Case Study on "Organization Behavior"

Case Study 9 pages (2806 words) Sources: 20

[EXCERPT] . . . .

Organization Behavior

Over the last several decades, the airline industry has been undergoing major transformations. This is because globalization is leading to changes in how firms are competing with each other over routes and passengers. At the heart of these shifts, is a focus on competitors who have lower cost structures and are flying the most profitable routes. For different legacy carriers, this is challenging as their business models must be readjusted to reflect these new realities. The problem is that many of these transformations will result in existing staff members facing the possibility of layoffs and lower wages / benefits. This is a controversial move, as many of these individuals are highly skilled and play a vital role in the well-being of the airline. (Wensveen 2011, pp. 116 -- 140)

In the case of Qantas, they are dealing with similar challenges. This started in the early 1990s' when they were no longer Australia's premier carrier to key routes in: Asia, North America and Europe. What happened is the government began to allow many new carriers to emerge who had a considerably lower cost structure (i.e. Virgin Blue). To compete, Qantas introduce their own low cost carrier named Jet Star. The problems began when the management started paying the employees lower wages. This was used as a tool to encourage Qantas staff members to reduce their costs to similar amounts (as a part of the larger effort to help the airline remain profitable). (Geoffrey 2009)

These changes sparked concerns among Qantas' engineers, baggage handlers, services employees and pilots about possible future cuts. Their biggest worries were that the airline could outsource jobs to Asian countries and transfer more positions to Jet Star. This would effectively weaken the unions and strengthen Qantas' position. To prevent this from happening, these groups of employees shut down the company in late 2011. (the Qantas Crisis 2012)

The management's response was to effectively ground all flights (leading to binding arbitration under the Fair Work Act). This required both sides to resolve their disputes within 21 days (while the airline was allowed to operate over the short-term). However, no agreement was reached which imposed binding arbitration on both sides. Any decision, will result in the two sides having an agreement in place for a total of four years (with no one allowed to strike or create labor disruptions during this time). As a result, both parties have been effectively forced back to work under the law (with labor and management receiving some of their concessions). (the Qantas Crisis 2012) (Dorsette 2010)

However, the incident will have a lasting impact on the airlines relationship with various stakeholders. To fully understand this situation requires focusing on: key issues from the case, how the both sides could address their differences, analyzing the leadership style of the CEO (Alan Joyce), determining how this will impact the survival of Qantas in the future and providing specific recommendations for dealing with these challenges. Together, these elements will highlight potential strategies executives can use to address these underlying problems over the long-term. (the Qantas Crisis 2012) (Dorsette 2010)

Task 1

Critically discuss the power issues evident from the case.

The most critical issues from the case are: the overall costs of labor and the amounts of flexibility given to managers in adjusting with new challenges. From the perspective of the employees, this is troubling as executives have created a low cost carrier that can circumvent existing labor agreements. This is problematic, as the new entity is being used to force employees to accept unilateral changes from the company. Moreover, managers have the ability to outsource high paying jobs to other Asian countries (where labor costs are lower). All of the unions want to protect their rights to collectively bargain and limit the extent of these changes. (Oxenbridge 2010)

Executives will argue that the industry has changed dramatically from deregulation. This is having an adverse impact on their ability to compete with many low cost carriers undercutting Qantas. To keep up with the changes, there must be some kind of transformation in the labor agreements. This means that employees have to be willing to accept lower wages / benefits, fewer numbers of unionized staff members and changes to the firm's operating procedures. These views are illustrating how management believes that this is the only way that the company can remain economically viable in the future. (Oxenbridge 2010)

Critically discuss the conflict issues evident from the case and how the respective parties have dealt with the conflict.

To deal with the conflict, both sides have become more determined in supporting their position at all costs. This is because the employees feel that if they do not make some kind of stand. There will be a change in firm's labor agreements and the policies that are imposed upon members. To prevent this happening, their solution was to ask the company to honor the existing agreements. After the management continued to ignore these provisions, is when it was decided that four of the various unions will go on strike simultaneously. This was designed to shut down the airline and force managers back to the bargaining table. On the surface, this was initially successful. Yet, in the long-term, this action meant that arbitrators imposed the Fair Work Act upon employees. This meant that they would receive lower forms of compensation and benefits. As a result, this is illustrating how this approach increased the overall amounts of hostility surrounding labor costs (which resulted in the unions receiving less than what they wanted). (the Qantas Crisis 2012) (Fajot 2006, pp. 6 -- 10)

The management of Qantas believes that asking employees to accept these kinds of reductions is reasonable. This is because competitors in other areas such as Europe and North America have received these types of changes. This is helping these firms to be able to compete more effectively against the different low cost carriers. The fact that employees are refusing to understand these changes is a sign that they do not comprehend the challenges facing the firm. To remain competitive, managers need to have the ability to implement layoffs and make changes to the company's structure. This means that union employees will receive lower forms of compensation and there is the possibility that more jobs will be outsourced. To address these issues, the firm engaged in a number of activities to include: they opened their own low cost carrier (i.e. Jet Star), they began to make unilateral changes to existing labor agreements and they started sending a number of higher paying positions overseas. The combination of these factors, created the impression that management was only interested in increasing their bottom line results at all costs. (the Qantas Crisis 2012) (Cento 2008, pp. 5 -- 16)

Critically discuss the leadership style of Qantas CEO, Alan Joyce as evident from the case and the change management strategies that he has used in dealing with the strike.

Alan Joyce took a very standoffish and confrontational leadership style. This is from his upbringing in Ireland and his desire to never give up. Moreover, Joyce brings a sense of energy to the airline. This is pushing managers to do more in helping the firm to be successful in the future. From an investor and managerial perspective, these attributes make him appear to be an ideal CEO for turning the airline around. (the Qantas Crisis 2012) (Sperry 2002, pp. 69 -- 90)

However, underneath the surface, Joyce does very little communicating with different stakeholders and why these sweeping changes must occur. As he is continuing to claim how the airline is in dire straits (which is necessitating the speed and scope of these cuts). Yet, he is not discussing these issues with union leaders and key employees. Instead, he has told managers to unilaterally make any kind of cuts using Jet Star as the benchmark. This will serve as a comparison in the overall concessions that are required from unionized employees. (the Qantas Crisis 2012) (Sperry 2002, pp. 69 -- 90)

The problem is that the employees see these actions as an attempt to increase the airlines bottom line result at their expense. This is because the Qantas has been making these kinds of claims for many years and they continue to remain in business. From an employees' point-of-view, managers are simply following the same practices as other firms. This is not necessary, given the fact that there are smaller numbers of competitors flying in and out of Australia. (Kiazad 2010) (the Qantas Crisis 2012) (Doganas 2006, pp. 17 -- 26)

The basic management strategy that Joyce used for settling the strike was designed to give the company an advantage in the arbitration process. This is because he knew that the two sides were far apart on labor related issues. To receive some kind of concessions for employees, he continued to embrace these hardball tactics (which resulted in the firm receiving some of these changes). This is troubling, as it is showing how Joyce's… READ MORE

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