Comparative Employee Relations

Project Report

Industrial Relations at Pakistan International Airlines

Submitted to: Mr.Nabeel Safdar 3rd December 2011

Sec: BBA-A

Group Members:
Haroon Ashraf Hafiz Usman Ali Haider Absham Mehboob Nabeel Atiq Tabish Mujahid 08-0108 08-0442 08-0176 08-0014 08-0141 08-0051

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Contents
Company Overview ....................................................................................................................................... 3 Company Profile............................................................................................................................................ 4 Vision......................................................................................................................................................... 4 Mission Statement analysis ...................................................................................................................... 4 Business Status.......................................................................................................................................... 4 Organizational Structure ........................................................................................................................... 4 Departments of PIA................................................................................................................................... 5 Human Resources Department................................................................................................................. 5 Employee Relations Strategy ........................................................................................................................ 6 Organizational Structure: .......................................................................................................................... 6 Recruitment and hiring procedures: ......................................................................................................... 6 Salaries ...................................................................................................................................................... 6 Employee training and attitude enhancement ......................................................................................... 6 Employee satisfaction or dissatisfaction measures .................................................................................. 6 Conflict resolution:.................................................................................................................................... 7 Culture Existing between Employees and Management .............................................................................. 8 A General View.......................................................................................................................................... 8 Employee Attitude .................................................................................................................................... 8 Influence of Groups on Decision Making .................................................................................................. 8 Team works Role ...................................................................................................................................... 8 Centralized System.................................................................................................................................... 9 Multiple Power Sources ............................................................................................................................ 9 Lack of Unity.............................................................................................................................................. 9 Nepotism ................................................................................................................................................... 9 Communication ......................................................................................................................................... 9 Rules and Regulations ................................................................................................................................. 10 Violation of Code of Conduct (COC)........................................................................................................ 10 Disagreement among Employees ........................................................................................................... 10 Unions and Workforce ............................................................................................................................ 10 Resolving Conflict .................................................................................................................................... 11

Page |2 Recommendations ...................................................................................................................................... 12 Delegation of Tasks ................................................................................................................................. 12 Job Rotation ............................................................................................................................................ 12 Monetary Rewards.................................................................................................................................. 12 References .................................................................................................................................................. 14

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Company Overview
Pakistan International Airlines, Pakistans national flagship airline, has been a pioneer since its inception in 1955. PIA was the first airline from a non-communist country to fly into the People s Republic of China and, in 1962 PIA set out to break the record for the fastest flight between London and Karachi. PIA has a fleet of young airplanes and a crew dedicated to providing the highest standards of in-house service. However, recently, the profitability of PIA has been witnessing a downside. The year end 2010 did not bring any significant improvements to the financial performance of the airline. The ignored problems of the past recurred and compounded and resulted in a higher net loss for the company. The company is at a tip over stage and is wearisome to salvage itself from further crises. Imposition of operating restrictions by European Union in 2007 caused considerable disruption in the PIA schedule as well as significant curtailment in capacity. While the financial division of PIA was in difficult situation, the human resource problems were not far from dreadful. In the past year several conflicts have come to pass. People with influence or power control the recruitment and appraisal process. PIAC has a autocratic structure so has a traditional top down hierarchy, also being a public limited company, PIA like another public sector company is not immune from bureaucratic control. With the airline brand severely hurt, PIA lost market share as well as growth in business, which made the circumstances still more difficult. The record hike in oil prices adversely impacted PIA. Apart from the fuel cost, increases in pay to certain categories of personnel and depreciation of the rupee vis-a-vis the US dollar also adversely affected the financial results. The airline is not immune to ever-increasing competition due to an over supplied capacity environment including entry of new operators in certain key markets.

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Company Profile
Vision
PIA has a vision to be a world class airline, meeting customer expectations through excellent services, on-time performance, innovative products and absolute safety.

Mission Statement analysis

PIAs mission statement is as follows Employee teams will contribute towards making PIA a global airline of choice through 1. Offering quality customer services and innovative products 2. Using state-of-the-art technologies 3. Ensuring cost effective measures in procurement and operations 4. Developing safety culture This mission statement addresses following core points of nine point mission statement analysis 1. Product and or service 2. Technology 3. Philosophy 4. Self-concept 5. Concern for people 6. Concern for survival growth and profitability

Business Status
PIA is capitalized (publicized) and its the only airline in Pakistan to be in stock market. Though its full privatization is announced by the GOP but it was never implemented due to Union power. Currently 89.1% shares of PIA are with government. Several steps towards outsourcing of non-core business have been initiated. Catering units (starting with Karachi Flight Kitchen), Ground Handling (starting with Ramp Services) and Engineering, are to be gradually carved out of the airline and operated as independent companies.

Organizational Structure
The organizational structure of PIA is centralized, therefore decision-making is a time-consuming process and delays occur in downward communication. Though, it is believed that the management is inclined towards a decentralized system, the implementation will be a major challenge. The decentralization process becomes difficult because of problems and concerns of the majors stake

Page |5 holders which include government officials and politicians who value their own agenda rather than focusing on overall organizational efficiency.

Departments of PIA
Human Resource and Administration Marketing Corporate Planning Information Services Finance Flight Services Flight Operation Engineering Procurement and Logistics Customer Services Training and Development

Human Resources Department

Every organization has to perform certain personnel functions in its own capacity. Every organization must hire, train, pay, motivate, maintain and ultimately separate employees. Every organization has its peculiar administrative structure, which suits the function, objectives, strategies, rules and procedure of that organization. Administration is the collective activity directed towards the attainment of a specific goal. Administration and management are used interchangeably and have no distinction. In the strict sense, Administration is execution of pre-determined policies; while management is the determination, execution and evaluation of these policies. Thus administration is defined as determination, execution and evaluation of policies. Administration/Human Resource Management is one of the most complex and challenging fields of endeavor. Human Resource (HR) manager for that matter must be greatly concerned with the expectations of both employees and society in general. Society at large proclaimed its human resources to have vital needs that move beyond a work force status. The Pakistan international airlines corporation (PIAC) has an Administration department, which involves the organization and management of man and material in order to accomplish its goals. Administration Manager is the head of the Administration department; where as the head of the overall Administration is GM HR of the region. The HR Manager is directly under the control of GM of the respective region.

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Employee Relations Strategy

Organizational Structure:
At PIA, the decision making authority rests with the high management. Employees have near to no participation in decision making. They are bound to comply by all decisions made by the top management. In this respect, PIA is a strictly hierarchal organization.

Recruitment and hiring procedures:

An entire Recruitment and Selection Division is functioning in the HR & Administration Department. Decisions are taken by the top management regarding the attributes required for hiring. An assessment form, based on certain characteristics such as personality, skills and qualifications, is used to evaluate a candidate. The verdict of the management is forwarded to the recruitment division which then initiates the procedure of recruitment and selection. After difficult circumstances the Human Resource Department is now fully functional and policies and procedures are now in place. New recruitments with clearly defined levels of skill and competence in all areas are being made. New inductions both on the management side and specifically the operational side of cockpit crew, cabin crew and ground engineers will continue at regular intervals so that the shortages experienced in these areas are fully taken care. The policy is to promote people from within the airline at all levels. However, where PIA does not find the relevant competencies they hire people from outside which is based on market salaries.

Salaries
Salaries of all the employees including operational crew have been considerably enhanced in an effort to align PIA salaries with regional airlines over a period of time.

Employee training and attitude enhancement

A PIAC Training Center (PTC), operating in Karachi, conducts training courses to augment the skills of employees while the scope for enhancing their attitudes (beliefs and emotions) through these courses is meager.

Employee satisfaction or dissatisfaction measures

PIA believes that dissatisfaction or absenteeism affects the productivity level of employees, so the root cause of such factors is identified. If a genuine reason emerges, the employee is assisted in rectifying the situation; if not, the employee might get a letter of warning.

Page |7 Employees at PIA can express dissatisfaction through the Suggestion Boxes located at various sites of PIA. Furthermore, quarterly employee co-ordination meetings are held where all employees can share their views with their bosses and subordinates.

Conflict resolution:
Its also a part of ER strategy, which is discussed in detail in following pages under rules and regulations.

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Culture Existing between Employees and Management

A General View
The seven characteristics of organizational culture in PIA are given below

CHARACTERISTICS INNOVATION AND RISK TAKING ATTENTION TO DETAIL OUTCOME ORIENTATION PEOPLE ORIENTATION TEAM ORIENTATION AGGRESSIVENESS STABILITY

PIAC Low Low High Low High Low High

The chart shows that management at PIA focuses more on the goal rather than means to achieve it. Therefore, employees are not highly valued.

Employee Attitude
At PIA, every employee is expected to show complete responsibility through their attitudes and avoid behavior which clashes directly with the organizations interest. In case of deviant workplace behavior, administrative action is taken against the employee according to the standing rules of PIA.

Influence of Groups on Decision Making

The sheer size of the organization leads to the formulation of various formal and informal groups at PIA. The informal groups influence the overall decision making process to some extent due to the nature of the workplace. These informal groups are formed because many employees have been there in the organization for several years and they share common interests. One more important factor is the highly politicized environment of the organization which allows and pampers such groups from top level management.

Team works Role

In an airline industry almost all tasks are performed through team work and PIAC is not any different. From ticket reservation to the landing of the plane team work is the decisive factor. Employees work in various teams such as ground staff, cabin crew, flight attendants, office staff etc. All these teams have different sets of tasks to perform but cohesion among these teams is necessary to run the day to day

Page |9 operations. Considering the diverse nature of employees PIAC has, it is difficult to make team work efficient so it is major challenge for them.

Centralized System
PIA is a highly centralized organization. Decision making rests with the high authorities. Employees have almost no involvement in the decision making process. This has created a lack of trust and disorientation among between management and employees.

Multiple Power Sources

There are multiple power sources in the organizational culture of PIA. The person or group with the higher power gets the maximum influence. Individuals and groups exert power through their position, a resource they control, having a relationship with someone influential within or outside the organization.

Lack of Unity
PIA human resource has a serious lack of unity. Individuals and groups have their personal agendas. They dont have a common goal to achieve. Often people are loyal to their specific groups instead of the organization.

Nepotism
One reason of disunity and non professional attitude of the PIA employees is a growing trend of nepotism. Government appoints its favorites at the key posts.

Communication
The organizational structure of PIAC is centralized, therefore decision-making is a time-consuming process and delays occur in downward communication. Though, it is believed that the current Chairman is inclined towards a decentralized system, the effectiveness of such an approach in PIAC remains to be seen. Effective communication is essential in all organizations and it becomes even more essential in an organization like PIAC due to its large size and expanded network. It is necessary that people from various departments communicate between each other to have an overall uniformity. Previously fax was widely used to transmit information, however, with the technological advancement e-mails are used for this purpose. Another mode of communication is through letters.

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Rules and Regulations

All human resource issues are dealt in accordance with the POLICIES AND PROCEDURES MANUAL (Volume 1 and 2). This document deals with every aspect of employee behavior. Basic Labor Laws guaranteed under various Acts and Ordinances apply to PIA.

Violation of Code of Conduct (COC)

If the code of conduct is violated in PIA, a Show Cause Letter is issued while in severe cases the employee is suspended until a proper investigation takes place.

Disagreement among Employees

At present, all unions have policies and guidelines available for use. Disagreement among employees is resolved through applications and appeals. Some cases may be dealt by the ELT (Employee Leadership Team), headed by the Chairman.

Unions and Workforce

Like any public and private sector organization, PIA has to cater to work unions protocol by law. They have to ensure determination of collective bargaining agent for PIA as required under section 22 of the industrial relations ordinance 1969. Therefore PIA has allowed work unions under policy that each section of the various departments at the head office and outstations in Pakistan shall have Works Council. Under Industrial Relations Ordinance 1969, it is only the registered Trade Union of Workmen which, in accordance with the provision of the said Ordinance, is declared as bargaining agent and can represent the Workmen in the matter of collective bargaining. In case of PIA there are more than one registered trade unions. These trade unions include, but are not limited to the following: Pilots Engineers Technical Staff Ground Staff Sanitation staff

P a g e | 11 When there are more than one registered trade unions in an establishment, the collective bargaining agent is to be determined by the registrar of trade unions by secret ballot. Workers have the right to join trade unions.

Resolving Conflict
For resolution of issues of work unions and possible conflicts of interests the PIA policy states.The points raised by the Union in the Works Councils meetings shall be examined and every effort shall be made by the sectional heads to expeditiously resolve these points. General Manager Industrial Relations shall prepare and circulate a booklet containing relevant information on the current Labor Laws, obligations of the Employees and Employers in the accomplishment of the common goal and hold periodic meetings with the Departmental Heads with a view to assist them in the amicable and expeditious settlement of all Union matters. Union Activities in the Corporation were suspended in 2001, later restored in 2007.

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Recommendations
Delegation of Tasks
This diagram breaks down major skills needed to be introduced at PIA in three categories Top level management Middle level management Functional level management

Top level Management

power of person Paternalistic style of management forward looking broad minded intelligent

Middle level management

power of person and position honest tactfull loyalty power to align teams adaptibility

Functional level management

purpose driven open empowered boundary less diversity growth/change

Job Rotation
At PIA, employees are not rotated amongst various departments unless they request for a rotation.

Monetary Rewards
Amid a highly competitive environment, PIA needs to motivate its employees. For this purpose, Promotion Boards are held twice a year. Extra-mile Awards are handed over to the competent employees. An Employee Suggestion Scheme gives employees an opportunity to be vociferous

P a g e | 13 regarding their issues. The three best suggestions are given monetary awards ranging from Rs.5000 to Rs. 20,000. Apart from the basic salary, fringe benefits are in the form of Medical Entitlement, Free/Rebated Air Tickets, Utility Allowance, Rent Allowance and Meals at discounted rates.

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References
http://www.piac.com.pk/PIA_About/pia-about_History.asp

http://findarticles.com/p/articles/mi_hb092/is_n5_v22/ai_n28603065/

http://www.scribd.com/doc/23738166/Chap4-Departments-of-PIA