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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

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Page 1: Assignment HR Practice

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

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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

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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.

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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.

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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

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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.

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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.

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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

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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

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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)

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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

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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

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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

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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

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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

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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.

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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.

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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.

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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.

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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

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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.

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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

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Reporting Project Status

Strategic Direction Guidance

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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:

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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

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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

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Organizational StructureDirector General

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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

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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

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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

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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

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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.

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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.

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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.

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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,

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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

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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

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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.

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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

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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.

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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

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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.

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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

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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”,

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Annexure – A

Location of Civil Airports – Pakistan 2004 – 05

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Annexure – B

Aircraft Movement from all airports in Pakistan

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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