reaching their

destination without transferring to another bus terminal and taking another mode of

transportation. Passengers’ waiting psychology and behavior affect their perceptions at bus

station. Passengers will have expectations on bus service level such as waiting time, cabin

environment, and service value. The buses are usually operated on specified routes at scheduled

time. When the bus service level become lower due to traffic congestion during rush hours,

passengers cannot accurately predict the bus arrival time and have to wait before the bus arrived

at the terminal. When the arrival is not the expected one, it will result in great loss and thus a

psychological imbalance, which will give negative feelings to passengers. When the waiting time

exceeds the psychological expectations of the passengers, some of them will not only choose to

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transfer to other bus routes or bus terminal, but also choose to transfer to other travel mode such

as taxi and carpool.

Therefore, without taking the consideration of the consumers behavior, loss of passengers

will happen as well as the sales revenue of the company.

By using these theories and principles, the group tracked the possible causes and effect of

the main problem and created a possible solution and suggestions to solve each of the problems

appears on the case study.

RECOMMENDATION

In this section, the group will recommend the best solution for solving or lessen all the

problems appears on this case. Since, public transport must provide a higher service quality to

ensure its dominance in transportation and avoid the loss of passenger flow caused by various

reasons.

The group recommends to the General Manager to apply all the solutions, theory and

principle discussed in the Discussion of Solutions. Since, there is a best solution that were

discussed in every problem that arouse in the case.

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APPENDIX

Figure 1. Basic Function of the Transportation Terminal

Figure 2. Interaction of objectives, policies and procedures.

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 Figure 3. Two Factor Theory by Frederick Herzberg

Figure 4. Illustration of the Two Factor Theory in Practice

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REFERENCES

Textbook:

 Mauch, P. (1954). Quality Management: Theory and Application. Retrieved from

https://pqm-online.com/assets/files/lib/books/mouch.pdf

Websites:

 Bernstein, R. (2018). Top Consumer Behavior Theories. Retrieved May 8, 2019 form

Husson University Online Blog: https://online.husson.edu/consumer-behavior-theories/

 Foxall C. (2013). Bus passengers’ experience of delays and disruption. Retrieved May 7,

2019 from: https://www.transportfocus.org.uk/research-publications/publications/bus-

passengers-experience-of-delays-and-disruption-research-report-april-2013/
 Han, Y., Li, W., Wei, S., Zhang, T. (2018). Research on Passenger’s Travel Mode Choice

Behavior Waiting at Bus Station Based on SEM-Logit Integration Model. Retrieved May

8, 2019 from Ideas: https://ideas.repec.org/a/gam/jsusta/v10y2018i6p1996-d152333.html

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 Kuijk, A. (2018). Two Factor Theory by Frederick Herzberg. Retrieved May 7, 2019 from

ToolsHero: https://www.toolshero.com/psychology/theories-of-motivation/two-factor-

theory-herzberg/

 Vasudevan, P., Mulukutla, P. (2017). Bus Karo 2.0 Case studies from India. Retrieved

May 7, 2019 from The Hub: https://wricitieshub.org/online-publications/71-costs-and-

revenues-understanding-bus-operations

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