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1
HRM 380
Group “D”
Prepared by:
S. M. Tanveer Saad
ID no. 041-154-530
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Executive Summary:
The growth of modern Singapore can be traced back to the policies and
priorities established by the then prime minister who was a staunch believer in
free trade and internally driven growth. Despite of, the Government being the
majority share holder Singapore International Airlines (SIA) faced heightened
competition from the start as the government declared that it would not give
any subsidies to the airline. SIA traced its roots to an organization which had
proved to be quiet beneficial to the fledgling company. From the crews’
impeccable safety record to personnel with crucial operating experience
helped SIA to reach over 90 destinations in more than 40 countries all over
the world by early 2003. SIA established an enviable record both in terms of
the operational performance and its profitability history.
Using its brand image, geographic location, and outstanding service as the
cornerstones of its strategy SIA enjoyed a run of exemplary profitability and
service performance by the year 2004. It had built its strategy around the
principles of a differentiated positioning.
In recent years, there have been many environmental shocks, such as SARS,
that have challenged the continued viability of the model. The model of
strategy that SIA had built in order to compete in the airline business in the
late 1990s’ is to take some important steps to fortify its position globally. By
joining the star Alliance SIA expected code sharing services, fine tune traffic
flows and enter destination where it did not had access, like more secondary
cities of USA and South America. However, despite the obvious advantages,
the alliance network brought some concerns like restoring the brand image of
SIA which it so carefully nourished over the years. The loss of control over
some key decisions also posed challenges to SIA.
To gain the control of alliance SIA took some decisions which later came out
to be a bit costly for them. Such as the partnership with Air New Zealand
resulted in loss and hasty retreat from the initial foray to establish control of
the key Australia- Asia routes.
The second wrong move was to acquire the 49% of the equity with U K based
Virgin Atlantic Airways for 1.6 billion. Virgin’s decision not to join the Star
Alliance placed SIA in delicate position and the threat of invoking the ire of
other alliance partners should it favor Virgin over United and other for
channeling some of its transatlantic passengers. On the other hand rejecting
the opportunity to participate in the venture of Virgin Blue, which later posted
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very good returns in the Australasia market was another wide of the mark
decision of SIA.
The low cost carriers in Asia became one of the greatest threats for now. The
Air Asia and Virgin Blue have acquired considerable percentage of Asian and
domestic Australian markets and SIA has found itself challenged by the entry
of many other low-cost airlines in its home market.
SIA is at the cross roads in its history and the next few strategic moves would
determine the rise of the best Asian Airline to become a global player
commanding the respect of the world’s largest carriers. The case closes with
a decision that SIA needed to make about how it would address the onset of
low-cost competitors, and whether it would make sense to move away from its
differentiated premium approach.
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Table of contents
Title Page
Background ……………… 05
Theme ……………… 23
HR Issues ……………… 41
Recommendation ……………… 46
Implementation ……………… 56
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Background
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Back Ground
Singapore International Airlines (SIA)-A
Benchmark Airline:
Over the years the Singapore International Airlines has built up a strong brand
name as a trend-setter in the aviation industry, particularly in terms of safely,
innovation and service excellence. Its focus on the differentiation of its
services from other airlines has made it one of the most successful and
recognizable airline brands in the recent past. It is also an industry bellwether
for air-craft purchases. Its major shareholder being the Government of
Singapore, SIA has always received tremendous support from them. It is the
parent airline of the Singapore Airline Group of Companies. It has diversified
into airline-related businesses such as aircraft handling, engineering and
catering. The Singapore girl as we know is what the hostesses are called- is
recognized as a symbol of excellence in service quality. The concept of choice
of meals in the “economy class” was first pioneered by the SIA. Other tangible
and intangible differentiations were first pioneered by SIA which is now copied
by all major airlines.
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The competition became so intense and acute that many carriers started to
focus only on their service offerings. They concentrated on upgrading their
service offerings. To sustain the competition, many carriers in the process of
improving their service offering, contributed in the declining yields in a price-
conscious market. The presence of so many airlines competing with each
other worsened the situation. The passenger-revenue yield declined in all
geographic regions. The carriers around the world were passing a very tough
and challenging stage in order to extract higher levels of efficiencies from their
operating structures.
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But along with the advantages, came the short comings of being a part of the
alliances. It had its own problematic issues. The issue that rose first was if all
the carriers in the alliances would be able to perform consistently or not. That
is the partner carriers were concerned if the level of service across carriers,
safety records of the partners, and willingness to let go control to an alliance.
Becoming a partner meant losing the control to some extent. As the
partnership suggests, they also had to listen to other members of the alliances
and act in accordance with them. They have to work as a unity. The crucial
factor seemed to be the difficulty in developing a harmony among the partners
regarding how they would establish common safety, service, and performance
standards. The other major issue was the cross-shareholdings between
carriers especially in the Europe markets as the privatization accelerated. It
was seen that many carriers were purchasing shares of other airlines but it
was not like everyone was purchasing everyone’s shares. Rather it occurred
between two-three carriers and that endangered the scenario for the alliance.
Inside one big alliance, small alliances were emerging and it was giving rise to
rivalry among them. This also happened as the partners were allowed to
negotiate side deals with other carriers irrespective of their alliance
membership.
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established and popular airlines in the world. It reached over 90 destinations
in over 40 countries in Asia, Europe, North America, the Middle East, the
South-West Pacific and Africa.
Both in terms of operational performance and its profitability history SIA was
doing really great. The record it had created was envied by the other airlines.
SIA was one of the few Asian airlines which continuously posted profit even at
times of economic downturns in the 1990s in Asia. However, its short-term
performance record began to decline as a result of SARS attack in the south
east region and the Middle East crisis and the global economic conditions that
had taken hold of most of its key markets. In view of all these major issues,
the company was looking for alternative courses of actions to survive in the
industry
Ground Services:
SIA has been all along known for its ground services. They were known for
giving superior services and they did it by building a strong network of wholly
owned subsidiaries and joint ventures to offer operational support in the areas
such as catering, terminal management, and aircraft maintenance. The
subsidiaries were largely managed as an autonomous entities and it had to
bid for orders from the parent company. In many of the core areas they were
rated as number one. One of the largest of the groups was The Singapore
Airlines Terminal Services (SATS). This group specialized in terminal
management which includes management services such as catering,
passenger and baggage handling, and ramp operations. SATS are one of the
largest flight kitchens in the world at Changi International Airport. On average
they produce about 45000 meals a day. Some of it’s clients were the British
Airways, Quantas, Lufthansa and Japan Airlines. In addition to that SATS
serves 70% of all airlines that fly in to Singapore. SATS also went global by
going in to joint ventures in Beijing, Hong Kong, Chennai, Manila etc.
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covers. It used Connolly leathers for the seat covers. The seats had built-in
communication devices and inflatable air mattress. On long trips the bed
linens in the first-class were changed by the cabin-crew. It truly showed how
much the SIA gave importance to customer satisfaction. All the service wares
were designed by the famous French Fashion house “Givenchy”. The SIA
wanted to make all its passengers feel special. Starting from the first class to
the economy class.
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organizations in Singapore. The SIA also started a Training Centre in
Singapore. Its main objective was to train the cabin crew, commercial staff,
and flight crew and flight operations personnel of SIA.
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launched the Singaporean girl as the embodiment of caring, comfortable,
hospitable service. This paid off immensely as all this Oriental mystique was
then a big attraction for the western world.
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was growing rapidly but it destroyed when Sir New Zealand’s fortunes turning
into worst position. The Government raises capital to hold up the company but
it weakened SIA’s ownership in this company. SIA left the company with a
large amount of loss and hasty retreat from the initial foray to establish control
of the key Australia- Asia routes.
The second move of SIA was to acquire the 49% of the equity with UK based
Virgin Atlantic Airways for $1.6 billion. This was the fairly steep price to pay for
a deal that offered little operating control in the near term for SIA, but the
Virgins thought that this partnership would give SIA the ability to control their
transatlantic routes, among the most lucrative worldwide. Virgin was popular
for their exacting service standards. They were constantly going up to the 2nd
position behind SIA in most surveys of customer satisfaction. The partnership
ultimately goes wrong. Virgin’s decision not to join the Star Alliance placed SIA
in delicate position and the threat of invoking the ire of other alliance partners
should it favor Virgin over United and other for channeling some of its
transatlantic passengers. On the other hand rejecting the opportunity to
participate in the venture of Virgin Blue, which later posted very good returns
in the Australasia market was another wide of the mark decision of SIA.
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Air Asia and Virgin Blue faced threats. Air Asia was based in Malaysia and
offered services at highly discounted rates to domestic destinations within the
country. Its operations model used Kuala Lumpur as its central hub, but plans
were on the anvil for expanding into Johor, a location that was within driving
distance from Singapore. It plans to fly with approximately two million
passengers by 2004 even though it had a small fleet of seven Boeings 737.
Its attractive price drove passengers to this way. It offered a round trip from
Kuala Lumpur to the resort island of Penang for only US$10, while Malaysia
Air, charged US$101 for the same trip. Air Asia also boasted that it had the
lowest cost for any passenger airline in the world at US2.5¢ per available seat
kilometer compared to US5.1¢ for SIA. Air Asia set challenges to SIA in the
near future. It had recently scouted Changi international and Seletar Airport in
Singapore to explore to setting up its operations there. The company
suggested that it offers a one-way fare of US$28 from Changi to Kuala
Lumpur, a sector where SIA was currently charging US$109.
Virgin Blue, the developed alternative of Virgin Airways had captured 30% of
the domestic Australian market within three years. For the aggressive move to
dominant the market, Virgin Blue, had control over in airports such as Sydney.
Virgin Blue and Qantas eliminated the possibility of another carrier the
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national flag carrier, built rivalry air service networks in that country. Virgin
Blue was also contemplating service offerings from Australia to New Zealand
and Fiji. In the very short period Virgin Blue was active in Australia and
weakens the network carrier competitors to demonstrate that how vulnerable
they were to low cost competition. Qantas was at the receiving end of this
onslaught in Australia and came up losing a significant amount of its market
share. It was clear that SIA could not wish away the imminent threat.
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Theme
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Theme
Being the one of the most foremost & leading top airliner in the international
industry , SIA is facing challenges from redefining strategically complication
to outgrowing competition to low cost carriers like virgin blue and air Asia
coming up to the continent. Also facing problem with the fleet accusation and
management. Air New Zealand’s and the deal with the virgin Atlantic also
needed to be managed as it put Singapore International Airline into a delicate
position. Their significant feature were also being copied by the competitors
and fallout from SARS and Iraq war they were turmoil with extreme employee
problem on human capital side. Lay off salary cuts and cutting down operation
cost are also among them to be exact. In this moment of crisis the next few
strategic movements will be the future line for SIA.
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Main Issue
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Main Issue:
What strategy Singapore international Airline Services should follow in front of
the confrontation of continuing differentiate itself from the copycats who
seemed to be doing a very creditable job at imitating SIA amenities, retain
back the very people who had been instrumental in helping SIA into leading
airliners, becoming once again the global player in this time of crisis?
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SWOT Analysis
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SWOT analysis
SWOT analysis is a simple framework for generating strategic alternatives
from a situation analysis. It is applicable to either the corporate level or the
business unit level and frequently appears in marketing plans. Such an
analysis of the strategic environment is referred to as a SWOT analysis. A
scan of the internal and external environment is an important part of the
strategic planning process. Environmental factors internal to the firm usually
can be classified as strengths or weaknesses, and those external to the firm
can be classified as opportunities or threats. The SWOT analysis provides
information that is helpful in matching the firm's resources and capabilities to
the competitive environment in which it operates. As such, it is instrumental in
strategy formulation and selection. The following diagram shows how a SWOT
analysis fits into an environmental scan:
Strengths refer to a firm's strengths are its resources and capabilities that
can be used as a basis for developing a competitive advantage in the market
place
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Strengths
SIA Has A Track Record Around Its
Superior Strategy Of Differentiation:
SIA has established an outstanding standard on inventing and implementing
new strategies in airlines industry. It always keeps herself up-to date in the
industry and introduced diverse types of strategies, which had helped to
dominate in the market for a long time. Innovation on different sectors within
airline industry has given them supremacy over other airlines’ as the rest of
them could not bring such a new thing simultaneously.
It’s quite impossible to make airline business profitable without expanding new
routes. SIA has realized it and take the advantages of its massive fleets. It has
reached to all major attractive cities of the world. So no matter whether it is a
business trip or leisure trip Singapore airline is ready to serve its customers
needs. Long routes means more flight, which at the end of the day will bring
more profit and enhance customer satisfaction.
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Safety is a very vital factor upon which an airline’s success depends mostly.
Due to lack of a good safety record a significant number of airlines that have
invested a lot even failed to attract considerable amount of customers.
Whereas, SIA has got awards for its safety records which naturally influenced
travelers both short and long haul travelers to choose SIA. The major thing is
SIA have achieved the confidence of customers by its safety records.
In-flight catering is definitely a vital point for airline industry. Many other
competitors of SIA have left behind because of poor catering facility. It is well
known fact that in long haul flight customers will look for good and hygienic
food, which they consider as a part of comfort and luxury as well. So, to
satisfy customers it is a must to prepare top class menus. So adding a world
class catering service on board has given SIA supremacy over other
competitors.
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Most of the harassment occurs during baggage collection after arriving in the
airport. Even some renowned airliner cannot guarantee hassle free baggage
collection for their passenger. But SIA can offer them this unique service,
which is a definite advantage for them. So before give a booking for a ticket
for traveling a passenger would certainly think what is the best option for him
or her to choose if he/she looks for a smooth journey and of course a pleasant
departure from the airport. This unparallel service has also ensured the
dominance of SIA over other competitor airlines as well.
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Customers always want to save their time and energy. Online ticket booking
system and automated check-in-systems have now helping them to reduce
their travel time. They don’t need to come earlier at the airport for checking.
Definitely this is a very attractive facility for any passenger. Due to this
opportunity many of the travelers blindly select SIA for any short or long
distance traveling.
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SIA provides some unique facilities for the passengers on-board. They are the
first airline in the world that have installed video screen on the back of each
seat no matters whether it is business class or economy class. They show
many video channels, have larger amount of stereo channels and even game
channels. The leather seats they use are of top quality, which are being used
for Ferrari, Jaguar as well. Other necessary equipments are imported from top
class companies like Clad in Connolly, French fashion house, Givenchy etc.
Passengers like to pass a nice and comfortable time during their travel period.
SIA has got all necessary equipments to fulfill their needs. This usually gives
supremacy over other airlines that offer cheap flights with less quality of
products on-board. People who like comfort and luxury, certainly SIA is the top
most choice for them both for short and long haul flight
Better training is the key point for safety. SIA’s pilots have a significant
contribution on building reputation of the SIA. Behind that their extra-ordinary
training has worked as a key factor. Unparallel training facilities have
distinguished SIA from other airlines. Even from other airlines pilots come to
learn at Singapore airlines. The unique capability of SIA’s pilot have a good
demand in aviation industry which on the long run bring benefits for SIA by
establishing them as a brand name in the aviation sector.
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SIA has a strong policy for talent hunting. Top quality workplace and on job
training has made them first choice among all other Singaporean companies
to the young generation. So automatically SIA is getting enormous talents on
their pipeline that at the end of the day are brining significant change both on
technical and operational sides. Among the employees job satisfaction is the
biggest criteria, which determines the period of existing in any organization.
Here SIA has got the biggest success as well. Their corporate atmosphere
has been able to retain the employees. So turn over rate is very low unless it
is something worldwide crucial moment or any natural disaster occurs. This
has brought enormous strength inside of SIA, as the human beings are the
main assets for any organization who are responsible for making any
organization profitable and dynamic.
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Weaknesses
SIA Does Not Receive Any Subsidies Or
Protection From The Government Though
It Is The National Flag Carrier:
A big drawback for Singapore airline is it does not receive any subsidies or
protection from the Government. Unlike other airline they don’t get any
financial support from the Government. They are totally private organization
and they have to heavily depend over their shareholders and upon the benefit
of the business.
Many airline of the world that is national flag carrier do receive subsidiaries or
some financial protection from their Government. This helps them to survive
during turbulent period. On the other hand, SIA is getting deprived from this
facility. So if anything goes wrong they have to face terrible situation. They
have to cut down their workers, have to close down some operations; they
might have to close some other routes. These all will certainly decrease the
benefit level of Singapore airlines and can jeopardize its position in the
aviation industry.
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high standard behind pilots training, as they are committed to maintain top
class all the way. These training include flight simulator training, ground
training etc which are highly expensive. So, if any pilot moves to other airlines
certainly the investment they have made will be a complete disaster.
As much as the low cost airliner is arriving to the industry that much SIA has
been facing competition. Obviously SIA can’t decrease its price, as it cannot
compromise with its quality. But there are significant amount of passengers
who always seek for low cost travel. They don’t go for luxury. They are more
interested for saving their money. But unfortunately, SIA can’t get their
attention due to high price than other cheap airlines. So a large chunk of
people is always out of SIA’s service. And SIA is loosing business due to its
price.
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Opportunities
Singapore And United States Had Signed
For An Open Skies Agreement:
This is a new phenomenon where two or more countries make a deal to do
business together. In this deal they come to a consensus where the skies of
the each country will remain open for each other. This is known as “Open
sky”. Under this treaty countries who will sign will be able to land and take off
their aircrafts from any of the airport of the corresponding countries.
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Building alliance is a massive task but it opens more opportunity for any
individual airliner. An individual airliner sometimes faces some difficulties with
various types of problems. It might be technical, operational, and strategic and
so on. It’s very tough to solve those problems lacks lonely. Sometimes it’s not
possible to operate flights on some routes due to operational cost though it
might have prospects as well. Financial constraints most of the time create
headache as well. Forming alliance is a good solution for it where everyone
works under same umbrella. Working under an alliance will give SIA a unique
opportunity to work with other friendly airlines and would able them to reach to
other different destinations in Europe and USA, the zones that are yet to be
served by SIA. This will definitely increase the profitability margin. SIA will be
able to reach to cover up their loses on different zones by forming alliances
with its friendly companies. It will help them to share profit as well because
some people might not travel by SIA but they may travel through one of the
airlines of the alliance.
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Threats
SIA’s Competitors Are Duplicating It’s
Own Corporate Strategies:
It is well known that the strategies SIA adopts are world class and effective
under any circumstances. That’s why its competitors have started to follow
him blindly. For any example, online reservation system, introducing different
cabin systems, on-board entertainment facilities all these are the brainchild of
the executives of SIA. Some of the old executive who has switched to
different airliners now adopting the same policies that SIA follows in the
business. Thus SIA’s policies are getting copied in a vulnerable way among
other of its competitors.
It’s very tough to run business when the competitors are copying the
corporate strategies rapidly. SIA’s key business strategies are getting copied –
that’s mean SIA can’t have the profit for which they make the decisions. It’s
continuously making them looser and they are going back in the competition.
If business secrecy is being leaked out then obviously
It’s crucial for any organization and the survival will be questionable. Other
airlines now introduced music system, multiple video channels on-board
which were being introduced by SIA the first. But as those facilities are now
being available on other cheap airlines even, and so travelers are now getting
interested on SIA’s competitors.
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Traveling through cheap airlines is a phenomenon among the air travelers.
Now a day it takes very few amount of money to travel from one country to
another country, which was unimaginable some days ago. These low cost
airlines don’t offer luxurious facilities but they do offer the minimum amount of
service. Most of the customers are delighted with it no matter whether they
are getting world-class luxurious facility or multiple entertainment channels or
not. So all other facilities that SIA is offering is not getting that much value to
the customers like before. Definitely they are loosing their business to the low
cost airlines. If SIA can’t bring any solution then rest of the customers will
blindly select these low-cost airlines for the coming days.
SIA has a very fresh and prolonged reputation on airline industry where very
few airlines of the world can dare to reach. But due to turbulent nature of the
airline industry SIA is getting forced to tie up with other airlines. If they do this
and get a partner with poor performance then certainly who are the regular
passengers of SIA will not show interest to board any of the aircraft of the
alliance. These will seriously damage the reputation of SIA. Due to the fault of
one airline the whole alliance including the SIA will suffer. Side business of its
partner with rivalry group also may jeopardize the business position of SIA as
well. A large chunk of passengers may migrate to different alliance or other
member of the SIA’s alliance who are getting benefited in a different way by
depriving SIA. So, both ways there are threats for Singapore airlines if they go
under alliance.
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HR Related Issues
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HR Related Issues
Human resource is a vital element of an organization. It is like a nucleus of an
organization. Without it, an organization is like helpless in a sea because
every part of an organization is interrelated with HR. To gain competitive edge
in the industry, human resources plays a key role in helping companies
dealing with a fast-changing competitive environment and efficient and
potential employees. Due to the effect of SARS and Iraq war in order to
cutting down cost Singapore Airliner has went on with some serious done
about in term with the company employees. There are also problem and rising
issues with the low cost airliners competition as it becoming more and more
intense SIA have to take some drastic measure for their company in order to
keep the competitive advantages and keep their name shine. Some their
measures are directly related to the Human Resource issue to the company
and it make a more of a factor on understanding where it will headed next, on
the basis of their precise decision. The followings are some of the issue that is
being recognized as the Human Resource related issues that are being
subjected to the Singapore International Airlines:
Being a leading Airliner in the world recently SIA had laid off
employees, gave wage cut in the senior management and
came to negotiated with cabin and ground stuff employee on
their salary. This is a major Human Resource related Issue
which should better be dealt with grave importance as it
might create a huge amount of negative impact if not properly
managed among the employees of SIA.
Singapore Airline had laid off about 400 employees in order to bring down the
operational cost then almost about hundred and fifty more additional
employees were also being laid off so that the operational cost will be more
cut down to minimum. Senior management salary cuts averaging 22%
announced, and negotiations were on with cabin and ground stuff for further
wage cuts. This issue makes a more regrettable position for this airliner as
this airline once were the world’s foremost luxurious and leading airliner of
them all and these are the employees that made this airliner a success. To
Salary Cuts and laying of definitely will make them unrest and become a
situation with the job security issue, where employee’s will left wondering what
it will bring for them if they just keep on working for a company like that.
Appropriate human resources assure an organization that the right number
and kind of people are available at the right time and place so that
organizational needs can be met.
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This is one of the major HR related issue, as because in these employee
hands the SIA what it is now became in these employees hands. It is be these
people who were played major role to make SIA to make them a leading
airliner in the international market. Employees needed to be acknowledged in
a international airliner like SIA this for the first time such incident are
occurring, so it will be rational explanatory checking if there is a way to keep
check on all of those thing and make a proper justification on all of those
things. To cutting jobs of such large number of people for the first time is a
huge aspects for HR .So cutting these employees from SIA is a major HR
related factors.
The unrest that are being seen in the company due to the
weak human resource management in the company and also
for the SARS and Iraq incident left a negative impact in SIA
which should be dealt with capable HRM so that the issue
would be minimized.
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situation is first in time to be handled by SIA. They never faced this kind of
situation or a problem before so handling all this measurement can become a
major problem for them as they do not understand enough of the problem for
not knowing how to deal with these before. Because people are the core of
this business as this is a more of the service related industry where the
humane are side taken on very importantly than that of others.
This is a Human resource related issue as this explores that all the employees
in the company are not treated equally in a great airliner such as Singapore
International airlines. This is violated issue that give rises to many problem
that are still yet to be seen This issue deals with the employees morality
towards the company and focuses with female getting discriminated in such
company is a big deal of human resource factor. Understandings also the
factor if the women in the company are being considered to be the minorities
or really in where they are being prioritize the factor of limited amount of
renewable contract. The opportunity should be equal for all but if that not the
case giving understanding and providing with adaptable justification would be
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righteous way of indication that human resource issues are properly
recognized.
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The training and recruitment policy in the SIA intensive, it indeed is global in
terms of recruiting pilot from the both the local Singapore pilot who server the
country for defense purpose and became the pilots for SIA and the expatriate
pilots who are served with more generous salary with pother benefits such as
housing, schooling for children and other facilities. These should be balanced
and ought to be in a way that local based pilots won’t be downgraded on to
the point of factor that their compensation is justified to the others. This should
be done fairly and with extensive care so that the compensation package that
expatriate pilots are getting won’t be rigorously high as pilots get graduated
from Singapore. Unbalanced salary may become an issue in case from both
the parties. SIA should make a proper adjustment among the both parties
salary into a range so that their will not going to be an any dissimilarities
among expatriate and local pilots.
The compensation package for pilots with the differentiated issue played a
large part in the Human resource management as it is the core issue related
in terms of retaining the most important employees in the job. This might
create a differential impact on the mind of local pilots that they are being
underpaid than the pilots who are being foreigner working among them from
different place. Though in a case the benefits remain close to similar in a
package of compensation and benefits given to them both but the
differentiation needed to be clear among the pilots as it might make a proper
problem among them .So keeping them in the job by providing the right terms
of salary is also the very jobs of Human resource management.
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Recommendations
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Recommendations
After analyzing the case and identifying the Human Resource issues
effectively in the previous part, it is now time for recommendation to
Singapore International Airlines (SIA) to focus on some specific areas to retain
their existing employees and diversified customers, to capture new market in
new or innovative ways and also to make profit by increasing their operational
efficiency for financial viability. We already knew from the case that SIA has
already established itself as one of the world’s most admired airlines. It has a
superior strategy of differentiation but recently it’s trimming its operating cost
by downsizing its employees. They already started to have problem with their
operational management system otherwise downsizing won’t took place. So
there must be some areas that should be focused by them to sustain in the
airlines market for longer period.
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Problem no. 1
Singapore International Airlines (SIA) is minimizing their
operating cost by downsizing their employees, and
unjustified salary cuts in all management levels by using
SARS and Iraq War issue.
SIA had lain off over 400 employees and 156 cabin-crews in order to trim
down its operational cost during the time of SARS and Iraq War. Senior
management’s salary cuts also averaged 22% as announced, and they were
planning to implement further wage cuts. This is one of the crucial issues, as
the combined affect of this action could have a serious negative impact on
employee morale and passenger service. Employees are the heart of an
organization, so, downsizing only weakens a company. There are surely other
good ways to avoid this destructive method, and here in the following
recommendation we will talk about those ways.
Recommendation 1
Singapore International Airlines (SIA) needs a specific and
proper compensation plan, by forming a new compensation
committee which will help to design a perfect and motivated
compensation policy rather than the existed demoralizing
one.
To sustain in the market with the same leading position HR department of SIA
Need to change their current compensation policy of the employees which
has already started to demoralize the employees. So HR department need to
form a compensation committee to develop a successful and bold,
imaginative yet practical compensation strategy to motivate all the employees
and increase the efficiency of SIA’s passenger service.
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Problem no. 2
Women employees are not treated equally with male
employees in Singapore International Airlines (SIA). So, they
are violating the Equal Employment Opportunity (EEO).
The term Equal Employment Opportunity (EEO) was created by the 36th
President of the United States Lyndon B. Johnson when he signed Executive
Order 11246 on September 24, 1965, created to prohibit federal contractors
from discriminating against employees on the basis of race, sex, creed,
religion, color, or national origin. The Executive Order also required
contractors to implement affirmative action plans to increase the participation
of minorities and women in the workplace. Pursuant to federal regulations,
affirmative action plans must consist of an equal opportunity policy statement,
an analysis of the current work force, identification of problem areas, the
establishment of goals and timetables for increasing employment
opportunities, specific action-oriented programs to address problem areas,
support for community action programs, and the establishment of an internal
audit and reporting system.
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Recommendation no. 2
SIA can start recruiting their male cabin crews exactly the
same way they are recruiting their female cabin crews. Then
there will be no question of discrimination or violation of
Equal Employment Opportunity (EEO). Also if all jobs are on
contract, then it becomes easier for SIA to replace or shift
positions easily.
Also they can practice shifting or replacing their employees from one
department from another. By doing this they will conduct a job rotation, which
helps employees greatly to learn new things, and adopt with new
environment.
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Problem no. 3
SIA is struggling with its union as the union deemed
unfriendly. Without a cooperative union it’s not possible for
any company to achieve success in the long run.
The union of SIA is not helping its top decision makers to decide about a
particular matter. The union is confused about many things; as a result they
can’t trust the higher authority properly. So, they became very unsupportive
and unfriendly. If SIA fails to recover the whole situation it will become worst
day by the, and at one point the entire company will be collapsed.
Recommendation no. 3
Establishing a friendly union can always help and guide about
important aspects of an organization. So SIA should
immediately fix confusions with its union, and cooperate with
them 100%.
Establishing a happy and cooperative union might be a tricky one for SIA. But
the top management of SIA should always think about the best interest of SIA,
and should be ready to sacrifice many things for the betterment of the
organization. The first thing to create a strong but friendly union is the
transparency. If both parties remains enough transparent, then no one will
have any confusions in his/her mind, so no disputes will take place. The
management of SIA has to remember that, the most crucial resource of their
company is not the billion dollar aero planes; they are the employees and
workers who work day and night to uphold Singapore International Airlines as
a brand. Only then the union will trust the higher authority, and will cooperate
with them for a common goal.
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Problem no. 4
Singapore International Airlines (SIA) uses a lengthy, difficult,
and costly method of recruitment, training, and development
program. Which we think, is not feasible at this moment.
Though SIA has a finely tuned recruitment program, they are not using that
facility properly. Singapore has a shortage of population so they are highly
dependent on other countries for their required talents. To fulfill their
requirements they recruit around 50% of their employees from outside world.
Especially in the pilot sector expatriates costs a lot. Moreover, SIA is spending
14 times more per employee as the average Singaporean company. So, they
should be very careful about recruiting and selecting their employees
otherwise, they will be definitely fall under financial crisis during tough
economical condition.
Recommendation no. 4
More structured but less costly recruitment system, and
training programs for new comers. Also introducing
competency management and fast track will create an added
advantage on employee performance.
The SIA has to think and plan about their recruitment process very carefully.
They should try to recruit people from inside Singapore, because that will
save a lot of money. They do can depend on expatriates but those should be
preferred who lives in adjacent countries like Malaysia, Indonesia, Thailand,
or Philippines. That will save a lot of money. Selecting and recruiting
employees from Bangladesh, India or China can also be a good option as
their expected salary is comparatively lower than other job seekers.
Recruitment process should be designed in such a way that it covers the
whole country first, and also the neighboring countries. They should avoid
gender discrimination at all cost during recruitments; otherwise they will never
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get good employees for their organization.
For a giant like SIA a more concrete system is needed to evaluate their
candidates and employees properly. So, we recommend the competency
management system, by using this system they can evaluate their each
employee’s/candidate’s characteristics and can profile them. By this way, they
will easily evaluate who is better for which type of job, and how much time it
can take to get promoted to next level. Also by using competency
management they can fast track most potential employees, who are
inexperienced but with a small guidance they can even challenge their seniors
in terms of performance. These people are the future leader of any company,
so they are needed to track down at early stage, so that the company can get
enough time to prepare them for future leadership positions.
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Problem no. 5
SIA is facing great competitions from some low-cost carriers
in Asia. These low cost carriers can take away a big amount
of market share from SIA.
SIA is currently facing competitions from some low cost airlines like Air Asia,
and Virgin Blue. They are planning to use Singapore as a base to conduct
their operations in Asia. Though they have a very small fleet, due to their
attractive fares almost all of their flights become full. They are offering very
low price to their customers, only USD$10 for a flight from Kuala Lumpur to
Penang. Where as same flight may cost 10 times more for airlines like SIA.
So, people started to rush on those low cost airlines, and the market
positioning of SIA starts to decline.
Recommendation no. 5
SIA should introduce some new low-cost flights under a new
sub-brand to overtake the threat of low-cost airlines. By doing
this SIA will be able to uplift their image as a more superior
airlines than that of their new sub-brand, and will be able to
remove the low cost carriers’ threat completely from the
region.
Since low-cost carriers are targeting some top airlines like SIA, now it’s time
for SIA to take a sweet revenge against them. SIA shall not lower its cost to
fight back these low cost carriers. Instead under a new sub-brand SIA it will
introduce some new flights to those destinations where the low cost carriers
are targeting. As a result SIA will be completely out of the competition, and
their new sub brand will compete with those low cost carriers. Since SIA has a
vast experience in the region their new sub brand will be also doing because
of this experience. Where as, new comer low cost carriers will struggle a lot to
cope-up with the new sub brand of SIA.
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Implementation
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Implementation
In the previous section we have identified some problems that are Singapore
International Airline currently having and also
recommended some suitable solutions aligned
with organizational goals respectively for each
of them. And now in this part we are going to
implement whatever plans we have discussed
in the previous part. Our planning and
recommendation are of no use unless they are
properly implemented and utilized to the full
extent. Without implementation planning is only
wastage of time, money and labor. Therefore,
effective and timely implementation of suitable plans is essential to make
them successful.
Without a sound framework and without a healthy work environment, even the
best ever plans will fail. Therefore, an appropriate organizational environment
must be in place that will foster the effectiveness of our proposed
implementation plan. We have come up with some realistic implementation
plan that will foster the company to the highest extent to achieve the highest
market share not only in the local market but also globally. All those plans are
described below one by one along with their problems and proposed
solutions: Therefore, effective and timely implementation of suitable plans is
essential to make them successful.
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Problem no. 1
Singapore International Airlines (SIA) is minimizing their
operating cost by downsizing their employees, and
unjustified salary cuts in all management levels by using
SARS and Iraq War issue.
Recommendation 1
Singapore International Airlines (SIA) needs a specific and
proper compensation plan, by forming a new compensation
committee which will help to design a perfect and motivated
compensation policy rather than the existed demoralizing
one.
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The junior level staffs are always more or less defensive towards pay cut or
freeze or any such measures. They suspect the company of trying to take
advantage of an economic situation to make even larger profits at the
cost of their well deserved salary. What the company can do is, introduce
this plan first on the higher level management and then gradually move down
the hierarchy. In that way the lower level managers won’t feel exploited as
they can well perceive it as a company emergency situation.
A formal letter from HR signed by the chairman and CEO should be issued
which laid out the process. Clearly mention in this letter that the Staff can earn
back the salary they've sacrificed – plus a bonus – should the company
achieve a 50% or better income to cost ratio taken on a month-by-month
basis. Possibility of bonus for taking a cut: People taking a 15% salary cut
could get back their salary plus 7%. 20% salary sacrifice earns a salary return
plus a 17% bonus, while a 25% cut would repay salary plus a 25% bonus and
so on.
Assure the employees going through pay freeze & pay cut
that their money will not be lost forever
Assure the employees whenever and however possible that these are
temporary steps to ensure the survival of the company in hard times. As soon
as the company sees the light of success their pay and salaries will go
back to the original level. These are alternative action plan to layoff. So in a
way employees are benefiting form these measures more than anybody else.
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There might be attempt to sabotage the company the law suits and other
legal actions when such sensitive decisions are implemented. The
employees become resentful and thus may wan tot attack the company.
Therefore it is absolutely necessary the at all the legal angles relating to such
steps are properly explored and studied so that these actions are lawfully
executed.
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The HR department must be always on the toes to ensure that the plan is
executed with peace and harmony through out the organization and it does
not be come a source of resentment towards the company. Also what is
necessary is to assess that if the company is truly benefiting form all these.
There are certain cost associated with pay cuts and freeze related to
employee dissatisfaction and demotivation. If the company is main more
benefits over cost is something the organization must review form time
to time.
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Problem no. 2
Women employees are not treated equally with male
employees in Singapore International Airlines (SIA). So, they
are violating the Equal Employment Opportunity (EEO).
Recommendation no. 2
SIA can start recruiting their male cabin crews exactly the
same way they are recruiting their female cabin crews. Then
there will be no question of discrimination or violation of
Equal Employment Opportunity (EEO). Also if all jobs are on
contract, then it becomes easier for SIA to replace or shift
positions easily.
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HR and EEO have a long bitter history with one another. The HR department
has been on more than one occasion been harassed by the EEOC. Thus it is
mandatory on today’s world to dedicate an active unit within HR which is
going to oversee and handle the EEO issues arising in the company. Gender
equality is a fundamental human right and an essential condition for achieving
effective democracy. The Constitution of the International Labor Organization
(ILO) affirms that "all human beings, irrespective of race, creed or sex, have
the right to pursue both their material well-being and their spiritual
development in conditions of freedom and dignity, of economic security and
equal opportunity". Countries are increasingly committed to the promotion of
equality of opportunity and treatment for women and men in the world of work.
But governments and the social partners face difficulties in making the
principles and provisions of international instruments effective in national law
and practice. They often seek information and advice from the ILO on the
different approaches taken in different parts of the world to give practical
effect to gender equality principles.
Prepare a formal guideline that includes all the rules that must
be complied with and the action that would be taken on non-
compliance
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• Educate employees by participating in relevant training and
education programs on campus and encouraging subordinate staff
with EEO responsibilities to do the same.
Complaint Procedures
Informal Complaint
If, however, the employee does not wish to discuss the concern with the
immediate supervisor, the employee may talk with an EEO counselor.
The role of the EEO counselor is to serve as a bridge between employees
and management and to resolve EEO problems on an informal basis.
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If a matter is not resolved through consultation with an EEO counselor, an
employee may request a conference with the supervisor of the employee’s
immediate supervisor.
Formal Complaint
A formal complaint must be made in writing and must give the name and
address of the complainant, state the basis of the complaint and indicate
whether the alleged discrimination was based on race, color, national origin,
religion, gender, age, disability, marital or veteran status or any other legally
protected status. The complaint must be submitted within 180 days of the
conduct giving rise to the complaint. A complainant will at all times be free
from reprisal.
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implemented through out the organization so that nobody feels that other was
treated more favorably.
Problem no. 3
SIA is struggling with its union as the union deemed
unfriendly. Without a cooperative union it’s not possible for
any company to achieve success in the long run.
Recommendation no. 3
Establishing a friendly union can always help and guide about
important aspects of an organization. So SIA should
immediately fix confusions with its union, and cooperate with
them 100%.
Relations between the labor unions and the group management has been
testy at times, particularly after wage cuts, retrenchments, and early
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retirement affected staff morale during and after difficult economic conditions
such as the SARS outbreak in 2003. Disputes have grown so severe that they
have attracted the intervention of the government. SIA should arrange for the
top government leaders to meet with both their management and the union
leaders to settle their conflict. When a powerful mediator comes to settle a
dispute both the sides feel necessary to listen to one another, a situation that
is absolutely necessary for SIA right now.
Both the parties must take a step forward to ensure that the co-operation is
established. Grievances lie on both sides. However, both parties must hear
each other out and try to think being in each other’s shoes. The management
must be accountable and answerable to the employees for all the actions
taken regarding their work and compensation. And the union must also be
ready to take some steps to try to understand that some actions by the
management may seem unfavorable to them now but it is better for them in
the long run. For all these to take place, open discussions, friendly attitude
and free flow of information from the management to the labor union is
necessary. There should be better communication as both sides have put in
more efforts to strengthen the relationship. It is lucky to have capable union
leaders in place who can represent the ground well and represent the ground
issues. On the management side, with better understanding and more even
keel relationship, they are in a better position to discuss the more difficult
issues.
Election of the union leaders must be conducted with utter seriousness and
fairness. This is necessary because the employees must feel that they have
chosen the best representative and the person who can best reflect their
demands to the management. If the process of election is highly politicized
and employees don’t favor their leader with the whole heart then with time
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their grievances will rise as their demands will not be pressed to the
management and the authority. Peaceful negotiations are pre requisite for a
successful employee-employer relationship. There should be better
communication as both sides have put in more efforts to strengthen the
relationship. It is lucky to have capable union leaders in place who can
represent the ground well and represent the ground issues. On the
management side, with better understanding and more keel relationship, they
are in a better position to discuss the more difficult issues.
It is lucky to have capable union leaders in place who can represent the
ground well and represent the ground issues. On the management side, with
better understanding and more keel relationship, they are in a better position
to discuss the more difficult issues.
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proceeding well or not. So finally we can say that HR department would
implement this plan with great effectiveness.
Problem no. 4
Singapore International Airlines (SIA) uses a lengthy, difficult,
and costly method of recruitment, training, and development
program. Which we think, is not feasible at this moment.
Recommendation no. 4
More structured but less costly recruitment system, and
training programs for new comers. Also introducing
competency management and fast track will create an added
advantage on employee performance.
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It's not surprising that some organizations have no idea what "makes the job"
in their business. Surveying successful, competent employees is usually the
best way to analyze such situations. Communicating those results, and
comparing them with the department head's own ideas, may give you a great
starting point.
What job roles do people possess? How are these roles defined? What is
common among the roles? What skills or competencies support each role?
What learning events (courses, meetings, demonstrations, on-the-job training,
etc.) support and build these competencies? How does a new hire begin their
training? This may seem daunting, but defining existing job roles is
worthwhile, and brings many insights into the company's needs for competent
performance. The data from such surveys also helps to build measurable
ways to determine when employees attain needed skills, and conversely, may
identify training needs that are not yet met.
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Learning events allow employees to gain competencies, and need to be
defined, along with related recertification dates. It would be useless to have
job roles that did not periodically require updating, as the business needs for
these roles change. You may not want to specify recertification dates at first,
but you will later need to identify and inform employees, who possess certain
job roles, that they must meet new needs and requirements. Thinking through
these tasks requires determination of business needs, so the training
department must work with all other departments that require competent
personnel, to gain insights into their important job roles, competencies, and
learning events.
The training programmes must include series of evaluation and tests for the
participants to ensure they are learning well and are becoming thorough. The
tests are not only to evaluate the effectiveness of the training but also
determine which participants are better then average, average or below
average. In this way the fast learners can be directly sent to important
positions and can be invested more on. These hardcore training programmes
make the company less vulnerable to the demand of skilled employees. The
company will not have to be always dependent on the expatriates for key
organizational positions. Moreover, the skill level of the new and current
employees will shoot up.
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If more and more applicants for these training programs are called from the
home country and neighboring countries then the cost pressure exerted due
to the expatriates will soothe down significantly. SIA is highly depended on the
expatriate due to shortage of labor I the home country and also not all the
employees available have the required level of skill. This is where the training
can come into use. The potential candidates form home and neighboring
countries can be trained and molded as per the needs of the company so that
SIA can reduce its dependency on foreign employees.
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Problem no. 5
SIA is facing great competitions from some low-cost carriers
in Asia. These low cost carriers can take away a big amount
of market share from SIA.
Recommendation no. 5
SIA should introduce some new low-cost flights under a new
sub-brand to overtake the threat of low-cost airlines. By doing
this SIA will be able to uplift their image as a more superior
airlines than that of their new sub-brand, and will be able to
remove the low cost carriers’ threat completely from the
region.
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• emphasis on direct sales of tickets, especially over the Internet
(avoiding fees and commissions paid to travel agents and
computer reservations systems)
• employees working in multiple roles, for instance flight attendants
also cleaning the aircraft or working as gate agents (limiting
personnel costs)
• a disinclination to handle Special Service passengers, for instance
by placing a higher age limit on unaccompanied minors than full
service carriers
• Aggressive fuel hedging programs
• Not every low-cost carrier implements all of the above points. For
example, some try to differentiate themselves with allocated
seating, while others operate more than one aircraft type, still
others will have relatively high operating costs but lower fares.
• The price policy of the low cost carriers is usually very dynamic,
with discounts and tickets in promotion. Even if the advertised price
may be very low, sometimes it does not include charges & taxes.
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A ppe
ndix
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