SINGAPORE MASS RAPID TRANSIT: GOING OFF TRACK
On January, 2012, Singapore Mass Rapid Transit (SMRT) Corporation’s Chief Executive
Officer (CEO), Phaik Hwa Saw, resigned from her position after two major breakdowns on the North-South Line in December 2011. SMRT was a public transport operator in Singapore, with a transportation network that comprised buses, trains and taxis. The two breakdowns were arguably the largest public transportation incidents in Singapore’s history, occurring two days apart and affecting more than 220,000 commuters. Widespread public outrage ensued, with heavy criticism of Saw for the breakdowns and her mismanagement of the corporation.

Prior to the incidents, Saw’s tenure as CEO had been associated with a particularly prosperous period in the history of SMRT. She had successfully navigated SMRT through its post-merger transition process and achieved a significant growth in profits. She had also transformed SMRT from a company focusing solely on transportation to one that provided all-around service and transportation to commuters.

Why did Saw become the target of public discontent? Were the breakdowns a result of her lack of ability to lead SMRT effectively?

LEADERSHIP HISTORY

Prior to Saw’s appointment in December 2002, SMRT had been traditionally led by men with engineering backgrounds and experience in military or public service.

SMRT was first led by Leong Geok Lim, who had a degree in engineering. He was widely acknowledged as the progenitor of the MRT system in Singapore, convincing the government at the time that the MRT system was the best option for improving public transportation there. Lim had previously been the executive director of MRT Corporation, the government agency that subsequently merged with other agencies to form the Land Transport Authority of Singapore.

In 1996, Rear Admiral Siew Jin Kwek replaced Lim. Kwek had previously served as Chief of Navy and had spent his career in the military until his appointment to lead SMRT in 1996. Kwek graduated with a degree in electrical engineering.

In January 2002, Kwek was replaced by Brigadier General Tak Hap Boey, who had served as Chief of Army, and subsequently, Singapore Power and Public Utility Board’s CEO. Boey held a degree in automatic control and system engineering with management sciences. SMRT announced that Boey left the company for personal and health reasons eight months after his appointment.

Upon the announcement of Boey’s resignation, SMRT attracted the attention of industry observers and market players by placing advertisements in The Straits Times and The Business Times about replacing Boey as CEO. SMRT’s three-month-long search ended in December 2002 when the company announced that it would appoint Saw as its CEO.

PHAIK HWA SAW

Saw was born in Kuala Lumpur, Malaysia. She moved to Singapore after her “O-Level” examinations to continue her studies and eventually graduated from the National University of Singapore with a biochemistry degree.

Saw’s professional background was in consumer retailing. She had joined two major retailers before her appointment to SMRT – Metro in 1978 and Duty Free Store (DFS) Venture in 1981. At DFS, Saw navigated the corporate ladder and was promoted to the position of regional president of Southeast Asia (Singapore, Malaysia and Indonesia) in 1998. Under her leadership, DFS Venture Singapore won the Singapore Tourism Board’s Best Retail Concept Award in 2000. However, she was let go in early 2002 as part of DFS’s corporate restructuring.

Saw was very different from other CEOs who had led SMRT in the past. Unlike her predecessors, Saw did not have any engineering training. Her career experience had largely been with the consumer retail industry in the private sector. When asked about this change, SMRT simply reported that Saw had been chosen based “on the strength of her achievements as a business manager and her ability to lead and motivate people under her care.

Despite her lack of experience in the transportation industry, Saw was unfazed by the challenge of leading SMRT. She praised the board for its courage in going against tradition in appointing her and insisted that her lack of technical knowledge was not a handicap, citing “good common sense, entrepreneurial spirit and financial knowledge; and knowing how to motivate staff’ as the traits that were key in her new appointment.

However, the public had doubts about Saw’s appointment and was not convinced that she had the ability to lead SMRT. Questions were raised in the media over her appointment during an especially difficult transition period for SMRT after its merger with a bus service company in 2001.

A TRAILBLAZER

Saw had always been a trailblazer, being the first Asian woman to step into the positions she had filled. In Singapore, where the top positions on corporate boards were overwhelmingly male-dominated, she was one of the few women who managed to be at the helm of Singapore’s government-linked companies. Saw felt that there was a tendency for men in senior management positions to choose other men as board members because they shared common work styles and interests. This resulted in corporate boards lacking diversity. She advised management boards to carefully analyze the additional benefits that employee diversity could bring to a company. She also urged women to step forward and raise their profile in the corporate realm, so as to be on the same footing as male candidates.

Saw had to compete with men for jobs and promotions throughout her career. She noted that she had been passed over for promotion in the course of her career because of her gender. Thus, in order to succeed, she had to be “twice as good, if not three times as good” as her male colleagues. She acknowledged that gender stereotyping often led management to assume that women lacked job commitment, or were unwilling to travel frequently for work.

The issue of gender inequality seemed to have surfaced in the controversy surrounding Saw’s appointment. SMRT’s decision to replace Boey with Saw in 2002 raised questions from the public, which deemed Saw’s experience in the retail industry as unrelated to SMRT’s core business. However, the fact that Saw’s predecessors in SMRT had little industry-specific knowledge did not bother the public and few questions had been raised about any man’s ability to lead SMRT.

ACCOMPLISHMENTS AT SMRT

Prior to Saw’s appointment, SMRT’s core business had been in transportation. Hailing from a retail background, Saw immediately recognized the opportunity to utilize the premium retail spaces available in MRT stations. She worked tirelessly with the authorities to obtain permission for train operators to make use of these spaces. Her efforts in integrating advertising and retailing into SMRT’s core business were highly successful, with SMRT’s retail and advertising income almost matching transport-related earnings by the time she left the company in 2012.

The significant successes in these side businesses helped SMRT to offset the financial pressure from rail and bus operations without the need for large fare adjustments to keep the company afloat. The income from rental and advertising helped to cover the incoming fuel, electricity and maintenance costs. While year-on-year energy costs increased by 17.5 percent in 2011, fare adjustment was capped by the government at just 2.8 percent. As SMRT had no control in setting fare structures for commuters, the introduction of retail and advertising businesses was crucial in ensuring SMRT’s profitability and long-term business sustainability.

Overall, Saw tripled SMRT’s net profit from S$56.8 million (US$45.4 million) in 2002 to S$161.1 million (US$128.9 million) in 2011, with its stock price growing from less than S$0.60 cents at the start of her leadership to more than S$1.70 in early 2012. SMRT was also popular among investors as one of the few companies that consistently delivered high dividends. Under Saw’s direction, SMRT also received numerous awards over the years, including the Best Metro Award in 2009 from MetroRail (a conference of the global rail transport industry). It was consistently ranked among the top in the Corporate Governance and Transparency Index by The Business Times.

UNCONVENTIONAL LEADERSHIP STYLE

Saw’s approach to leadership was largely influenced by her career in the retail industry, where she had developed and honed her people skills. She firmly believed in the importance of motivating her employees through the “human touch,” stressing that “we can make things happen only through people.” Saw’s emphasis on the personal touch was reflected in her assistance that her staff address her as “Phaik Hwa.” This was not an easy feat, considering how strongly the culture of hierarchy had permeated SMRT before Saw’s arrival.

Saw had high expectations of her employees as well. SMRT’s vice-president of commercial and roads at the time, Chew Hoon Teo, described Saw as someone who challenged her employees to strive for excellence. Teo added, “Saw has very high expectations and will push people to do things beyond her limits, making us discover abilities we didn’t even know we had.”

Under Saw’s leadership, SMRT started organizing more internal events. Among others, SMRT was well known for its Employee Dinner and Dance, a glamorous affair with employees and management alike, decorated in costumes portraying fantastical themes. The event attracted public attention and criticism when a photo showing Saw dressed in an Egyptian costume being carried on a sedan chair by bare-chested men went viral. When asked about the controversial photo, Saw was unapologetic, highlighting that it was an internal event organized by her staff and that she was just entertaining their wishes, even if it made her look “stupid or silly.” Saw later explained in her blog that it was “the little we could do to make it fun for the staff and for them to see the management as one of them, rather than people on high horses.”

BUILDING A PUBLIC IMAGE

Unlike most CEOs from government-linked companies in Singapore, who tended to avoid the limelight and maintain low profiles in the media, Saw never shied away from the media. She regularly commented on issues related to the corporate and socio-economic situation in Singapore by drawing on her experience in leading SMRT.

Saw never held back her opinions, even on sensitive issues. A case in point was her opinion on Singaporeans’ attitudes towards low-wage jobs. Saw called for a change in perception, arguing that at some point, it would no longer be feasible for every Singaporean to have a high-paying, high-performance job, even with the government’s best efforts. Low-wage jobs, in her opinion, were still able to provide a “decent living.”

Saw also used the media as a platform to voice here opinions on government policies. Most notably, she made a bold retort over the media to the government’s proposals to merge two rail operators barely a year after her controversial appointment as COE of SMRT. Saw emphasized that she would not entertain the merger if it was not in the interests of SMRT. She argued that taking a line that suffered large losses would significantly decrease SMRT’s shareholder value and pose a strain and significant difficulties for SMRT during the transition process.

The restructuring of public transport operators in Singapore never materialized. Such a bold response to the government’s plan was very uncommon in Singapore. This was even more the case among government-linked companies such as SMRT, which virtually served as an extension of the economic arm of the government.

MANAGING CRISES – SMRT’S OFF-TRACK RECORD

Saw’s leadership saw its fair share of challenges and crises. An incident in 2008 shut down four stations along the East-West MRT Line for seven hours. A worker had failed to put on the parking brake of a maintenance train, when the rolled back into a locomotive. More than 57,000 commuters were affected, and the Land Transport authority fined S$387,176 for the disruption.

In June 2010, Saw drew a public backlash over a statement in the media when she commented in response to overcrowding in trains that people can board the train – it’s whether they choose to. Saw also emphasized that in comparison with other rail systems around the world, the trains in Singapore were not overcrowded as “we have yet to push people into the train.” Not surprisingly, Saw’s remarks were perceived as heartless, and the public viewed her as unsympathetic to the concerns of public commuters.

There were also two high-profile trespassing and vandalism cases involving SMRT’s train depots. SMRT was heavily criticized for failing to safeguard its facilities and was find for these security breaches. Train deport breaches constituted serious public security threats as they provided opportunities for terrorist organizations, known to be active in the region, to launch attacks against the general public in Singapore.

To make matters worse, a new distance-based fare for MRTs and buses was implemented by the Singapore government in July 2010. While this was promoted as a cheaper and better system, errors were found in the computation of fares on some routes, which resulted in commuters being overcharged. There was much public dissatisfaction, not only towards the government, but also towards public transport operators, who were accused of profiting from the new scheme, despite the subsequent refunds given to those who were mistakenly overcharged.

The December 2011 breakdowns compounded this series of events, thus calling into question Saw’s effectiveness as the CEO of SMRT.

DECEMBER 2011 - THE LAST STRAW

The string of events started on December 14, 2011. Seven stations along the Circle Line ceased operations due to a technical fault, which affected approximately 1,400 commuters. SMRT cited communication network problems and apologized for the inconvenience caused to commuters.

Shortly after, a northbound train service stopped on the tracks between two adjacent stations along the North-South Line at around 7:00 p.m. on December 15, 2011. Soon, a power loss occurred which stopped operations in eleven stations along the same line in both directions.
Four trains were halted, trapping hundreds of passengers. The emergency power supply failed to turn on in one of the trains, leaving the passengers in darkness. There were also reports of ventilation problems, as requests for doors to be opened for ventilation were denied by the operator for “safety reasons.” One passenger decided to break a glass window using the fire extinguisher to help his wife, who felt dizzy during the incident.

Passengers trapped in the trains were not aware of the cause of the incident, as they were only provided with apologetic messages over the delay. Only after 40 minutes an announcement was made that the emergency doors would be opened and they were to walk to the nearest station.

Announcements were made at the affected stations at 7:20 p.m. that the delay would last an hour. At 7:48 p.m., SMRT deployed a total of 87 buses along the affected stations to ferry passengers who were affected by the breakdowns. Public announcements were broadcasted at 8:00 p.m. through the radio and over the Internet for commuters to make alternative transport arrangements. Service along the North-South Line resumed at 11:40 p.m., nearly five hours after the onset of the breakdown. About 127,000 commuters were affected that day.

On December 16, Saw issued an apology at a press conference for the incident and assured the public that SMRT would “spare no effort” in resolving the problem. However, at about 7:00 a.m. on December 17, 2011, the North-South Line experienced another breakdown. Close to a thousand passengers were trapped when five trains ground to a halt between twelve stations.

SMRT was quick to act this time. Passengers were evacuated from the trains within minutes of the breakdown. Announcements were made in English and Mandarin at all affected stations, directing passengers towards alternative transport arrangements, such as bus services provided to shuttle passengers along the affected stations. More staff was also deployed on the ground to assist affected commuters and advise them on alternative arrangements. SMRT took close to seven hours to fix the technical problems and resumed full operation of the North-South Line at 1:48 p.m. It was estimated that 94,000 commuters were affected that day.

THE PUBLIC’S REACTION

Initial responses to the incidents were focused on the way that SMRT handled the passengers’ evacuation, especially during the breakdown on December 15, 2011. There was anxiety over how passengers had been trapped inside non-functioning trains for about 40 minutes, reportedly without lighting and ventilation. Several passengers had attempted to call for help by pressing the emergency button, but there was no response from the driver.

SMRT was also criticized for its failure to inform commuters about the incident. Clear directions and information about alternative transport arrangements were not readily available, causing build-ups and human traffic spillovers around affected stations. The situation was aggravated by the fact that the stations affected were along the busiest commercial and business area. As a result, it took more than one hour for the shuttle buses to arrive at the affected stations. This led to complaints about uncertain shuttle bus frequency and overcapacity.

There was also much anger over a message sent out to SMRT taxi drivers shortly after the breakdown. It read: “Income opportunity. Dear partners, there is a breakdown in our MRT train services from Bishan MRT to Marina Bay MRT stretch of stations.” A photo taken by a passenger went viral on the Internet, which led to a public uproar over the insensitivity of the message.

During and after the crisis, Saw assumed the role of SMRT spokesperson, making statements during press releases and giving interviews. As the saga drew on, public attention increasingly focused on Saw, instead of the incidents. Questions and comments were made about her competency, salary and even lifestyle, appearance and nationality.

Online forums, chat rooms and cyberspace were flooded with angry messages and calls for Saw to resign. Comments made on the Internet were ruthless and sometimes downright offensive, with anonymity protecting the culprits from being held accountable. The mainstream media was also involved, providing a platform for the public to voice is dissatisfaction and supplying “expert” critics to comment on the incidents. While the media did not directly condemn Saw, it played a significant role in shifting the public’s attention from the MRT incidents to Saw’s personal life. One example involved an article published by a leading daily publication in which Saw’s private life was discussed. The article explored her unconventional lifestyle and portrayed her as a troublemaker.

SAW PHAIK HWA’S RESIGNATION

Public criticism against SMRT intensified, and with it the call for Saw to step down grew in urgency. A public demonstration was organized by the popular socio-political blog “The Online Citizen” in Hong Lim Park, attended by about 80 people, openly calling for Saw to resign. This clearly signaled the great extent of public dissatisfaction. Singaporeans rarely used public demonstrations to voice their disagreement, as it was illegal to conduct such demonstrations without a valid license from the authorities, and even when allowed they were restricted to the Speakers’ Corner in Hong Lim Park. An online petition was organized as well, signed by more than 1,400 people, demanding Saw’s immediate resignation. Furthermore, emails were sent to SMRT containing strongly worded letter-of-resignation templates for Saw.

Aside from the general public, the media was also filled with commentaries and articles by industry observers and experts, questioning Saw’s ability and suggesting that SMRT’s success with the business of leasing retail space was at the expense of its core business focus of running a mass rapid transit network.

When asked about the calls for her resignation during a press conference on December 18, 2011, Saw made it clear that she would not abandon her position. True to her nature, Saw refused to bow to external pressure and insisted that she would see SMRT through the crisis, saying that, “No good leader will leave the field when the battle is on. I am staying, put now to … put everything right.”

Consequently, many were surprised when Saw tendered her resignation on January 6, 2012, citing “to pursue personal interests” as the main reason for exiting SMRT. However, Saw revealed a glimpse of the thought process that led to her resignation in an interview sometime later. She cited the public reaction on the MRT breakdowns as well as the increasingly personal attacks as the main motivating factor behind her decision leave SMRT. She reasoned that since she had become “a magnet attracting all the criticism,” it would be better for her to leave to allow SMRT “to start on a clean path.” The public claimed victory and SMRT’s share price rose on the day of Saw’s resignation.

THE GOVERNMENT’S RESPONSE – COMMITTEE OF INQUIRY

The scale of the incident and the extent of public anger called for an intervention from the government. On December 18, 2011, Transport Minister Lui commissioned a Committee of Inquiry (CoI), a high-level investigation committee led by a judge, to investigate the cause of the breakdowns, and provide a course of recommendations for the government.

COMMITTEE OF INQUIRY’S HEARINGS AND FINDINGS

The CoI’s hearings commented on April 16, 2012, and lasted for six weeks. In total, 116 witnesses testified, including international experts and former CEOs of SMRT.

Investigations revealed that the disruption had been caused by the loss of the electrical supply to the trains. This occurred due to the collapse of the “third rail,” a mechanism used to supply electricity to the trains. This “third rail” was held in place using metal claws, and dislodgement of the claws resulted in the collapse. The collapse also triggered a power outage in the system, which extended the effect of the failure. This problem had been discovered back in the 1980s. However, it was treated as a regular maintenance issue, as the dislodgements were usually isolated, with minimum impact on the system. This design problem persisted even in the newest generation of lock system used to support the third rail.

It was also revealed that the operation control centre for SMRT’s North-South and East-West MRT lines had been overwhelmed by the task of managing the emergency response to the breakdown. SMRT’s chief controller, Siew Chee Quah, admitted to the committee that the maintenance team had been unable to cope with the scale of the breakdown. He attributed this to the shoestring budget allocated for SMRT’s operations, where staff strength was kept to an operational minimum. Quah revealed that the operation control centre had employed virtually the same number of staff since 1994, despite the exponential growth in commuters.

These revelations highlighted the loopholes and potential problems in SMRT’s operation. Saw’s career prior to SMRT had always been in the private sector, which tended to focus on profit and shareholder value. Processes were streamlined and operations were geared to achieving the greatest returns at minimum cost. Applying this to SMRT meant introducing productivity initiatives to allow manpower to remain low despite the increase in commuters and trains’ mileage. However, disruptions in public services such as the power supply or telecommunications network were of a different magnitude from product and service failures in the private sector, affecting the lives of hundreds and thousands of people.

The committee questioned Saw about these problems. Among others, it raised concerns over the train maintenance budget, which despite aging assets and increased train frequency had remained constant for the past 10 years. Saw asserted that this was possible only because SMRT had spent S$143 million (US$114.4 million) for “mid-life upgrades,” thus reducing the cost of maintenance and repair.

Saw reiterated her belief that SMRT was caught by surprise on December 15 and 17, 2011, since the breakdowns were unprecedented and the standard operating procedure did not cover such contingencies. When it was highlighted that the sagging of the third rail had happened before in 2010 and 2006, she responded that management was not aware of the events, because there had been no significant effect to the system during those instances and thus they had been deemed regular maintenance issues.

COMMITTEE OF INQUIRY’S REPORT

The CoI presented its report to the Transport Minister on July 3, 2012, proposing 24 key recommendations for the parties involved to resolve the issues that had contributed to the breakdown and to prevent future occurrences. Among others, the report cited “lapses in the SMRT maintenance schedule” as the main contributing factor to the December 15 and 17 breakdowns. The committee also highlighted that there seemed to be a “gaping disconnect” between issues that were highlighted and brought to top executives’ attention through formal records and the problems that actually cropped up during maintenance.

According to the report, much could be done to improve SMRT’s maintenance and engineering culture. One notable point in the report was the need for “competent mid-level engineers in SMRT who can think strategically, lead and organize maintenance work effectively, as well as learn from experience.” This underscored an issue in SMRT’s corporate structure, as the top management lacked engineering and technical expertise. Thus, this aspect of the operating process had been overlooked in strategic management decisions.

SAW’S RESPONSES

One of the most notable decisions that Saw made after her resignation was to have an interview with a daily paper, which was published as an article entitled “We Had No Power.” The interview revealed Saw’s frim conviction that SMRT had done its best to cope with the incidents under the given circumstances. She maintained that the incidents had been caused by a rare confluence of various factors which had been almost impossible to pre-empt. Consequently, there had been no precedent and no contingency plan available to use to quickly respond to the breakdowns.

Aside from media appearances, Saw published a blog in March 2012 to present her side of the story. In it, she clarified certain out-of-context statements which the mass media had used to portray her in an unflattering light. One example was her statement made in June 2010 regarding train overcrowding which caused much public anger. Her comment was a response to a journalist who had asked why the train was so crowded that she could not board it at 9:00 a.m. Saw’s original response was that 9:00 a.m. was considered post-morning peak hour (after the morning crowd’s rush), during which trains were not crowded, and that the reporter should have been able to get on one. Hence, Saw replied that the “trains are not crowded, you can get on if you want.” However, her statement was reported out of context and seemed to suggest that she did not care about pubic commuters. The statement was quoted frequently by the media in 2010, and later after the December 2011 incidents. Due to this quote, Saw was perceived by the public as heartless and unconcerned about the hassles that commuters experienced in their daily commutes.

There were also several comments after December 2011 that were published out of context. One of the comments was made by a member of the CoI who had said to Saw during a hearing, “You knew the risk, and you did not do enough. You implemented cable ties.” This comment was reported without the background information about why the cable ties had been chosen. Thus, it was suggested that Saw had resorted to cutting corners by implementing a “cheap and unreliable” technical solution, at the expense of safety.

In fact, the technical decision to use cable ties had been made back in the 1980s, when it was discovered that the metal claws could dislodge. At that time, the engineering contractor of the system recommended the use of cable ties to reinforce the claws. This recommendation was accepted by the MRT Corporation at the time and had remained unchanged since. Even after a new and better claw design was used for the newly built MRT line in the past 10 years, there had never been any consideration by SMRT or Land Transport authority to change the system of metal claws and cable ties of the older rails. After the December incidents, Saw ordered a more extensive reinforcement of the third rail using more heavy-duty cable ties, since it was the only feasible option in the short term.

POST-SAW SMRT

After Saw’s resignation, SMRT clarified that she had been considering a career change even before the December incident. SMRT board chairman Yong Guan Koh explained to the media that, “On 7 December 2011, Phaik Hwa spoke to me about her desire to move on during 2012, after having served nine years and led SMRT through considerable growth.” Auric Pacific Group, a Singaporean food manufacturing and distribution subsidiary owned by Hong Kong-based Indonesian conglomerate Lippo Group, announced in July 2013 that it had appointed Saw as its new CEO with immediate effect.

SMRT announced in August 14, 2012, that it had appointed Desmond Kuek, a former Chief of Defense who had graduated with a degree in engineering science, to be its next CEO effective October 2012. Following this, SMRT made changes to its standard operating procedure in emergencies and upgraded its rail system.

However, even with these new changes, the MRT system in Singapore still experienced delays and breakdowns from time to time, though of a smaller magnitude than the December 2011 breakdowns. These occurred despite the government’s introduction of tougher measures on rail transport operators in a bid to increase motivation to avoid such breakdowns. In fact, SMRT spokesman warned that the delays would continue to occur over the next two years at least, as SMRT upgraded the entire rail system.

Were the breakdowns simply the inevitable consequence of long-term war and tear resulting from the demands made by an increasing number of commuters as a result of the rise in Singapore’s population over the years? Regardless, the saga surrounding the major SMRT breakdowns in December 2011 still raised the question of whether Saw was responsible for the incidents.