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8/12/2019 AWA Final Solution

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America West Airlines: HRM 360

An Airline in Transition

Background

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Theme

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Main IssueHow effectively can America West Airlines use strategy and proper Humanresource planning to bring operational and managerial efficiency, achievecustomer satisfaction, bring structural improvements and increase marketshare while keeping the costs in control?

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S!T "nalysisS!T structure#

Statement

$ lines

%ustification# $ lines

Strengths:&' (obbying skills to negotiate out of paying half the fine and also obtain

financial support from the government and creditors' S )*' Investment in IT infrastructure' S )$' "" uses +elphi techniue, Markov "nalysis, management inventories,

replacement charts, and succession planning while forecasting demand- supply of labor' S )

.' "" maintains one of the lowest /"SM 0cost per available seat mile1)' The new management team led by Mr' 2arker is ualified to turn the

company around'3' "" new strategy for route structure is very effective'

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Weaknesses:&' "" management philosophy to always pay less then the marketaverage is a weak strategy' )*' 4mployee dissatisfaction to the point of protest' .$' 2oor customer service.' (ack of change management during personnel replacement')' "" has gained a bad reputation due to government fines and

maga5ine reviews'3' 6ailing to ma7imi5e shareholders profits for consecutive years'8' High +ebt

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Opportunities:&' +iscount carriers will gain .9: of the market by ne7t year' ! .*' Highly ualified employees are competing for secured ;obs in the labor

market' ! )$' /an affiliate with other low cost airlines to give better service to

customers through providing connecting flights'.'


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Threats:&' 6all in demand due to economic and political catastrophes faced by the

industry' T )*' Many airlines are fighting over funds from the government'$' 2essimistic view from analyst about the airline industry can affect share

prices'.' Many low=cost airlines are entering the point=to=point markets where

"" has competitive advantage'

)' !il prices are ever rising'

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Human >esource 2lanning Model

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FORECASTINGFORECASTING

TechniquesTechniques

Staffing tablesStaffing tables Markov analysisMarkov analysis

Skills inventoriesSkills inventories@@ ManagementManagementinventoriesinventories

@@ >eplacement>eplacementchartscharts

@@ SuccessionSuccession

TechniquesTechniques@@ Trend analysisTrend analysis

Managerial estimatesManagerial estimates@@ +elphi techniue+elphi techniue

Eterna! Consi"erationsEterna! Consi"erations

+emographic changes+emographic changes@@ 4ducation of the4ducation of theworkforceworkforce

@@ (abor Mobility(abor Mobility

@@ ecalls

(Surp!us) Re"uctions(Surp!us) Re"uctions

@@ (ayoffs(ayoffs

@@ TerminationsTerminations

+emotions+emotions >etirements>etirements


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Forecasting "e*an"

Interna! Consi"erations

$ro"uct+Ser,ice De*an"

It is the level of demand that e7ists in the market for the productserviceoffered by an organi5ation' If there is no demand in the market for theorgani5ations productservice it is a big disadvantage' Strategies will have tobe revisited and product adaptation may be reuired for success'

-usti.ication:""Cs discount carriersC low=cost flights are in high demand after ""Csreforming initiatives, although the airline industry as a whole is suffering'+iscounters have *): market share and are e7pected to capture .9: withinne7t year'

Techno!og/

It is the e7tent of investment a firm makes in technology to manage, improveor invent new processes, products or services' Technology makes processesmore efficient and less time consuming' Technology also can reduce laborreuirements'

-usti.ication:"" continued to invest in IT pro;ects' "" introduced (ow 6are 6inder

online' To reduce check=in time, "" automated airport check=in with self=service kiosks'

Financia! Resources

It is one of the most important components for a business' ithout finance, noorgani5ation can run' There are financial institutions like banks that financepotential businesses' "n organi5ation has to have the skills to arrange thecapital it needs'

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-usti.ication:"" was the first to receive a government loan of D$E9 million because of

their lobbying skills, which was later supplemented by a D.*F million loan froma /ity Bank group' "" also suee5ed out D399 million form its *9 creditors'

A0senteeis*+Turno,er

4mployee absenteeism is the rate of employees being absent per month andemployee turnover is the rate of employees leaving the organi5ation per year'Both high absenteeism and high turnover reflects badly on the organi5ationCsability to keep employees satisfied'

-usti.ication:

"" employees are paid about .): less than competitors' The new contractsigned in *99$ doesnCt increase salaries but it increases total compensationand benefits by appro7imately D$9 million' Higher salaries from competitorsCmeans high turnover risk for ""'

Organi1ationa! Gro2th

It refers to the growth potential of the organi5ation in the industry' If theindustry is saturated then the only way for an organi5ation to increase market

share is by capturing competitorsC share' "lso an organi5ation has growth ifthe industry has a high growth rateG the si5e of the pie increases for everyone'

-usti.ication:"" is concentrating on becoming a discount airline rather than thetraditional hub and spoke, because the growth opportunities for discountairlines are looking brighter'

Manage*ent $hi!osoph/

It is the accumulation of guidelines, attitudes and beliefs that the managementfollows in running the organi5ation' Management philosophy reflects in allmanagerial decisions and it affects the overall image of the organi5ation'

-usti.ication:"" management philosophy is to always pay less then the market average'This is not a good strategy as it makes it difficult to retain e7periencedemployees' +issatisfied employees damaged ""Cs assets in the form of

protest'

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Techniques

Tren" Ana!/sis

It is the analysis of the trends in the industry over a period of time' Throughtrend analysis, a firm can figure out why the demand for their productserviceshave decreased increased? hat may cause a shift in the industry? How toforecast upcoming industry shocks, etc'

-usti.ication:Before the F&& incident, "" was able to get preliminary approval for a D*99million loan, and after F&&, when they started loosing D) million daily, the loangot cancelled' They had to fire &)99 employees and lobby e7tensively forfinance'

Manageria! esti*ates

It constitutes collecting the opinions 0;udgments1 of supervisors, departmentmanagers, e7perts, andor others knowledgeable advisors about theorgani5ationCs future employment needs'

-usti.ication:There is no information in the case that suggests that "" utili5es managerialestimates'

De!phi Techniques

It is an attempt to decrease the sub;ectivity of forecasts by soliciting andsummari5ing the ;udgments of a preselected group of individuals' The finalforecast represents a composite group ;udgment'

-usti.ication:The new management team led by Mr' ' +ouglas 2arker was the designatedgroup of people to forecast the industry changes and act accordingly to bring

"" back to its former standards'

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Forecasting supp!/

Eterna! Consi"erations

De*ographic Changes

+emographics are affected when there is immigration of labor for better ;ob

opportunities or there is any unusual change in birthdeath rate' 6irms need tokeep track of demographic changes to understand reasons behind laborsurplusshortage'

-usti.ication:There is not much information in the case about demographic changes'

E"ucation o. the Work.orce

It refers to the education levels of the workforce availableG whether they areadeuately educated for the available positions? whether they are skilledenough to do their ;obs?, etc'

-usti.ication:The airline industry is highly competitive and any terrorist attacks, naturaldisasters or other financial crisis can lead fall in flight demand and then toemployee layoffs and terminations' Therefore the very best pilots, flightattendants, crews survive in this industry'

%a0or Mo0i!it/

It is the ease with which employees can shift ;obs' If the industry is such thatan employee can leave a company and ;oin their rival company without anybarriers, then it becomes imperative that the employer provide its employeeswith enough incentives to stay with the company'

-usti.ication:

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" lot of the employees who were fired from "" soon ;oined the competingairlines' (ater on "" rehired all of its fired employees including pilots when

operations where improving'

Go,ern*ent $o!icies


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Techniques

Sta..ing Ta0!es

These are graphic representations of all organi5ational ;obs, along with thenumbers of employees currently occupying those ;obs and future 0monthly oryearly1 employment reuirements'

-usti.ication:There is no information in the case that suggests "" has used staffingtables'

Marko, Ana!/sis

This analysis is a method for tracking the pattern of employee movements

through various ;obs'

-usti.ication:Mr' 2arker was a financial wi5ard who came up through ""Cs managementranks' +uring his tenure as /6!, 2arker had restructured the airlineCsschedule to increase business traffic while cutting back leisure destinationsflights'

Ski!!s In,entories

It consists of files of personnel education, e7perience, interests, skills, etc',which allow managers to uickly match ;ob openings with employeebackgrounds'

-usti.ication:There is no information in the case that suggests "" has used skillsinventories for each employee'

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Manage*ent In,entoriesIt is a summary of each employeeCs education, e7perience, interests, skills,etc' 6or managers, it also includes managerial responsibilities, duties incurrentprevious positions, and management training'

-usti.ication:"" maintains management inventories' It has records of Mr' 2arkerCs

managerial and financial skills and previous managerial history'

Rep!ace*ent Charts

>eplacement charts are listings of current ;obholders in the company andpersons who are potential replacements if an opening occurs' It is a visualrepresentation of likely replacement employees for each position, includingage, present performance rating, promotability status, relative strengths -weaknesses'

-usti.ication:"" does maintain replacement charts for its strategic position holders' Mr'illiam 6ranke replaced Mr' 4dward Beauvais and Mr' Michael /onway' "ndthen Mr' ' +ouglas 2arker replaced Mr' 6ranke as 2resident'

Succession $!anning

It is the process of identifying, developing, and tracking key individuals for

e7ecutive positions in the organi5ation' It involves analy5ing demand formanagersprofessionals, auditing e7isting e7ecutives, pro;ecting futureemployee supply, aiding individual career planningcounseling, acceleratepromotions, training - development, and planned strategic recruitment'

-usti.ication:The new management team that Mr' 6ranke established shows that "" wasplanning for this succession' The team is led by Mr' 2arker who has beenthrough management training through various managerial ranks'

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Balancing supply and demand

Shortage = Recruit*ent

Fu!! ti*e

6ull time employees cost higher because they are entitled to benefits otherthan ;ust basic salary'

-usti.ication:There is a shortage of ualified and dedicated employees at ""' 6or thisreason they should employ full time employees and invest in employee=firmrelationship building'

$art ti*e

2art time employees are easier to hire and fire' They are not entitled to anyemployee benefits' Many employers prefer part time employees to reducecosts but part time employees donCt have the same level of loyalty as full timeemployees do'

-usti.ication:2art time employees are cheaper to hire and that contributes to ""Cs goal ofkeeping costs down, but in the long term, employee loyalty and dedication is

important' So, part time employees are not a good option for ""'

Reca!!s

4mployees who were laid off before can be recalled to ;oin duty' Because oftheir former e7perience with the organi5ation, it is better to employ them thento look for new employees in the market'

-usti.ication:

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"" has recalled &)99 employees, whom it fired after F&&, including &8Fpilots' "s operations improved due to new management, all the fired

employees were rehired'

Surp!us = Re"uction

%a/o..

(ay offs usually occurs during bad economy or company budget cuts'4mployees are fired on a temporary basis for $9 to F9 days ma7imum' Theyare paid )9:of their salary during that timeG after the lay off period is over

they are either called back to work or notified of termination'

-usti.ication:(ay offs are a better option then termination because it gives the employeeshope of ;oining ;ob again' It also gives the employees some remuneration tofall back on while looking for another ;ob'

Ter*ination

Termination usually occurs when an employee goes against organi5ationCswelfare or shows any misconduct at the office place' Inefficiency can alsoresult in termination'

-usti.ication:"" tends to fire employees whenever there is an economic or politicalattack on the industry' It is damaging to employee relationships' It is not agood option'

De*otion

It is the opposite of promotion and is usually used as a punishment or a tacticto induce voluntary uits' "n employer only uses demotion as a negativereinforcement when a particular employee is of very less importance to thefirm'

-usti.ication:

There is no mention of any demotion at ""'

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Retire*ents

>etirements are the easiest to predict for a firm' 4ach country has a differentretirement age' Many firms have a set retirement age' 4mployees may takeearly retirements too' Many firms try to fire their employees ;ust before theirretirement to avoid paying retirement benefits' This is a very unfair practice'

-usti.ication:Mr' 4dward Beauvais stepped down from his position after "" filed forbankruptcy in &FF&'

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/orrelation between S!T -H>2M

3u*an Resource $!anning Mo"e!

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FORECASTINGFORECASTING


Staffing tablesStaffing tables Markov analysisMarkov analysis S )S )

Skills inventoriesSkills inventories@@ ManagementManagementinventoriesinventories S $S $

@@ >eplacement>eplacementchartscharts S )S )

@@


@@ Trend analysisTrend analysis T )T )

Managerial estimatesManagerial estimates@@ +elphi techniue+elphi techniue SS..

Eterna! Consi"erationsEterna! Consi"erations

+emographic changes+emographic changes@@ 4ducation of the4ducation of theworkforceworkforce ! $! $

@@

(abor Mobility(abor Mobility . .@@ ecalls S )S )

(Surp!us) Re"uctions(Surp!us) Re"uctions

@@ (ayoffs(ayoffs ) )

@@ TerminationsTerminations ))

+emotions+emotions>etirements>etirements


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Reco**en"ation 4 I*p!e*entation&' "merican est "irline does not have an effective Human >esource

+epartment'

To achieve efficient H> structure "" must have strong H>22 along witheffective personnel'

*' "" customer service fails to meet the uality set up by the

competitors'

To gain patrons trust, "" must invest in building strong customerrelationships by appointing speciali5ed customer service officers'

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