assignment hr practice
TRANSCRIPT
Restructuring of CAA Pakistan and the Challenges
to Implementation of Modern HR Practices
By
Umair Zafar
A project report submitted in part requirement for the M. Sc. In Management
Glasgow UniversitySchool of Business and Management
August 2007
Table of Contents
1. Introduction…………………………………………………………………………… 6
2. CAA Pakistan – Prior to Restructuring…………………………………….. 9
2.1 Background2.2 CAA Organogram2.3 Problem Areas
3. Restructuring Process………………………………………………………………16
3.1 Restructuring strategy3.2 Objectives 3.3 Methodology3.4 Approach3.5 Project Organization Chart3.6 The Process Starts3.7 Revised Organogram
4. Implementation - Problem Areas………………………………………………26
4.1 Government Rules / Regulations4.2 Difficulty in Changing the Mindsets4.3 Misconceptions and Myths related to Restructuring 4.4 Quality of Work Force4.5 Resistance to Change – Getting People on Board
5. Findings…………………………………………………………………………………. 31
6. Conclusions ……………………………………………………………………………. 37
7. Recommendations…………………………………………………………………….38
Bibliography…………………………………………………………………………………. 40
Annexure – A to C……………………………………………………………………….42 - 44
2
Summary
Organizational change is very much in the climate of Pakistan. A number of
Public Sector Organizations have embarked upon restructuring to bring
corporate culture through introduction of best HR practices in their setups.
Today rightsizing is irresistible because it is firmly planted in business and
public sector can no longer remain oblivious of this phenomenon. But on the
other hand Public Sector Organizations because of their very structure and
prevalent culture of over staffing find it difficult to right size which will
result in layoffs which Pakistan can ill-afford since unemployment rate is
already high in the country as compared to its neighbours.
The paper encompasses an analytical study of the on-going process of
Restructuring in Pakistan Civil Aviation Authority – a Public Sector
Organization, with reference to the challenges being faced in
implementation of best HR practices.
The research study applied the narrative theory as a conceptual bridge across
organizational Change Management to identify the challenges to
implementation and suggested measure to meet those challenges to achieve
the desired goal. The methodology adopted was printed material (secondary
data source) and the telephonic interviews. Study discussed the state of CAA
Prior to Restructuring, the Restructuring Process, the Implementation –
Problem Areas, Findings, Conclusion and Recommendations. The major
findings of the study are given in succeeding paras.
Adequate preparatory work was done prior to undertaking
Restructuring Process and a viable strategic plan was formulated.
3
The initial phase of Restructuring Process went well. This included a
Talent Hunt exercise, a 3 days workshop to reach to a consensus on
revised mission, vision, and core values. New organizational structure
was also evolved through lengthy discussions
It was the Implementation Stage where the problems started
surfacing. The main problems were due to lack of communication
with employees. Although there was a Communication Strategy but it
was implemented late and by that time there were all sorts of
misperceptions and doubts in employees’ minds regarding
Restructuring Process. Moreover, there were problems of
Government Rules and Regulations, which were a major hurdle in
implementation of best HR practices.
In-spite of all the problems it is considered that the Restructuring
Process of CAA was about 40% success. The process is still
continuing and perhaps things will improve. For the first time there is
a focus on best HR practices such as HR Training and Development;
Succession Planning, Introduction of Benchmarking various
functions at airports and new Appraisal System etc.
Some of the recommendations are effective communication strategy
within and outside the organization, a phased Implementation Plan,
and an effort to get Government Rules and Regulations revised which
directly impinge upon implementation of modern HR practices in
Public Sector Organizations.
4
Acknowledgements
I am thankful to all those officers and staff of CAA Pakistan who were very
forthcoming during telephonic interviews. Without their cooperation and
assistance in conveying their candid opinions, this research would not have
been possible.
In particular I am indebted to the following officers of CAA belonging to
middle and top-level management whose contributions were most valuable
since they were directly involved in the Restructuring Process right from the
conceptual stage to the implementation stage:
Umair Zafar
5
Restructuring of CAA Pakistan and the Challenges to Implementation of
Modern HR Practices
Introduction
Organizations competed to gain competitive advantage through total quality
management in the 1970s, through time based management in the 1980s,
through efficiency in the 1990s, and through innovation to the 2000s (A
fuah, 1998 Kuczmarski, 1996; Gupta, 1993). We are in the 21st century and
it is evident that with the free flow of capital due to the GATT and GATS,
firms in both manufacturing and services will be faced with more fierce
competition. Without continuous and relentless innovation, it would be
difficult for any firm to be able to keep their market share in this borderless
world. Peter (1997) reiterates the view that the world of business is now in a
permanent state of flux where constant innovation is the only strategy for
survival for both individual and organizations.
Restructuring is an extremely relevant issue to organizations today in that it
has become the most prevalent dilemma in recent years. The current
tendency of organizations to restructure and ultimately to downsize has a
major impact on the organizations themselves, on their surviving and
terminated employees, on the government, and on society as a whole. In
fact, it is everyone’s problem and it seems to have become more the rule
than the exception today and for the future.
As Miller (1993) suggests, many organization are either too small to have a
specialist HR function or are unwilling to allocate these functions to a
specialists. Therefore, it was important to operationlise the notion of HR
practices in a way that was restructuring-friendly.
6
The current adverse economic climate has been persistent and long-lasting.
As a result, many organizations which were operating inefficiently have
been driven out of business, and most of those which have survived were
forced to restructure in order to streamline their operations and achieve
operating cost savings to ensure their continued competitiveness both on the
local and global markets. More often than not, this meant downsizing the
organization and, in many cases, the downsizing was conducted in multiple
phases or may be ongoing.
Typically, the concept of restructuring and organizational change is in regard
to organization-wide change, as opposed to smaller changes such as adding a
new person, modifying a program, etc. Examples of organization-wide
change might include a change in mission, restructuring operations, new
technologies, mergers, major collaborations, "rightsizing", new programs
such as Total Quality Management, re-engineering, etc.
Restructuring is an important issue mostly to privatize the public enterprises
all over the world. Usually, such organizations want to achieve high
efficiencies in order to report attractive profits which would influence the
stock market to reflect maximum share value.
Research has found that failures occur at other levels as well. It was
established that, despite careful planning, most organizations which
restructured to achieve the desired cost reductions and effectiveness which
were their primary restructuring objectives. Koonce (1991) and Prevost
(1992) have attributed this failure to the fact that organizations do not give
enough consideration to the “people factor” when restructuring. New
corporate goals are often unclear because little information is given to
employees. it is reasonable to speculate that this omission may partly be
caused by the fact that human resource issues are often not considered an
integral component of the organization’s strategic planning process.
7
Organizational change is very much in the climate of Pakistan. A number of
Public Sector Organizations have embarked upon restructuring to bring
corporate culture through introduction of best HR practices. Today,
rightsizing is irresistible because it is firmly planted in business. Public
sector can no longer remain oblivious of this change where most
organizations are over-staffed and their performance on productivity is poor.
Civil Aviation Authority (CAA) of Pakistan is a public sector autonomous
body working under the control of Federal Government of Pakistan through
Ministry of Defence. There had been a constant decline in the working of the
organization over the years which prompted the Government to look for
ways to bring in improvement. Accordingly it was decided in November
2006 to restructure CAA. The paper will encompass the ongoing process of
restructuring in CAA Pakistan with reference to the challenges being faced
in implementation of best HR practices.
This research study will apply the narrative theory as a conceptual bridge
across organizational change management and identify the challenges to
implementation of HR practices and suggest measures to meet those
challenges to achieve the desired results. The study will cover the state of
CAA prior to change, the restructuring process, the problem areas and sum
up with the findings and recommendations. The scope of this study is
limited to CAA Pakistan but to quite an extent the problems of restructuring
of CAA will have relevance to other Public Sector organizations to the
extent that Government rules and regulations and other problems such as
overstaffing, lack of HR practices, bureaucratic attitudes etc are more or less
same in all these setups.
The topic has been chosen for the reason that for some years to come there
will have to be similar organizational changes in other public sector
organizations of Pakistan as well. HR being the subject that I intend
8
pursuing as my career, this study will give me a good insight into the
problems and their possible solutions.
CAA Pakistan – Prior to Restructuring
Background
CAA was created on 7th December, 1982 as an autonomous body in the
Ministry of Defence, Government of Pakistan. The mission of CAA is to
provide for the promotion and regulation of Civil Aviation activities and to
develop an infrastructure for safe, efficient, adequate, economical and
properly coordinated Civil Air Transport Service in Pakistan.
CAA Pakistan manages 42 airports including international (Annexure – A)
and has a total workforce of over 9000 personnel including about 1400
officers. Apart from this there are temporary/daily wages employees and
their number is around 3500. Most of the temporary wages employees are in
the lower echelons performing general duties, porter and janitorial services.
CAA Ordinance (1982) provides for general direction and administration of
the CAA and its affairs shall vest in a Board which may exercise all powers,
perform all functions and do all acts and things which may be exercised,
performed or done by the authority. CAA Board has further delegated
certain powers to the CAA Executive Committee which manages day to day
affairs of the Authority. The Committee is headed by Director General CAA
having Deputy Director General and three to four senior directors as its
members.
Pakistan ‘s economy is rapidly growing for the last few years .In the fiscal
year 2005 the economy has achieved a GDP growth of 8.4%.Being gateway
to Central Asian countries and with low labour cost it has great potential to
grow. Also its geographical location puts it at an advantage with regard to
aviation industry. But unfortunately CAA has not been able to take
9
advantage of its strategic location .CAA used to have foreign air lines
operating in Pakistan but over the years the number has decreased. For
example in the year 1995-96, total aircraft movements from all air ports in
Pakistan was 245673; this decreased to 155222 in year 2001-02 and in year
2004-05 was 199830.(CAA Statistics 2006 Annexure – B) ).
The CAA's Revenue, Aircraft Movement and Passenger Traffic Trends for
the years 2001 to 2005 are as under:-
REVENUE FOR THE YEAR TILL 30 th JUNE
(Rs. in Million)
Description 2005 2004 2003 2002 2001
Operational 6584 5,048 3,971 3,799 4,648Non Operational 1,663 1,505 1,470 1,453 1,324
Total 8,274 6,553 5,972 5,441 5,232% Increase Total 26 20 4 (12) 8
% Increase Operational 30 27 5 (19) 15% Increase Non
Operational11 2 1 10 (10)
10
AIRCRAFT MOVEMENT FOR THE YEAR ENDED 30 TH JUNE
Description 2005 2004 2003 2002 2001
Route/(Over flying) 105,279 90,031 70,961 52,850 72,159Domestic Landing 47,644 44,431 39,886 39,071 49,293
International Landing 21,925 19,608 17,064 15,727 18,690Total 174,848 154,070 127,911 107,648 140,142
% Increase /(Decrease)Route/(Over flying) 17 27 34 (27) 10Domestic Landing 7 11 2 (21) (17)
International Landing 12 15 9 (16) (71)Total 13 20 19 (23) (3)
Trend of Aircraft Movement as on 30 th June
11
Passengers Movement for the year Ended 30 th June
Description 2005 2004 2003 2002 2001
Domestic 3,632,026 3,138,066 2,892,288 2,650,606 3,476,590International 3,381,024 3,040,744 2,600,628 2,422,844 2,816,217
Total 7,013,050 6,178,810 5,492,916 5,073,450 6,292,807% Increase / (Decrase)
Domestic 16 8 9 (24) (11)Internatioal 11 17 7 (14) 9
Total 14 12 8 (19) (3)
Trend of International and Domestic Passenger Movement
As On 30 th June
12
Going through these statistics one might notice that CAA’s revenue and net
profit as well as passenger and Air Traffic have shown an increase over the
last few years (CAA Annual Report 2005) but considering the potential of
growth that CAA has got, these achievements are considered insignificant
because there is a lot more that CAA is capable of earning provided the
organization is well structured and has a motivated work force.
There has been a constant decline in the work environment of CAA which
included low morale, poor performance and productivity of employees. This
prompted the Federal Government to look for ways to bring in necessary
improvements through a process of restructuring and change management.
Morgan (1991) has asserted that leadership at all levels will be needed to
generate innovation and change in the organization. The European
Commission (Commission of the European Communities – 1995 and the
U.K. Govt CDTI and CBI – 1994) state that in nine out of ten “winning” UK
companies studied, one of the characteristic of innovation best practice
included leadership by vision and the unlocking of the potential of people by
good communications, team work and training. Flattening the organizational
pyramid (Commission of European Community – 1995 Moran 1991) and
creating a customer focused culture.
The Government of Pakistan appointed an experienced and well- reputed
person from a multi-national set up as the Director General which indicated
Government’s seriousness in improving the worsening state of affairs of
CAA and to start the restructuring – cum – change process.
The change management process in CAA was started to facilitate the
journey of transformation and restructuring. Change is a process which
introduces new and better ways of working to achieve efficiencies and
optimization of organization’s resources. At the same time change process
13
emphasizes on training, performance based rewards and career progression
to maximize the value of its human capital.
CAA Organogram
Problem Areas
Civil Aviation is one of the world’s most important services. The aviation
industry is experiencing an unprecedented period of change. Three
interlinked developments are combining to transform the structure of the
industry: progressive liberalization of the market, the drive to privatize
publicly owned carriers and airports, and management’s accelerated pursuit
of the benefits of globalization, in terms of both product market and labour
market.
14
Details at Annexure - C
CAA – PRIOR TO RESTRUCTURING
DG CAA
D FIN D COM&ESTATES
D LEGALD ADMIN
APM JIAP
D P&DAPMAIIAP
RD(N) D TECH
D AT
SIB D OPSD AWD FLT STD
CFID
WORKS
D NIIAP
DY DG CAA
RD (S)
D CATI
GM AUDIT
PSO/SB
Noble (1999) contends that the ineffective deployment of strategic planning
in many firms is the main reason for the failure to achieve expected or
projected performance. He states that “implementation is an enigma and a
source of frustration in many companies”
The Civil Aviation industry, which is a key factor for promotion of social,
political and economic life in the modern times, was unfortunately a
neglected sector in Pakistan. Most of the international airlines earlier
operating from Pakistan were compelled to cease their operations mainly
because of harsh bureaucratic attitude, poor quality of airport handling safety
standards and exorbitant airport handling and fuel charges. Consequently,
Pakistan had to pay the price and most of the international airlines such as
KLM, Lufthansa, Pan American, and Japan Airlines etc. switched over their
operations from Pakistan to Dubai.
CAA’s support functions took precedence over its core functions like Air
Navigation Services, Air Worthiness, Regulatory Affairs, and Airport
Services. The stakeholders were ignored and were not allowed participation
in decision making. The top management was kept busy in routine work and
their macro-level assignments could not be fulfilled. HR practices did have
the requisite priority wherein no SMART tasks and targets were assigned
even to senior officers. The bureaucratic culture and administrative islands
were promoted with centralization of command and control system, which
resulted in lack of motivation.
Some of the other problem areas prior to restructuring included:
a) Bureaucratic systems got in the way of the real business
a) Managers were reluctant to develop their people for fear of creating rivals
b) Key decisions were taken without consultation
15
b) There was no sense of urgency seen
c) Rumors proliferated
d) Unclear ‘purpose of the organization’ - confusion was passed down
e) Too many people played the “that’s not my job” game
f) Meetings bred indecisions
g) A blame culture suppress innovation – “it wasn’t my fault”
h) Willing horses were overloaded but unreliable people were given nothing to do
i) Investigations were conducted, at great cost, yet nothing changed for the better.
j) There was a culture of “acceptable under-performance”
k) Hidden agendas grew, and internal politics drained time and energy.
Restructuring Process
General
Ohmae (1983) encapsulates the meaning of strategic planning when he states
that: … business strategy is about … competitive advantage. The sole
purpose of strategic planning is to enable a company to gain, as efficiently as
possible, a sustainable edge over its competitors.
According to Hewlett (1999), restructuring and strategic planning imply to
an attempt to alter a company’s strength relative to that of its competitors, in
the most efficient and effective way. Strategic planning focuses on the
direction of the organization and actions necessary to improve its
performance. It is the process by which firms derive a strategy to enable
them to anticipate and respond to the changing dynamic environment in
which they operate.
16
Successful change involves top management including the Board and Chief
Executive. Usually there is a champion who initially instigates the change by
being visionary, persuasive and consistent. A change agent role is usually
responsible to translate the vision into a realistic plan and carry out the plan.
Change is usually best carried out as a team effort .Communication about
the change should be frequent and with all organization members. To sustain
change, the structure of the organization itself should be modified, including
strategic plans, policies and procedures; this change in the structures of the
organization typically involves an Unfreezing, Change and Re-freezing
process.
Theoretically a typical Restructuring Process comprises of following three
phases.
17
Phase – 1 Preparing for change: The foundation for managing change is
built wherein the theories and perspectives that impact how people go
through changes are examined. The specific change characteristics and the
organizational attributes that impact change management are assessed. The
team structure and sponsorship model are developed.
Phase – II Managing change: The key change management plans,
communications, sponsorship, coaching, training, resistance management
are developed. A project plan for implementing change management
activities and learn how to use the model is created.
Phase – III Reinforcing change: The effectiveness of change management
activities are assessed and the buy-in process completed.
The key driver roles for organizational change are:
Change Leader
The change leader should be sufficiently senior in the
organization to be able to command resources and the attention
of the executive team. The change leader has a strong personal
commitment to the success of the program and is the principal
trouble-shooter.
Program Sponsor
The program sponsor is the executive’s representative for
ensuring that the appropriate resources are committed,
problems are solved and the program succeeds.
Steering Committee
Steering Committee members share overall responsibility for
the success of the program with the Program Sponsor. The
committee typically represents the key stakeholders and
reviews regularly the progress of the project.
18
The key implementor roles include:
Project Manager
The project manager has overall responsibility for detailed
planning and implementation of one or more components of
the change program.
Project Team Members
Project team members are responsible for completing
various project activities.
The key enabler roles include:
Middle Managers
Middle managers are responsible for supporting and
communicating change initiatives and allocating the resources
required within their area of control.
Supervisors Frontline supervisors and team leaders are the face of the
organization to employees and serve a critical role in
supporting, consoling and coaching employees throughout the
change process.
Restructuring strategy
Beaumont’s (1992) argument that the academic literature on organizations
do not add up to a consistent integrated package deriving from a long-term
coherent management strategy.
The growth and profitability are key dimensions for an organization to
remain sustainable and viable in competitive environment. .In 2005,
McKinsey & Company conducted a study and prepared a business plan for
CAA to ensure growth and profitability in future. The report also suggested
certain initiatives for re-orientation of CAA in order to effectively achieve
business goals, growth and profitability.
19
In order to turn around CAA into a dynamic organization, it was decided to
take professional services of Lahore University of Management Sciences
(LUMS)-the most credible and neutral institution to help and guide the
process of planning and implementing organizational transformation in
CAA.
Objectives
The specific objectives to be achieved in consultation with LUMS faculty
were as under.
To develop vision, mission and core values of CAA
To design an organizational structure that supports the new vision,
mission and meets the needs of the future.
To develop a change plan and an implementation strategy which
incorporates new ways of working where performance and results are
the core criteria for individual’s growth consistent with goals and
objectives of newly designed organization.
To provide support to CAA during the implementation process.
Methodology
To ensure smooth and sustainable transformation process, following teams
were constituted:
Consultants: A consulting team of highly qualified and experienced
professors from LUMS to provide guidelines to senior CAA
management to affect a change in the present system
Facilitators: A team of five officers from within CAA to interface
and facilitate LUMS team in achieving the objectives. The team will
20
also abridge CAA management and LUMS team and ensuring flow of
communication, data collection and implementation processes.
Approach
Hewlett (1999) suggests, “A restructuring and the strategic planning process
itself offers a competitive edge and enables a company to measure
achievements against expectations”.
CAA planned a four-track approach for restructuring and the strategic
planning process which will be adopted for implementation of new
transformational strategy described as under:
The Culture Track: To enhance trust communication information
sharing, team building and a willingness to change among employees.
These are the conditions that must exist before any improvement
effort can succeed.
The Skills Track: Provides all personnel with improved ways of
managing people and solving problems.
The Strategic Track: Develops either a completely new or a revised
strategic plan for the CAA and then aligns all divisions, departments,
jobs and resources with new strategic direction.
The Reward Track: Establishes a performance-based reward system
that helps sustain all improvements by officially sanctioning the new
culture, use of updated skills and team effort within all work groups.
21
The Culture and Skills Track are critical to the success of this change effort
along with other tracks significant for implementing inter related change
initiatives at CAA.
Project Organization Chart
The project organization chart below shows the respective roles and inter-
relationship among various groups /positions of the organization.
The Process Starts
Variyam and Kraybill (1993) state that ownership is a critical factor in the
adoption of a restructuring process. They stress that “besides size, human
capital, and market structure, a firm’s choice of strategies is likely to be
affected by its ownership structure.
Board
Director General (DG)
LUMS
Restructuring Management –CAA Team.
DirectoratesTalent Pool
Assessment of Progressof Change Effort
CommunicationData collectionPolicy implementation
22
Reporting Project Status
Strategic Direction Guidance
The process started with identification of deliverables, which started with a
preliminary assessment of the working environment of the organization
through interviews. The gap analysis was carried out in each of the four
track strategies. The external facilitators and the RMT arranged three day
workshop in Karachi, Pakistan wherein sixty officers from lower to top-
management participated. During this workshop the CAA’s mission was
revisited and new Vision, Mission, and Core Values were developed as
under with consensus:
Vision – “Be a world – class service provider in the Aviation Industry”
Mission – “Provide safe, secure and efficient best-in-class aviation
services to the stakeholders”
Core Values – “Safety and Security, Integrity, Professional
Excellence, and Customer Focus”
Revised Organogram
The new fundamental organizational structure was developed in line with
three core functions identified as Air Navigation Services, Regulatory, and
Airport Services. Work study and job analysis were carried out particularly
for new positions created in the revised organizational structure. New job
descriptions, specifications for each post were developed by RMT in
consultation with external facilitators. Initially there were problems because
of duplication of activities which were gradually smoothened. The new
structure allowed each directorate to function independently with minimized
duplication of activities. The new organogram, appointments, and core
activities were approved by CAA Board of Directors:
23
Major Changes in Organizational Structure
Following major changes in the CAA Organizational Structure during the
change process were noticed:
a) Three distinct functions of CAA i.e. Regulatory, air Navigation
Services, and airport Services, which were hithertofore all
amalgamated were separated into three distinct pillars in the new
structure;
b) To support all these pillars, a number of support services were formed
which would provide services to all the three pillars;
c) The span of control of DG CAA was made more manageable with
only some of the Support Services Directors and Deputy DG CAA
reporting directly to him;
d) The span of control of Deputy DG CAA was also rationalized with
the creation of five additional Assistant DG’s appointments who
would be reporting to Deputy DG instead of more than eight
Directors directly reporting to Deputy DG.
The HR Systems of two multi-national organizations were studied RMT
with particular reference to performance-based management. The old system
of Annual Confidential Report (ACR) system was replaced with the newly
developed “Performance Appraisal” wherein every officer has to negotiate
and agree his/her annual targets with his/her boss. The old system of annual
pay raise across the board was dispensed with and replaced with the
performance-based pay raise.
The business partners were given the orientation and training about the new
performance appraisal system to facilitate smooth transition from ACR to
Performance Appraisal
24
Regulatory Air TrafficServices
Airport Services
Support Functionprovide servicesTo line function
Finance
Legal
HumanResources
HSSE
Dev/Infra/Tech
Logistics
Delegation of to individual
units
Organizational Structure - Appointments
REG SERVICES
ADG x 5 GMs D AW x 5 GMs DAT x 2 GMs D FS x 12 GMs
AIR NAVSERVICES
ADG x 2 GMs DOPS x 8 GMsDSMS/ATM x
1 GM
AIRPORT SERVICES
ADG x 2 GMs RD(N) x 1 GM RD(S) x 1 GM
ADG COORD/SEC/SB
ADG P&D-DTx12GMs D WORKS x 6 GMs
C FO – 4 x GMs
C HR – 3 x GMs
CCMO – 4 x GMs
C LS – 2 x GMs
CPD
SIB – 2 x GMs
P & CM
GM AUDIT
HSE
SUPPORT DTES
MAIN DIRECTORATES/DEPARTMENTS
25
Organizational StructureDirector General
Implementation - Problem Areas
Mintzberg (1973) contended that while both content and process are separate
elements of restructuring strategy formulation, they are highly
interdependent. The interrelationship is seen as so significant that a
consideration of the content of strategy in the absence of strategic process
means that only a limited view is obtained. Hinterhuber and Popp (1992)
contended that it is impossible to consider one without the other.
Pettigrew and Whipp (1991) state that strategic planning is not just a matter
of formulation and deployment; it also includes how people interpret and
deploy the strategic restructuring plan.
REGULATORY SVCS
Policies of Civil Air Transport IndustryBilateral ASA’s Ensuring ICAO stds &compliance by airlines/ground operators.Ensuring highest level of safety & stdsCalibration of Nav,Comm, Landing & Visual Aids.Certification of Aerodromes.Implementation of ICAO Policies & Procedures.Licensing of Aviation Equipment & crew.Medical checks & fitnesscertification of air crew &Aviation personal. Economic oversight
AIR NAV SERVICES
Ensure safe & orderly flow of Air Traffic.Provide services in line with regulations & stds of ICAO pertaining to Air NavigationEnsure Fire/Rescueservices.Ensure Safety&Securityservices for Airside at Airports.Obtain certification from regulator as per ICAO instructions.Ensure safety of aircraft operations & coord withconcerned security agencies for security onairside at airports.
ADG COORD/SEC/SB
ADG P&D -DTECH & D WKS
ADG CATI
C FO
C HR
CCMO
C LS
CPD
SIB
P & CM
GM AUDIT
HSE
SUPPORT DTES MAIN DIRECTORATES
26
AIRPORT SERVICES
• Provide world-Class facilities & handling of passengers at Airports.
• Ensure safety,security& convenience of pax as per ICAO Standards.
• Develop working spirit with all agencies at Airports.
• Up keep of all Lounges and entire Land-side at Airports.
• Obtain certification fromRegulator.
Core Activities of Departments / Directorates
Stacey (1993) argues that strategies should merge from the “self
organization activities of loose, informal, destabilizing networks”.
Many HR managers have participated in Organizational Change projects and
processes. They experience difficulties in gaining successful organizational
change; there are many cases of problems and disasters. Something must be
wrong. Why after all their experience of failures do we continue to have
problems? Management consultants with their different system
implementation methodologies could not provide the answer. The real
problems are fundamental in the way we manage the organizational change.
Conventional methods introduce unsolvable problems. Therefore, no one
consultant’s methodology will work for all situations. That is what makes
change management both interesting and challenging for HR managers.
CAA change management team also had its share of problems during
implementation stage which are given in the succeeding paras.
Government Rules / Regulations
One of the major problems in implementation was the Government Rules
and Regulations. Public sector organizations have such rules where lengthy
procedures, say of procurement or selection / recruitment have to be
followed. The reason could be to meet Government Auditors requirements
or to keep the process transparent or to give equal share of job opportunities
in Government jobs to young graduates of different regions or provinces
(Estacode 2001).
Similarly there are rules of fixed compensation and salary. Unlike in the
corporate sector, there are hardly any provisions for bonuses or extra
rewards in monetary terms. Although the Government rules do provide
provisions for accelerated promotions to good performers but the procedures
27
for this are quite time consuming and complicated. Similarly hiring and
firing in the Public Sector organization is not that simple (Estacode 2001).
Therefore, individuals who are not putting in the desired effort or are
incompetent, have many ways to get away without any punishment by
resorting to appeals to different appellate authorities. These appellate
authorities were basically formed to look after the genuine concerns of the
Government employees but these forums are mostly being misused by
incompetent employees to avert or at-least delay decisions against them.
The ultimate sufferer is the organization which has to ‘live with’ such a
disgruntled lot till a favourable decision is received from the appellate
authority. CAA Service Regulations (2001) provides for employees’
promotions, seniority, long leaves, etc. which in different degrees were
impediments in implementation of the best HR practices.
Difficulty in Changing the Mindsets
Since CAA employees were used to doing their work in a particular manner
for almost 25 years during which there was hardly any change in work
ethics, they were, therefore, finding it difficult to accept, or to ‘digest’ and
come to terms with the new challenges. This phenomenon was more
common amongst those employees who had put in over fifteen to twenty
years of service in CAA. From younger employees, there was a relatively
better response to the change because their outlook was not as rigid
(Telephonic Interview with CAA Employees)
Misconceptions and Myths related to Restructuring
Miller (1993), when reviewing the progress of strategic HR, suggests that
the linkage between human resource management and strategy are poorly
developed. He also states that although research seems to be suggesting that
28
there is a little evidence of business experimenting with ideas which seek to
link strategy with HR, there seems to be considerable room for innovation in
key areas of HR practices
There were misconceptions that as a result of restructuring process there
would be large scale compulsory retirements and lay-offs since many
services such as Meeters and Greeters, Porter Services and Janitorial
Services etc. employing large number of employees (about 2500) were being
outsourced. Similarly connected with this were the unfounded fears that
large part of CAA, leaving Regulatory and Air Navigation Services will be
put to privatization resulting in a sense of uncertainty and job-insecurity
amongst the employees. Again this feeling was prevalent more amongst the
lower level employees since they formed the major part of the above
mentioned services hence were directly affected by this change (Telephonic
Interview with RMT)
.
Quality of Work Force
Because of prolonged neglect with regard to the important aspect of
Training in the old set up, there was a derth of quality workers who could
undertake the challenges of the new change. The work requirements had
suddenly changed. For example, new appraisal system was in place which
assigned specific tasks and targets to be achieved – a concept totally new to
the employees who were used to a system where performance issues were
not targeted and ‘its nobody’s fault’ when tasks assigned were not
accomplished.
Lack of motivation, guaranteed pay increments, lack of incentive for good
performers were other factors contributing towards the poor quality of work
force. All these and other such factors combined to create complex problems
with regard to quality of workforce which was never fully equipped to
accept the change least of all to implement one.
29
Resistance to Change – Getting People on Board
A change always brings a resistance to it and if one is prepared to tackle it,
the chances of bringing the change are there otherwise, there will be no
change. So it is important to take people along so that they are ready to
accept the change. For this Timings are very important. If the timings of
educating people and preparing them for the change are not articulated and
synchronized with other activities there are chances of failure. In CAA
although an effort was made to educate the employees but the timings were
late. Communication strategy did identify this important aspect of Getting
People on Board but because of delayed timings it cold not achieve the
desired results. Whereas some higher echelons were familiar with the change
right from the beginning of change management process but the bulk and the
most affected middle and lower wing of management remained skeptical till
the somewhat delayed communication was made but then it was a bit late
(Telephonic Interview with RMT)
.
There were strong resistances to change. People were afraid of the unknown.
Many people thought that everything was just fine and they didn’t
understand the need for change. Many were pessimistic about the change.
There were conflicting goals in the organization, e.g., to increase resources
to accomplish the change yet concurrently cut costs to remain viable.
Organization - wide change went against the very values held dear by
members in the organization, that is, the change might go against how
members believed things could be done. The best approaches to address
resistances were through increased and sustained communications and
education.
The leader could meet with all the managers and staff to explain reasons for
the change, how it generally would be carried out and where others could go
for additional information. A plan could be developed and communicated.
30
Plans did change but it could have been communicated that the plan had
changed and why. Forums could be held for organization members to
express their ideas for and express their concerns and frustrations as well.
Findings
a) CAA Pakistan was created on 7th December 1982 as an autonomous
body. The organization inherited a typical culture of a Public Sector
Organization with its status quo-baseline because of no SMART
targets to meet as a legacy from the years when it was Department of
Civil Aviation under Ministry of Defence.
b) The CAA has three main functions viz Regulatory, Air Navigation
Service and Airport Service, which were prior to restructuring all
mixed up without having benchmarks and having priority depending
upon the leadership’s discretion rather than as a deliberate and well-
thought out plan
c) CAA, ever since 1982 had been showing a steady progress in revenue
generation, passenger traffic and aircraft movement. However,
because of lack of diverse professionally sound workforce,
centralized corporate environment, lack of desired motivation and
almost non-existent modern HR practices, the organization had
reached a point of stagnation, resulting in a below par performance
both as a Regulatory Body and in the Commercial Sector.
d) Some of the figures regarding Revenue Earned and Passenger Traffic
may be showing improvements, but these could be misleading. The
increase in revenue could not be attributed to the “best HR practices”
or innovative approach. It could be due to strict financial controls on
expenditure. These savings were mostly due to the fact that no worth-
while capital investment was made during the past five to six years.
31
As against that, when CAA undertook its Radar up-gradation
programmes from 1985 to 1996 that project alone was worth Rs. 2.35
billions. Therefore, without taking any due credit from CAA, the
revenue increase of over Rs. 1.7 billion in 2005 which is 26% over
the last year (Annual Report 2005) may be insignificant considering
that no mega project had been undertaken during the period under
review. Likewise, CAA increased different passenger taxes at the
airports, which resulted in increased revenue; this again can not be
considered a profit in real terms because of CAA’s enhanced
efficiency. CAA is soon going to build new Islamabad International
Airport – a project worth over Rs. 40 billion and unless the
organization shows improvement in its revenues there will be major
problems of cash flow.
e) Prior to undertaking restructuring exercise there were hardly any HR
practices (as understood by corporate sector) in line with the
‘principles of management’ e.g. span of control, chain of command,
and the organization directly responsible for and accountable for
planning, implementing, and assessing work activities in CAA. There
were same old salary increments or time based promotions which are
typical in a Public Sector Organization. As the restructuring process
moved on, best industry practices such as delegation of administrative
and financial powers, decentralization of command and control,
compensation and reward were introduced. Though the new
Appraisal System has been some-what accepted but some of the
employees and even middle-level management are neither clear about
the tasks and targets nor are very enthusiastic to accept the change
(Reference personal interview). But this is natural during any change
management process because things will improve with the passage of
time. Over 30% employees have accepted the new appraisal form,
32
about 60% find it complicated and have difficulty in assigning targets
to their subordinates. 10% are those who had a ‘no-concern’ attitude.
f) CAA undertook the restructuring process in a pretty organized
manner framing its vision, mission, core values, and buy-in by the
senior management, yet there were some aspects both at the
conceptual and implementation levels which if paid due attention
would have facilitated the change. These are discussed in the
succeeding paras.
g) CAA did carry out a few studies including the one undertaken by
McKensey and Co just about a year prior to the restructuring process.
Although a conscious effort was made by CAA leadership that
McKensey’s recommendations are kept aside to have an unbiased
view of employees during the workshop yet McKensey’s
recommendations did provide accountability matrix, performance-
based reward and recognition system that had a profound effect on
some of the conclusions drawn at the end of 3-day workshop at
Karachi. For example, McKensey’s study recommended clear
demarcation of the core functions of CAA i.e. Regulatory; air
Navigation Services, and Airport Services with cascaded down
approach. The same was concluded in the workshop also. So
conceptually one could say that the restructuring process was neither
a ‘cold start’ nor an exercise carried out after a thorough study by
professionals. At best, it was a mix of the two which had its own
impact on results of restructuring process.
h) One of the most important factors for any such exercise is the will
and determination at the Chief Executive Level (in this case at the
Director General’s Level). The DG CAA appointed by the Federal
Government to spear-head the Restructuring Process was a smart
33
choice for the simple reason that he was bringing 36 years of rich
experience of a multi-national organization including over 8 years as
its CEO. He came with a mission and quantitative parameters to
ascertain the degree of individual and organizational performance.
Assessed the situation with desired results to be achieved within a
specified amount of time and then embarked upon restructuring.
Therefore, one of the most important requirements of restructuring
“the commitment of the leader” was met in the case of CAA’s
restructuring.
i) A fairly detailed restructuring strategy was chalked out for
restructuring process, which included objectives, methodology,
approach etc; and a systematic approach to performance improvement
through an ongoing process of establishing strategic performance
objectives; measuring performance; collecting, analyzing, reviewing,
and reporting performance etc.
j) The idea of picking up the best to be involved in the restructuring
process was conceptually right for which an exercise for Talent Hunt
was carried out to form RMT, for quality management through
objective measurement and systematic analysis to achieve intended
goals of restructuring. RMT included some relatively less
experienced members but otherwise very well qualified and suited for
the job. Sixty other general managers, corporate managers, and
deputy managers were selected to participate in the workshops and
also to undertake responsibility at implementation stage at
headquarters and different locations throughout Pakistan.
k) The restructuring process started well as planned but after some time
lost momentum. Things were moving very fast during the initial
stages of talent hunt, 3 days workshop under supervision of LUMS
34
and RMT for quality management and process improvements, but
subsequently when the stage came to put “right man for the right job”
things started getting out of control. The right man in certain cases
was far too junior and he could only be placed after giving him an out
of turn promotion (which is very difficult under existing CAA
Service Regulations). Moreover, all his seniors who would
automatically get superseded will send en-bulk representations to
Federal Service Tribunal or to different appellate authorities. This is
the root cause and major difference in a restructuring process in
Public Sector Organization as compared to a corporate set up where
the top man has the requisite authority and enjoys more liberty of
action, which is required to redesign current business processes to
reducing cost and cycle time resulting in increase stakeholders’
satisfaction.
l) One of the major problem areas was the Communication Gap that
existed between the line managers, first line supervisors and the top
management. Although Restructuring Plan included a
Communication Strategy but its implementation timings were late.
The most important lesson which has been drawn in the past and
which will remain valid for the future as well is that of
Communicating with the people. Here too employees had not been
given adequate importance because of which rumors started floating,
anonymous letters started pouring in. CAA’s RMT reacted late and
started addressing the people at locations but by that time the damage
was done. CAA could not appreciate that people throughout the
organization and at all tiers of command have different reactions to
change. One has a feeling that CAA did not negotiate the new
‘contract’ between employee and employer. The result was that
people knew what they were losing but did not have a clear picture of
what to expect in its place.
35
m) Somewhat related to the above mentioned finding is the fact that
restructuring in CAA was treated as an event, rather than a mental,
physical and emotional process. Leadership can facilitates this
emotional progress or ignore it at the risk of transformation effort.
Senior Management could lead by example; show a sincere interest in
the system and a fervent commitment to its success. In this case one
cannot say that it was totally ignored but this aspect of motivating and
taking people along was certainly not executed well because of which
most of the employees especially at middle and lower level were
never emotionally involved in the process.
n) As mentioned earlier, good preparation at the preliminary stage of
restructuring process was made and the stage was set for the change.
But during the implementation stage all too often changes were
announced in an environmental vacuum with little reason or rationale
as to what the organization was trying to accomplish and how this
change fits into the CAA’s desired vision. Whereas lot of emphasis
was given (verbally) for having the right person for the right job yet
for different reasons this remained a weak area. Result – an air of
mistrust about the whole process.
o) The strategies for a phased incremental change should have been
worked out for a smooth organizational transformation. In CAA, a
culture was prevalent where different trades were working for the
good of their own trade only rather than seeing CAA’s interest as a
whole. This phenomenon was quite obvious during the stage of
reorganization where each service was bidding for maximum number
of General Managers or Corporate Manager posts. This resulted into
creation of more posts of General Managers (from 80 to 129)
increasing positions at the top-management as compared to the
36
previous organization. This was at variance to HR practices. In fact
one of the objectives of restructuring was to have a lean and more
productive organization but CAA ended up further flattening the
organization.
p) Some other positive results of Restructuring are given below. It
would not be correct to say that all these have been fully implemented
rather more realistic inference is that these practices have been put
into motion:
Immediate focus on core functions of Regulatory, Air
Navigation Services and Airport Services.
Focus on one of the important aspects of HR Training and
Development
Focus on Performance-based Compensation System;
Non-performers are being identified easily
Development of Succession Plan
Focus on outsourcing of non-core and high expenditure
activities.
Introduction of bench marking various functions of the
airport/HQ CAA
Focus on effective Recruitment, Selection, and Placement
Conclusions
If one was to asses the whole Restructuring Process of CAA on a ranking
scale of 1 – 10 (lowest to highest), it would be around 4 or 40% successful.
37
Recommendations
a) Change Management is a time-consuming and lengthy process – it won’t
be magical and will take longer than CAA thinks. Therefore, he
organization should persevere and let the change come in its own time
but CAA should meanwhile have an effective mechanism of Change
Management in place to monitor and assist the transformation process;
b) Because of being a Public Sector Organization where people are not as
accustomed to modern HR practices as in the Corporate Sector, CAA
management should adopt a phased strategy. One of the biggest hurdles
in implementation of best HR practices would be stringent Government
Rules and Regulations, which practically impinge upon virtually almost
all the modern HR practices like Performance-Based Reward and
Compensation, Career Progression, Attracting and Retaining only the
best etc., therefore, CAA should make a well thought out phased
implementation plan.
c) Since most Public Sector Organizations would no longer be able to
sustain losses due to lack of best HR practices sooner or later will have to
undertake a Restructuring exercise like the one that CAA took. It will be
appropriate that CAA recommends Government to form a committee to
review relevant rules and regulations of Public Sector Organization and
bring these as close to Corporate Sector as possible so that a major
hurdle in implementation of best HR practices is removed. A strong will
and determination at the Government level is required because without
this no worthwhile Restructuring is possible.
d) If one was to name the most important aspect of Restructuring or Change
Management one would go for “COMMUNICATION”. This is the
38
beackbone or centre of gravity of the whole process. As very rightly
identified by J. Walson Wilson:
(quote) “if you dig very deeply into any problem
you will get to “People”. (unquote).
This aspect is even more important in an organization such as CAA
which is most vulnerable to unfounded fears and apprehensions.
Therefore, a very effective and timely ‘Communication Strategy’ is most
essential before, during and even after the Restructuring Process.
39
Bibliography
Afuah, A. (1998) Innovation Management: Strategies, Implementation, and Oxfor University Press
Beaumont, P. (1992), HRM: Key Concepts and Skills, Sage, London…,
CAA Annual Report (2005)
CAA Employees’ telephonic interviews
CAA Ordinance 1982 ( Ordinance XXX of 1982)
CAA RMT – telephonic interviews
CAA Service Regulations (2001)
Civil Aviation Statistics ( September 2004, May 2006)
Commission of the European Communities (CEC) (1995). Green Paper on Innovation, office of for Publications of European Co immunities, Brussels.
Estacode, Revised Amended Edition (2001)
Gupta, A. K. and Singhal, A. (1993), “Managing Human Resources for Innovation and Creativity”, Research – Technology Management
Hewlett, CA, 1999, “Strategic planning for real estate companies”, Journal of Property Management
Koonce, R., “The People side’ of Organizations Change”, Credit Magazine, Vol 17 No. 6, Nov 1991
Kuczmarski, T. D. (1996). Innovation: Leadership Strategies for the Competitive edge, American Marketing Association, NTC Business NBooks.
Miller, P. (1993), “Strategic human resource management: an assessment of progress”, Human Resource Management Journal, Vol. 1. No. 4
Mintzberg, H., 1973, The Nature of Managerial Work, Harper and Row, New York, NY
Mintzberg, H., 1987, “Crafting strat3egy”, Harvard Business Review, 65, 4, 66-75
40
Mintzberg, H., 1990, “The design school: reconsidering the basic premises of strategic management”, Strategic Management Journal, 11, 3, 171-95
Morgan, G. (1991) “Emerging waves and challenges: the need for new competencies and mindsets”, in Henry, J (E) Creative Management, Sage Publications, London
Noble, C. H., 1990, “Building the strategy implementation network (implementation is a vital, and often neglected, phase of strategic planning), Business Horizons, 42, 6, 19.
Pettigrew, A., Whipp, R., 1991, Managing Change for Competitive Success, Blackwell Publishers, Oxford.
Prevost, T, “Management is Holy Grail – Organizational Restructuring”, CMA Magazine, Vol 66 NO. 1, February 1992
Southern Economic Journal, 60, 1, 136-46
Stacey, R., 1993, Strategic Management and Organizational Dynamics, Pitman, London.
Variama, J. N., Kraybill, D. S., 1993 “Small firms’ choice of business strategies”,
41
Annexure – A
Location of Civil Airports – Pakistan 2004 – 05
42
Annexure – B
Aircraft Movement from all airports in Pakistan
43
Annexure – C
KEY
1. A DG P&D
2. A DG REG
3. A DG ANS
4. A DG CATI
5. A DG COORD/SB
6.CEO AS
7.CPD
8.DSP
9.PD
10.P&CM
11.HSE
12. P SIB
13.CFO
14.CHR
15.CC&MO
16. C O S
17.CLS
18.AW
19.FLT STD
20.LIC
21. F. Insp
22.AT
23.RD
24.C&M
25.Work Imp
26. SMS/ATM27. D Eco Oversight*28. W&D29. Tech / Log
1-Asst Director General Planning & Development2-Asst Director General Regulatory3-Asst Director General Air Navigation Services4-Asst Director General Training and Development5-Asst Director General Coordination/ Secretary Board
6-Chief Executive Officer Airport Services7-Chief Project Director8-Director Special Projects9-Project Director10-Planning & Change Management11-Health, Safety & Environment12-President Safety Investigation Board13-Chief Financial Officer14-Chief of Human Resource15-Chief Commercial & Marketing Officer16-Chief of Security17-Chief of Legal Services18-Air Worthiness19-Flight Standards20-Licensing21-Flight Inspection22-Air Transport23-Regional Director24-Commercial & Marketing25-Work Implementation26-Safety Management system/Air traffic management27-*Post will be re designated to GM after present
incumbents tenure28- Works & Development29- Technical & Logistics
44