Organization Behavior Over the Last

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 authoritarian leadership style created animosity and division among the employees. As they felt that his tactics were designed to reduce their wages and compensation for the benefit of the stockholders. This would change the way the firm is working with their unions and the current labor agreements that were in place. If Joyce had communicated more and listened to the ideas of employees, he would have been able to receive similar concessions from the arbitration. This would have allowed the company to avoid the negative publicity from the strike and address these issues from behind the scenes. (Sperry 2002, pp. 69 -- 90) (the Qantas Crisis 2012) (Harvey 2007, pp. 74 -- 123)

The survival of Qantas may be at stake if the issues aren't resolved in the future. In you view, is a culture change required in Qantas? Justify your answer by critically discussing the current culture of Qantas and evaluating whether a culture change is necessary.

Yes, a cultural change is necessary. This is because there is poisonous atmosphere between employees and management. At the heart of these challenges, are communication issues; with no one completely understanding the seriousness of the problems facing the firm. If there was a change in culture, managers and executives could begin working together to address these issues.

This will prevent these challenges from becoming a public event that will bring the regulators into the process. Instead, different stakeholders could begin having discussions about the long-term issues and how they can be addressed. This can be achieved by having key employees, managers and board members on a committee that will provide realistic recommendations. Once this takes place, there will be a change in the operating environment of the firm and how various stakeholders are working with each other. As a result, until there is some kind of transformation, these issues will continue to have an impact on the airline. This kind of approach has been utilized successfully by some of the American carriers (i.e. United and Delta) to reduce their labor costs. When this happened, both firms were more responsive to needs of various parties and what issues are most important to them. (Mayo 2009, pp. 61 -- 75) (Beiske 2007, pp. 58 -- 67)

Task 2

Draw up a table and summarize what improvements you could suggest in relation to each task above: (1) power and politics (module 7); (2) conflict management (module 8); (3) leadership (module 6) and associated change management strategies (module 10) in Qantas

To address the various challenges impacting the airline, Qantas needs to focus on improving its relationship between management and employees. This can be accomplished by concentrating on: power / politics, conflict management, leadership and associate management strategies. These different elements will provide specific insights that will highlight how the airline can effectively adapt to these challenges. (Managing Organizational Behavior 2012, pp. 143 -- 249)

In the case of power and politics, there must be some kind of mutual respect established for each side. This can be accomplished by establishing confidence building measures. This will show how managers have everyone's best interests in mind. These concepts are referred to as referent power. This is when individuals with an identifiable resource or personal trait are sought out in order to create common solutions. Once this takes place, is when there will be a new political structure that can focus on dealing with the challenges impacting Qantas. (Schien 2002, pp. 37 -- 76) (Managing Organizational Behavior 2012, pp. 143 -- 249)

For example, when the company would like to see a reduction in wages, they could have some kind of working relationship with key employees inside the unions. This is where executives will discuss with them the challenges impacting the carrier and what they would like to see happen (in a respectful format). If this could occur, the different stakeholders will see the importance of working together and everyone will focus on achieving these objectives. (Managing Organizational Behavior 2012, pp. 143 -- 249)