P

0 | P a g e

PT Kereta Api

Indonesia (Persero)Changes Management

2010

Fath Ade Surya, Iskandar Muda, Ivan Immanuel, Kresna Satria,

Obaja Kurniawan, Ricardo Rahmat, Clelie Albert

WM 63

1 Company ProfileThe presence of railway industry in Indonesia started with the constructions of

railways in Kemijen village, Friday June 17 1864 by dutch governor, Mr. L.A.J Baron Sloet Van Den Beele. The constructions was the initiative of “Naamlooze Venootschap Nederlandsch Indische Spoorweg Maatschappij” (NV.NISM) lead by Ir.J.P de Bordes from Kemijen to Tanggung village (26 Km) with train width of 1435 mm. The railways open for public transport in Saturday, august 10 1867.

The success of NV.NISM in building railways between kemijen – Tanggung ,continued by building railways which connected Semarang – Surakarta (110 Km), finally pushed investor’s interest to build railways in other area. This is why the growth of railways industry in 1864 – 1900 is high.

Beside java, railways building also take place in Aceh (1874), North Sumatra (1886), West Sumatra (1891), South Sumatra (1914), even in 1922, the construction also occur in Sulawesi between Makasar – Talakar. In Kalimantan, even though the construction have not finish, the study of railways betweenPontianak – Sambas (220 Km) was done.

After the Indonesia’s independence proclamation in august 17 1945, KA employee which united in “AngkatanMoedaKeretaApi” (AMKA) take over the raiways company from Japanese. This historical event occur in September 28 1945. After the take over, “DjawatanKeretaApiRepublik Indonesia” (DKARI) was established.

1.1 Vision and Mission1.1.1 Vision

To become the best railways service provider focusing in customer service and to fulfil stakeholder’s expectations.1.1.2 Mission

Conducts the business of railways and its supporting business, through its business practice and best organization models to provide the added value to its stakeholders and environment based on 4 main pillars : Safety, On Time, Service, and Convenience.

2 External and Internal Condition of PT Kereta Api Indonesia (Persero)2.1 External Condition :

1. Low customer satisfaction and trust 2. Competition with LCC (Low Cost Carrier), several routes closed due to economical

factors3. The only one railways provider in Indonesia4. Opportunities to become favorable transportation is high, because of traffic jam in

Jabodetabek is bad.5. Lots of investor willing to invest in railways industry

2.2 Internal Condition :

The table above shows the accident data from 2005 to 2009, it shows that the accident rate is high even the rate decrease in 2009 to 90 accidents. But if we see it from the

1

TAHUNJUMLAH

KECELAKAANJumlah Korban

Meninggal2005 102 362006 116 502007 159 312008 147 452009 90 57

Jumlah Kecelakaan, Korban, dan Faktor Penyebab

Tingkat Pendidikan Jumlah Usia JumlahS3/Post Graduate 0 <30 2979S2/Graduate 93 31-40 6073S1/Under Graduate 452 31-50 6037D3/Diploma 449 51-56 10448SLTA/High School 9771 JUMLAH 25537SLTP/Secondary School 6850SD/Elementary School 7922JUMLAH 25537

KOMPOSISI KARYAWAN PT KAI

numbers of casualties, 2009 have the highes number of casualties which is 57 people. The factor caused the accident in 2008 are human error factor (33%) and infrastructure factor (23%). In 2009 the human factor still become the dominant factor in causing the accidents which is 25%, and the infrastructure factor is 24%.

1. Low On Time performance

The table above shows the on-time performance of PT KAI. From the table we can conclude that the performance still far from expectation. In 2009 the on-time performance decrease 78% for arrival and 31% for departure.

2. Low level of education among its employee and most of the employee’s age are over 50.

From the table above we can see that PT KAI’s employee age composition is mostly between 51-56, and from education background, the employee mostly are senior high school graduate.

3. The construction of double-rail in Jabodetabek haven’t finished4. Currently serve java and Sumatra island5. Currently haven’t met the company’s vision and mission6. Currently there is no barrier between regulator and operator in railways industry in

Indonesia

From data that show above, we tried to classify PT. KAI’s internal problems to

2

2008 2009 2008 2009Kedatangan 5 6 81 78Berangkat 37 35 32 31

Kereta Api BarangBerangkat 97 115 26 27

Kedatangan 111 115 25 28

Rata-Rata Kelambatan (Menit) Rata-Rata Ketepatan (%)Rata-Rata Kelambatan dan Ketepatan Kereta Api (Menit)

Kereta Api Penumpang

The biggest problem are Human Resource Problem. This is reflected on low quality of human resource and high level of accident caused by human error. Low rate of on time performance and high level of passenger without tickets also caused by the low quality of human resource and irresponsible third-party group. The basic change can be started with improving the human resource.

Refering to “Leading Change” by John Kotter, the other problems also consisted in human resource problem which are management problem and leadership problem. Both of them have different role and responsibility in directing the organizational change. Both of the role must be work excellently if we want a successful change.

Management Leadership

Planning and budgeting:Establishing detailed steps and timetables for achieving needed results, then allocating the resources necessary to make it happen

Establishing direction:Developing a vision of the future—often thedistant future—and strategies for producing the changes needed to achieve that vision

Organizing and Staffing:Establishing some structure for accomplishing plan requirements, staffing that structure with individuals, delegating responsibility and authority for carrying out the plan, providing policies and procedures to help guide people, and create methods or systems to monitor implementation.

Aligning people:Communicating direction in words and deeds to all those whose cooperation may be needed so as to influence the creating of teams and coalitions that understand the vision and strategies and that accept their validity.

Controlling and problem solving:Monitoring results, identifying deviations from plan then planning and organizing to solve these problems.

Motivating and inspiring:Energizing people to overcome major political, bureaucratic, and resource barriers to change by satisfying basic, but often unfulfilled, human needs.

Produces a degree of predictability and order and has the potential to

consistently produce the short-term results expected by various stakeholders

(e.g., for customers, always being on time; for stockholders, being on budget)

Produces change, often to dramatic degree

And has the potential to produce extremely

useful change (e.g., new products that customers want, new approaches to labor

3

relations that help make a firm more competitive

3 The Changes Strategy and Implementation

The change Implemented with eight stage of leading change by John Kotter in PT.KAI. Usually in an organization which applying change management directly implement stage 5-7. Stage 1-4 and 8 usually missed and assume as unimportant. Stage 1-4 focusing on “defrost” the status-quo. Stage 5-7 focusing on “new practice”. And stage 8 focusing on “grounding the change” which is the final change and very important stage in “anchoring” the successful change in order that the organization didn’t come back to its original condition before the change. These are the steps which should be implemented step-by-step and perfectly :

3.1 Establishing a Sense of Urgency

Very important steps in starting the change is to establish the sense of urgency. This factor can guarantee the other steps to be accomplished and accepted by all stakeholders. But this is also quite difficult because of there aren’t critical factor that threathened all side. The factors caused from lack of sense of urgency in PT.KAI are :

Based on the factors above, we need to emerge the sense of urgency in all level of PT.KAI. The steps that can be implemented to increase the sense of urgency are :

Ways to Raise Sense of Urgency Implementation Sample PIC1. Show the critical condition faced

to the top managementShowt the data about the deterioration and shortage which should be improved

Accident data On-time

performance data Infrastructure and

facility data Financial data

CEO

2. Set high target that should be achieved

Set profit target, productivity target, safety

On time performance

CEO

4

target, and customer satisfaction target

increase to 95% Accident level

decrease by 70%3. Stop performace measurements

based on functional goalSet the KPI based on company’s business performance

Use KPI based according to Balanced Score Card

Director of Human

Resources

4. Show customer satisfaction data and company’s image to all stakeholders

Use small group to respond available data

Use Quality Control Circle (QCQ)

Director of Marketing

5. Make discussion forum about the company’s weakness, avoid adorn the news

Top management should facilitate monthly discussion about the company’s current condition

Monthly discussion forum

Coalition Team

6. Inform all employee with information about opportunities and profit in the future if they change

Explain about opportunities in the future on routine discussion

Utilize the monthly discussion forum

CEO and Director of

Human Resources

3.2 Creating the guiding coalition

In implementing the change we need to build coalition with other parties who have influence in making policy. We should pay attention to the optimal composition, level of trust, and goals. Coalition members should consist of members which have:

Position Power : Coalition member should be the people which have power and access to do change. Usually consist of top management.

Expertize : Have various point of view, came from various discipline and have experience in its field. Usually consist of senior manager.

Credibility : Member of coalition are people with best reputation and credibility, so they can increase trust and minimize resistance.

Leadership : The important point in this criteria is every member should have good leadership ability. Because this coalition is the foundation in creating changes. Every member are needed in spreading the change.

Steps in creating coalition :

1. Finding right person with above criteria.2. Build trust3. Develop goals

The Parties that should be involved in creating the coalition :

1. CEO2. BOD (Board of Director)3. Senior area manager with ability to articulate vision and have experience and ability

to spread change4. Expert, professional and other parties which have good reputation to implement

cultural change and also have access with policy and have power to coordinate change with related parties, which are :

a. Ministry of transportation

5

b. Professional consultantc. Employee Representatived. Customer Representative, we can use representative from railfans

community which currently have lots of members and very active. They even have their own magazine which discuss everything about train.

3.3 Developing a vision and strategy

Vision refers to a picture of the future with some implicit or explicit commentary on why people should strive to create that future. Form that perspective, vision is an essential part for make a change. Through the vision and strategy, changes that made in the organization will be directed to a common purpose.

Based on that idea, current strategy and vision of PT KeretaApi Indonesia (Persero) can still be used. This is because the currentvision already answer the internal problems of PT KAI.So, the vision for PT KAI to do change is “Being the best railway service providers who focus on customer service and meet the expectations of stakeholders.” Beside that, to get that vision company must improve their condition, especially in 4 main pillar :safety, timeliness, service,convenience.

3.4 Communicating the change vision

Last phase in “defrosting” the status quo is communicating the change vision. Communicating the change vision is an important part in spreading change agenda. Usually when the stage of building sense of urgency didn’t worked as expected or not optimal will result in resistence in change. The truth is, reality doesn’t have to be seen as a bad thing. Generally resistence is a form of respond and feedback. Feedback and respond can be utilized to get better format in doing change. According to Kotter, there are several things which can cause resistence. For every factor and condition, he have mapped the congruent strategy.

6

Source: Choosing Strategy for Change. by John Kotter and Leonard A. Schlesinger. Harvard Business Review 2008

The method chosen are based on prediction of resistence that might be happen. From analysis of the factor that cause lack of sense of urgency can be seen that resistance which occur will direct at the form of education and change facility. These are the main elements to form effective communication :

1. Simplicity : all jargon and techno-babble must me eliminated2. Metaphor, analogy, and example : A verbal picture is worth a thousand words3. Multiple forums : big meeting and small, memos and newspapers, formal and

informal interaction-all are effective for spreading the words4. Repetition : ideas sink in deeply only after they have been heard many times5. Walk the Talk, or Lead by Example : Behavior from important people that is

inconsistent with the vision overwhelms other forms of communication6. Give-and-Take : two-way communication is always more powerful than one-way

communication (listen and be listened to)7. Explanation of seeming inconsistencies : Un-addressed inconsistencies undermine

credibility of all communication.

3.5 Empowering Broad-Based Action

The major hindrance faced when actualize company’s vision can be divided to 4 important parts, System, Structure, Skill and Supervisor.

From the picture above, we can see that employee who have willingness to acualize the vision of PT.KAI, but they trapped at the system of the firm.

Gap between vision and structural hindrance :

Vision Structure

Focusing on customer service In reality, PT.KAI put its focus on railways operation

7

Employee understand the vision, but still trapped in

system of firm

Employee understand the vision, but still trapped in

system of firm

Formal structure hinder the actionFormal structure hinder the action

Lack of skills resulting in bad action from employee

Lack of skills resulting in bad action from employee

Boss prevent employee’s action in creating new vision

Boss prevent employee’s action in creating new vision

Staff and information system hinder the action

Staff and information system hinder the action

Fulfill the stakeholder’s expectation But, low productivity resulting in high cost. This is caused by high operational expense of the company

When the structural hindrance cannot be removed, it will cause employee become tired in doing transformational change in actualizing PT.KAI’s vision.

Providing Training Needs

To perform improvement, training is needed. But, the training done by PT.KAI often not appropriate. For example, there are many accident caused by human error.

Synchronizing System with Vision

To synchronize system with the company’s vision which focusing on customer service and stakeholder’s interest, needs the role of Human Resource Development which is brave and assertive in providing leadership needed to change the system to become congruent with PT.KAI’s company vision.

3. 6 Generating Short-Term Wins

Short term wins have role such as : Provide evidence that sacrifice are worth it; Help fine tune vision and strategy; Undermine cynics and self-serving resisters; Build momentum; keep bosses on board.

Based on role from short term wins, the change process done by PT.KAI should have short term wins. Focus of the change is human resource related to 4 factors, safety, convenience, and service. So, several short term wins that PT KAI can implement are :

1. Accident rate of train decrease by 70% in 1 year2. Human factor as the main cause of the accident decrease to 10% from 33%3. On Time performance increase to 95% in 1 year4. Employee composition who aged more than 50 decrease by 30% in 1 year5. Employee who have D3 educational level, increase by 15% in 1 year6. Net Income growth 200% from the previous period in 1 year7. Giving bonus to best employee every month in 1 year ahead8. Customer satisfaction increase to 90% in 1 year

3.7 Consolidating Gains and Producing More Change

According to Kotter, one of the main errors why many change projects fail is that people tend to declare victory too early. A sustainable and successful has to run deep. Quick wins are only the beginnings of what it is needed to be done to achieve long-term change.

So put in place a Human Resources change project in Pt KAI needs quick wins, but not only : the management will have to build on these first success and improve continuously its human resources management.

Actions to put in place in order to build on the change:

8

It will be necessary to put in place regular meetings to take stock of the situation and develop new projects on this basis: on areas which still need to be changed or on improvement areas identified.

Indeed each success provides an opportunity to build another action or project. But to improve its change management, change actors have to assess the precedent and analyze the outcomes. To assess what worked and what didn't enables to identify what you can improve. Each will be the opportunity to do an assessment of success, to identify errors and the areas of improvement.

Following the evaluation of the change process and its outcomes, the change agents will have to set new goals on this basis. As in every successful project they'll to put in place a precise provisional planning with deadlines for each action to do.

Put in place employees' surveys :

In line with the assessment meetings, one way to evaluate the first results on the human resources will be to launch an employees' survey. Moreover, the management and change actors will have to come to meet the employees for informal discussion and interview.

First it will enable to know how the change is perceived by employee, what they think to still have to be improved and in what way. To have the employees 'feedbacks which are on the day-to-day field will be interesting information, knowing better than anybody the day-to-day operations, they can bring ideas and creativity. Secondly to be consulted and involved will participate to improve their motivation and their commitment in the Pt KAI Company. Indeed, one better way to obtain motivation and involvement from its personnel is to recognize their role in the organization and to be grateful for it.

3.8 Anchoring New Approaches in The Culture

Culture which developed in PT KAI in the future is the culture called “Customer Oriented Culture” and “Employee’s Discipline Culture”. Customer oriented means customer satisfaction is the main factor we should pay attention to, and employee’s discipline means the whole employee obey the rule and also obey to give maximum service to the customer.

4 Conclusion

From our perspective the problem of PT Kereta Api Indonesia (Persero) are human resources problem that effect the four pillars of customer convenience, safety, on time performance, and services. That pillars is important to compete in transportation industry. Because of that that problem must be solved immediately. So, John Kotte’s 8 Steps can be implemented to do a changes in PT Kereta Api Indonesia (Persero).

9