Tirupati Management Control System

In the following paper I have described an incentive scheme used in a railway workshop as a Management Control tool to improve productivity. This scheme was successfully introduce at Tirupathi while I was in charge of the workshop. The scheme is unique because it has inbuilt systems to motivate workers through peer pressure to improve productivity. The productivity achieved over and above a base level is compensated monetarily. Since motivation to produce is inbuilt into the system, the supervisors have spare time to concentrate on logistics such as arranging materials and tools rather than supervision of workers per se.

Workers want to produce more to get more compensation. Management is able to achieve its objective of higher production at much lower marginal cost. The incentive scheme as such addresses the issue of goal congruence successfully.

Background

Indian Railways is a large organization with 1.3 million strong workforce. It has an extremely extensive and large infrastructure and asset base. The rolling stock mainly locomotives, coaches and wagons form an important infrastructural backbone of the railways. In other words the rolling stock is the primary revenue generators for the railways. As such it is paramount that the rolling stock is in good fettle at all times so as to maximize productivity.

The maintenance of rolling stock in the Indian Railways is a two stage process namely routine maintenance and periodic overhauling. After every trip (e.g. after going to Delhi and back for coaches of Karnataka Express) the coaches are stabled in the yard. During this period they are attended for cleaning, watering and roadworthiness. Once in a year the coaches are sent to major workshops for Periodic Overhaul (POH). During periodic overhaul, all the subassemblies are removed, tested, repaired and fitted back. In addition all the amenity fittings are replaced. The coach is painted afresh and dispatched. There are around 50 workshops on Indian Railways. Generally these workshops are dedicated workshops i.e. each workshop tackles only one type of rolling stock either coaches or locomotives or wagons.

The workshops are highly labour intensive with large workforce. In order to improve the productivity the workers are given an incentive to produce more. Most of the older workshops in Indian Railways follow an incentive scheme popularly known as the CLW pattern of incentive scheme. It is so called because the incentive scheme was first introduced in Chittaranjan Locomotive Works (CLW) in 1958. Some of the salient features of this scheme are

1. The incentive is calculated on individual performance. The time saved by a worker in performing a work against the allowed time forms the basis for the incentive earned.

2. Idle time can be booked for more than one reason like non availability of tools, machine breakdown, power cut etc. The worker continues to earn incentive even though he is not producing during idle hours.

3. The incentive is not linked to quality. It is linked to quantity only. The worker is not penalised in any way for poor quality of work, absence from work etc.

Though this incentive was successful during the first decade after introduction, it lost its effectiveness subsequently. One of the main reasons for degradation of the scheme was that allowed times were not revised regularly due to pressures from the unions even though better and high productivity machines were introduced. The old incentive pattern was more suited for manufacturing activities. During the 1950s and 1960s, workshops were manufacturing many of the spare parts required for repairs. The incentive scheme was relevant during that era. With the gradual change of maintenance philosophy from make and fit to buy and fit, the old incentive scheme lost its teeth and became a burden for the railways. Since the incentive is calculated on time saved, there is a possibility to earn incentive even in the absence of enough workload. To illustrate let us say a machinist is required to manufacture only 10 bolts in a day. He works for 8 hours a day i.e. 480 minutes. The allowed time for each bolt is 20 minutes. If the machinist is able to manufacture all the bolts in say 150 minutes, he earns incentive for the 50 minutes saved irrespective of the fact that he did not have any work to start with for 280 minutes. Secondly since there is no inbuilt penalty for bad workmanship, he continues to earn incentive even if all the bolts produced were defective. Since such discrepancies had crept into the scheme, Indian Railways took a conscious decision not to introduce the incentive scheme in the newer workshops

Tirupathi Workshop-a brief history

Indian railways has got a workshop for POH of coaches in Tirupathi. This workshop was established in early 1980s with the help of a loan from World Bank.