Air Nations Case Study
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Introduction to HRM Assessment 2:
Air Nations Case Study
In 1998, Air National turned as a newly privatised company that faced the future with enthusiasm, confident that they competed in a deregulated industry. However, in April 2000, the tone changed because they had a pre tax loss of $93 million, and the newly appointed CEO announced a major change in the company business strategy that would influence to a transformation of business operations and human resources practices in the company.
1. In the middle of 1980s ANs external environment was privatised by Britains conservative government, which exposed the company to competitive forces resulting in high competition and price wars in the market. They had to prepare for privatisation that required a painful restructuring because they needed to make the company attractive to initially sceptical investors. This gave the senior management the degree of stability to implement a new and HRM strategies. At the same time, there was a prolonged economic recession and the on going deregulation of civil aviation in Europe and America. With these negative forces, AN adopted a low cost competitive strategy and joined the industry wide price war. At this time, they were aggressive in the market place and they reduced costs in areas like service, marketing and advertising.
This low cost competitive strategy proven unsuccessful due to the fact that AN was unable to meet their customers needs because of the aggressive attitude and being too focused on the businesses procedures in reducing costs and forgetting the importance of their customers. The poor quality in customer service reflected on the businesses reputation evidentially causing the business more losses. Due to the critical state that AN was in, it realised that a clearer and more structures strategy was need and they worked on adding value to the business name in order to give them both the competitive advantage they need and resulting in satisfied customers. “Strategic management seeks to coordinate and integrate the activities of the various functional areas of a business in order to achieve long term organisational objectives”, (Bloisi, W., 2007, p.48). Their prioritisation of high quality customer service reflects on their understanding of customer value and by realising that their customers are their main focus point and satisfying them lead to better profits.
Launching a discount airline allowed the company to satisfy all classis of customers considering the economic situation and by providing a cheaper option attracts more customers. Operating as a separated company; the management structure was reorganised; ANs operations were divided into route groups based of five major markets. The previous low cost strategy failed to promote and expand the companies image therefore the companies new approach is invest in advertising to emphasise the added value elements of ANs services. As well as this new brand names and new uniforms for staff were introduced as part of the rebranding process, “investing in employees results in employees understanding organisational values and are able to commit to them”, (Robbins, S., 2001, p.69). In addition aircrafts and buildings were sold and unprofitable routes suspended or abandoned altogether to save and cut down on costs. Labour costs offered the most potential savings and with that, the company was able to focus on product development, marketing, customer service and HR development.
2. Initially the move that AN took was a leap from what is called Personnel Management to HRM, and there are 27 distinguishing characteristics separating the two according to John Storey. Human Resource Management could be described as strategic and proactive, “…strategies are on going and they constantly work towards managing and developing an organisations workforce”, (Leopold, J. 2002, p.96). It can be seen as proactive because of their continuous development and functions to improve the companys workforce. However, Personnel Management can be described as reactive providing a response to demands and concerns as they are presented. By contrast, human resources involves on going strategies to manage and develop an organizations workforce.
From the 27 distinguishing dimensions of Personnel Management and HRM it is easy to identify the features that are relevant to the change that took place at AN. Look at the table, 26. Training and development, is linked to the new strategic plan that AN is trying to enforce by becoming a more learning and developed company as they are investing money and lessons to train and develop their employees in order to empower them and help boost confidence and security within the organisation, which is a key aspect of their mission. In addition 3.Guide to management action, was crucial because they were able to focus on their business, customers and employees needs rather than procedures. The specific needs that they followed was to refresh the organisation by adding more value to their service, this included new uniform for employees, new brand names and new advertising strategies were enforced. Also, 24. Job design, which focuses on teamwork and the restructuring of the organisation and also giving employees power to make decisions which empowers them and allows them to be more committed and motivated towards their job which all adds value to the organisation helping them achieve their goals. By separating employees group they were able to give them more autonomy and responsibility. This resulted in less control and more power, which results in better performance, commitment and confidence due to the fact that employees feel part of the organisation and play an important role.
3. By implying a successful HRM strategy, an organisation puts itself in the position of being able to achieve its mission and objectives through its human resources. It is the effective way of organising the workforce by the adoption of a specific strategy, where employees performance can help to achieve the planned organisational targets, such as increasing revenue and margins through effective customer services and quality of image and performance of the company as a whole. This was the approach that AN took towards improving their companies situation and reputation in the market and by moving from a personnel management to a strategic and planned human resources strategy it highlighted the key areas that needed investment and changing helping improve the companies performance and achieve it aims by setting clear goals and objectives.
ANs plan was to create