PROBLEM AT TESSIE CASE STUDY

Submitted:

UNIVERSITY OF REGINA

Course Title:

Course Code:

Alamin Ali Galmani - 200488619

Parnia Abdollahian - 200486021

Annapurna kaul Prithiani – 200494746

Adenuga Abidemi Bayonle – 200493725

Olawunmi Abel Ajayi - 200476621

November 2023
Trouble at Tessei

EXECUTIVE SUMMARY
The Tessei case involves a cleaning company that is experiencing a number of difficulties,
including a high employee turnover rate, disgruntled customers, declining revenue, and
operational and safety concerns. The organisation provides services to JR East, a Japanese rail
company. Due to the precarious situation facing the company, Teruo Yabe, who had a stellar
career in operations and safety, was brought in to lead an organisational turnaround.

Yabe has been assigned to address a number of issues that the study discovered to be the core
causes of the four main problems plaguing the company: high employee turnover, dissatisfied
customers, declining revenue, and operational and safety concerns. Poor motivation and
employee engagement were found to be the root causes of the high employee turnover problem,
and customer dissatisfaction was linked to stolen lost items and dirty restrooms. It was
discovered that the cause of the declining revenue is structural while inflexibility in cleaning
protocols, a communication gap, and other factors that were linked to safety and operational
issues.

Following the problems' discovery, a number of recommendations and solutions were put forth in
relation to each major issue. In order to lower the high employee turnover rate, the new
management was urged to increase employee engagement. Additionally, a whistleblower policy
should be created to lower the frequency of stolen forgotten items, which is a major source of
customer dissatisfaction. Yabe was advised to promote transparency in order to address declining
revenue, and employees could help address operational and safety concerns by contributing to
the development of safety protocols.

According to the study's findings, involving stakeholders is not only a requirement but also a
crucial factor in the success of businesses. Another important lesson from the case was the
indispensability of employee motivation for company success.

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Trouble at Tessei

Contents
1.0 CASE BACKGROUND......................................................................................................................4
2.0 KEY ISSUES/PROBLEM STATEMENT..........................................................................................4
2.1 HIGH EMPLOYEE TURNOVER.....................................................................................................5
2.2 FALLING REVENUE.........................................................................................................................5
2.3 CUSTOMER DISSATISFACTION....................................................................................................6
2.4 SAFETY AND OPERATIONAL ISSUES..........................................................................................6
3.0 SOLUTION AND RECOMMENDATION........................................................................................7
3.1 HIGH EMPLOYEE TURNOVER.....................................................................................................7
3.2 FALL IN REVENUE...........................................................................................................................8
3.3 CUSTOMER DISSATISFACTION....................................................................................................9
3.4 SAFETY AND OPERATIONAL ISSUES..........................................................................................9
4.0 CONCLUSION..................................................................................................................................10
REFERENCES........................................................................................................................................11

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Trouble at Tessei

1.0 CASE BACKGROUND

As a subsidiary of the East Japan Railway Company, Tetsudo Seibi Kabushiki Kiasha, also
known as Tessei, is a railway maintenance firm. Working at Tessei is regarded as a herculean task
because employees are expected to clean the train cars in seven minutes, which is shorter than
the time it would normally take to clean one Boeing 737. Even with the tedious work, the
workplace was hostile because there was no room for creativity, superiors would yell at staff
members, and customers would make fun of them. In actuality, Tessei's employees had no
dignity amid the discouraging workplace atmosphere.

Tessie was plagued by issues with worker safety, a huge volume of customer complaints, a bad
reputation, operational mistakes, and a high employee turnover rate. For example, the company
hired twenty to thirty part-timers per month, with an average age of fifty-three, which made it
more challenging to finish the cleaning process in a short period of time. Furthermore, Tessei
experienced a decrease in revenue between 2001 and 2005 due to management misconduct. This
resulted in a 12% decrease in revenue despite corresponding percentage increase in the number
of train cars that were cleaned.

Pursuant to the desire to turn around Tessei, Teruo Yabe was appointed Director and General
Manager after 39 years with JR East, given his year of experience working in safety, operations,
and management.

2.0 KEY ISSUES/PROBLEM STATEMENT

In order for Teruo Yabe to achieve the task of turning around Tessei, he has to surmount four
principal challenges identified below:

High
Fall in
Employee
Revenue
Turnover

Customer Operational
Dissatisafctio & Safety
n Issues

Figure 1: Key Issues with Tessei

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Trouble at Tessei

2.1 HIGH EMPLOYEE TURNOVER

One of the greatest challenges that Yabe will have to deal with is the incidence of entry and exit
of employees in Tessie. The case states that Tessei typically hires 20 to 30 part-time workers each
year, indicating a high rate of employee attrition on the part of the company. Below are some of
the main causes of the high employee turnover rate:

Poor Motivation

High Employee
Turnover
Poor Employee
Engagement

Figure 2: Root Causes of High Employee Turnover

2.2 FALLING REVENUE

Encouraging Tessei to make a turnaround won't be enough if the company can't resolve the
problem of its revenue dropping sharply even though it is cleaning more train cars. To analyse
the underlying reason for the revenue decrease, the revenue framework—which is shown below
is employed.

Fee/Train Car

Revenue X
Number of Train
Cars cleaned

Figure 3: Analysis of Falling Revenue

By breaking down the revenue sources, revenue can only drop if there is a decrease in the
number of cleaned train cars, the fee per train car, or both. Excerpts from the case demonstrate
that, between 2000 and 2005, the number of cleaned train cars increased by 12%, indicating that
the fees had to have decreased. This is further supported by the case excerpt that claims the
reduction in commission was the result of managerial misconduct. The revenue drop per day
over a period of 365 days is displayed in the table below.

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Trouble at Tessei

Year 2001 2002 2003 2004 2005

Revenue (¥’Bn) 3,137 3,135 3,012 2,837 2,749
Number of Train Cars 1,904 1,922 2,000 2,036 2,127
Commission/ Train Cars 4,514 4,469 4,126 3,818 3,541
Percentage in Commission - -1.00% -7.67% -7.48% -7.25%
Table 1: Revenue Breakdown 2001 -2005

It is clear from the table that Yabe needs to look into the true cause of the managerial misconduct
and take corrective action because the revenue issue is more structural in nature.

2.3 CUSTOMER DISSATISFACTION

Two main factors, according to the case, contribute to customers' dissatisfaction with Tessei's
cleaning services: dirty train cars and dishonesty. According to case excerpts, the two main
complaints from passengers were about messy restrooms and unreturned items left on the train.
Being the ones who enter the train for cleaning after every passenger has disembarked makes
Tessei's employees the obvious suspects.

Dirty Bathroom
Customer
Dissatisfaction
Stolen Forgotten
Items

Figure 4: Root Causes of Customer Dissatisfaction

2.4 SAFETY AND OPERATIONAL ISSUES

Apart from providing advice in the handbook to ensure employees' personal safety and the safety
of their coworkers, Tessei does not have enough safety kits or procedures for its workers. The
case states that safety has grown to be a significant concern as there were significantly more
workplace accidents from three to eighteen between 2001 and 2005. Even though operating
procedures were standardised, they appeared antiquated and lacked flexibility, which caused
workers to finish cleaning after the allotted seven minutes, which resulted in low timeliness.

Little Safety
Safety
Kits/Procedure
Safety and
Operational Issues
Operational Lack of Flexibility

Figure 5: Root Causes of Safety and Operation Issues

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Trouble at Tessei

3.0 SOLUTION AND RECOMMENDATION

After identifying the four (4) main issues Yabe must address—high employee turnover, declining
revenue, dissatisfied customers, and operational and safety concerns—he needs to start a
thorough investigation into the underlying causes of these issues. While some of the causes of
these issues have already been found, more research will help Yabe find additional causes. Yabe
must, however, use a stakeholder approach to address the issues in order to resolve the ones that
have already been identified. A stakeholder approach to problem-solving is identifying,
analysing, and resolving issues within an organisation or a particular context while taking into
account and addressing the needs, interests, and concerns of all pertinent stakeholders (Caputo,
2013). Every issue mentioned above has a stakeholder component, involving top management,
customers, and employees. The solutions to the dilemma Tessei is facing are suggested below.

3.1 HIGH EMPLOYEE TURNOVER

The two most common root causes of high employee turnover that have been found are low
employee engagement and low motivation. Some suggestions and remedies for the high
employee turnover are listed below:

1. Poor motivation: A number of factors lead to the unmotivated state of Tessei employees.
First of all, passengers treat employees like second-class citizens, making them feel
worse off by telling their kids that they would be like them if they don't accept correction.
This goes against the principle of labour dignity. This will mean that workers are only in
their jobs to make ends meet and are not emotionally invested in their work. Supervisors
also yelled at them, which made them feel less confident, and they didn't encourage
innovation. Tessei also made the decision to reduce expenses by hiring part-timers instead
of full-timers. As a result, the annual salary without bonuses and benefits decreased.
Okine et al. (2021) claim that motivation improves employee morale, which in turn
pushes them to accomplish more in a more productive and efficient way. The following
steps are suggested as solutions to this issue.
i. By encouraging initiative and listening to them rather than yelling at them,
supervisors should help employees feel like they belong. They should also be shown
appreciation. Yabe may, for instance, institute a thank-you note for the workers
following train cleaning or create a rewards programme for effective and efficient
staff.

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Trouble at Tessei

ii. Restoring the bonuses and benefits is necessary. Even though it depends on income,
which is decreasing, Yabe ought to formally notify people that he is making an effort
to get them back.
iii. Providing employees with training and a more presentable uniform will help them
look better to customers and improve their perception of them.
iv. Employees should be given the opportunity to engage with consumers in order to
demonstrate their intelligence. They will gain respect and have more job satisfaction
as a result of this.
2. Poor Employee Engagement: Employee engagement pertains to the degree of zeal and
commitment a worker has for their work. A company's ability to succeed can be greatly
impacted by employee engagement because of its connections to morale and job
satisfaction. Employee engagement, in accordance with Stein (2021), raises the rate of
employee retention. Tessei's employee engagement is deemed inadequate due to the
absence of any indication of employee involvement in decision-making processes or
opportunities for voice their opinions. The following steps are suggested as solutions to
this issue.
i. Since they were formerly directly involved in the cleaning process, employees should be
consulted often and included in the process of improving the work manual. They'll feel
like they belong because of this.
ii. Tessei needs to encourage active listening and provide opportunities for constructive
feedback.

3.2 FALL IN REVENUE

The most likely cause of the revenue breakdown, as determined by the case, is structural and
based management misconduct. Yabe must thus recognise the nature of the misbehaviour and
involve the proper authorities in order to resolve the issue. The items listed below are suggested.

i. In order to gain the confidence of JR East management, Yabe must comprehend the
extent of the misbehaviour and work to maintain transparency. As is customary in
Japanese culture, this could entail auditing, releasing audited reports, and even naming
and shaming (Takada, 2019).
ii. Yabe should also speak with JR East management, updating them on the situation and
stressing the need for revenue growth to maintain the company. A thorough plan can
then be shared with them.
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Trouble at Tessei

3.3 CUSTOMER DISSATISFACTION

While the customers are JR East's and not Tessei's. JR East's earnings and, consequently, Tessei,
the cleaning services provider, will be impacted if customer dissatisfaction of any kind increases
and attrition rates rise. Eliminating the issue of dissatisfaction is crucial because it hasn't yet had
a negative impact on revenue.

1. Dirty Bathroom: The scarcity of soap is the cause of this. According to the employees in
Exhibit 4, even when they complain that the soap they were given has run out, they are
informed that they are not eligible for anymore because they have used up all of the
allocated soaps. It is suggested to do the following.
i. Given that cleanliness is a key selling point for Tessei, Yabe should ascertain whether
the budget for cleaning supplies has increased in line with the number of rail cars they
currently clean. If not, they should make sure the necessary measures are taken.
ii. There should be monitoring and control measures in place to prevent employee waste
or indolence.
2. Stolen Forgotten Items: Customers complained that their forgotten items were being
carted away from the case. While the Tesseis employees are the primary suspect, it is also
possible that another commuter took these items and fled. The actions listed below can be
implemented.
i. Before giving workers instructions to take lost items to the station's lost but found
section, supervisors should be made to keep an eye on both the work completed and
the items that have been recovered and take records.
ii. In order to weed out dishonest employees, whistleblowing policies ought to be
promoted and rewarded.
iii. Yabe should collaborate with JR East to determine how to implement an
announcement system that would alert passengers not to forget any items they may
have brought on board.

3.4 SAFETY AND OPERATIONAL ISSUES

Concerns about safety, such as recurrent mishaps, and operations, such as inflexible cleaning
protocols, strict 7-minute cleaning schedules, and poor communication regarding coach parts,
must be addressed. It is advised to do the following:

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Trouble at Tessei

i. The causes of accident should be investigated and forestalled and be properly

document for training purposes.
ii. In addition to safety shoes and gloves, other safety gear includes fall protection gear,
safety alarms and hearing protectors to lessen loud noise.
iii.In addition, seat rotation should only be done automatically, and everybody should be
alerted by a notification alarm when the procedure is ready to start. As a result, this
process will be less likely to cause accidents.
iv. Nothing is cast in stone, so Yabe should work with the janitors to determine the best
time for them to perform a thorough cleaning and suggest to JR East how feasible it
would be to make changes.
v. Appropriate communication regarding the composition of departing trains is necessary
to ensure that there are enough janitors available to clean the train cars. Exhibit 11
states that cleaning was the responsibility of 22 employees, irrespective of the makeup
of the coaches.
vi.Employees should be given flexibility to ensure a smooth cleaning process.

4.0 CONCLUSION
The issues at Tessei have demonstrated the importance of each stakeholder to the company's
success and the need to give them careful thought. Examining this case teaches that every
profession should be respected as we all depend on one another. Also, organisations must
encourage people to be happy, fulfilled, and driven to work efficiently, productively, and with
self-assurance. My main insights are as follows:

i. Employee engagement is essential to the success of a company because it helps

workers feel like they belong and allows management to see problems early on and
address them.
ii. Although money is a motivator, it is not the sole motivation providing employees
with a sense of belonging is also a motivation
iii. Feedback is critical to improving a process and delivering excellent customer
experience.

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Trouble at Tessei

REFERENCES

Caputo, A. (2013). Systemic Stakeholders’ Management form Real Estate Development Projects.
Global Business and Management Research: An International Journal, 5,(1), 66 – 82.
Okine, G. N. B., Addeh, G. Y. A., Olusola, B.E., & Asare, I. (2021). Employee Motivation and
its Effects on Employee Productivity/Performance. Journal of Economics and Sustainable
Development, 12 (16), 99-108.
Stein, D., Hobson, N., Jachimowicz, J. M., & Whillans, A. (2021). Employee: How Companies
Can Improve Employee Engagement Right Now. Havard Business Review, 1- 10.
https://www.hbs.edu/ris/Publication%20Files/How%20Companies%20Can%20Improve
%20Employee%20Engagement_88b8244d-e0e2-42dc-97d8-172a6ad4f876.pdf
Takada, A. (2019). Socialization Practices Regarding Shame in Japanese Caregiver–Child
Interactions. Front Psychol. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6638065/

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