Singapore Airlines Merger with Silvertail Airlines

Singapore and Silvertail airlines formed a merger under a mutual agreement to boost the airline business within the country. Such kind of a merger is likely to improve the levels of management, reduce competition (between the two providers), and improve their competitive advantage over the other airlines. The employees of the two airlines (cabin crew and ground crew) are comparatively older people, who might be having very strong and reliable experience levels. However, the management feels that there is a need to replace the old staff with young personnel, who are more productive and adaptive to the business environment. The challenge with old staff replacement is that the airline might lose its public image.

The management of the merger airline is, therefore, considering adopting a system of organizational performance improvement without having to interfere with the currently virtuous public image. One of the strategies that the management has considered is to reduce the number of old workers both in the cabin and ground crews, and a consequent replacement with younger and more energetic staff. Some of the strategies suggested for the reduction of old staff is making the working condition tough such that some of the older employees quit-this strategy is likely to destroy the public image of the firm. Another strategy is to stiffen the entry requirements such as the demand for a degree and knowledge of a second language, such that only the young can qualify. All the strategies do not seem optimally effective, and the organization needs better strategies of employee management and planning, to achieve good performance and at the same time, maintain its public image.

Identification of Problems

Problems

Ø Improper decision making.

Ø Lack of communication.

Ø Inappropriate perception towards the employees.

Improper decision making

Bobby and Sammy have not made the best decisions for the formulation of a strategy that might benefit the firm. Ideally, all the tactics laid by the two have chances of equally ruining the firm or improving its performance. A strategy adopted by the management should have higher chances of improving and output of a firm.

Lack of communication

Bobby and Sammy seem to have adopted an inefficient system for resolution within the firm. Generally, for a decision to be arrived at within a company, the top management is supposed to source for the opinion of other junior employees, such that the ultimate verdict does not negatively affect any of the parties. In this case, all the strategies laid down by Bobby and Sam are pleasant to the top management but are likely to be unpleasant to the crew members.

Inappropriate perception towards the employees

Bobby and Sammy have the belief that older employees are less effective than the younger ones. However, there are chances that the old employees are better than the youth in some aspects of the provision of services.

Ethical Dilemma

The aviation field is predominantly a service-oriented industry, and its performance generally depends on the skills and knowledge of the employees. Bobby and Sammy are therefore most concerned about the levels of services provided by their firm. The two managers want an improvement in the levels of their services, therefore they come up with strategies to achieve the desired enhancement in organizational performance. Bobby and Sammy suggest the replacement of their old staff with the young and energetic ones. However, the judgment may come with several merits and demerits that need to be gauged before the conclusion is actually implemented.

The old staff might have served the firm for a considerably long time, hence have better knowledge and skills in the field of airline service provision. The workers might also be attached to the organization thus try to deliver their best. The cost of hiring old employees might also be lower, as compared to that of young workers, due to their presumed lack of adequate skill and knowledge. However, the old members of the crew might serve the company for a lesser period than the young ones due to age limitations (Lallemand, 2009). Young workers are likely to have better knowledge and skills, but this may not be a guarantee. Hence, hiring younger workers might not be a surety that the levels of services might increase. Moreover, the young workers might imply more expenditure on salaries and wages. Therefore, the choice to fire old members of the crew and replace them with the young still has a lot to be thought about. The management, therefore, has to think whether the decision is right, legal and will create balance within the organization.

The Implication of the Problems

Low Performance

The organization may not perform well when most of the crucial resolutions are wrong and are solely made by the top management (Arun, 2007). The decision-making process should include the junior members of the company, such that every choice is seen as a product of the organization as a fraternity. Verdicts, made by the top managers alone might make the other employees feel left out. Consequently, the morale of workers may go down and work below the expected standards. Moreover, it is not fully guaranteed that the decision made by the top managers are fully effective. Practically, some of the conclusions arrived at by the managers are worse off and may lead to the collapse of a company. The decisions might also not be favorable to the workers and to the business, especially in a situation where the directors do not have a proper grasp of updates and what the prevailing business environment demands from service provider organizations.

Managerial Disorganizations

Some decisions are likely to cause confusions within the organization as well as a confusion in terms of how the commercial activities are carried out within the company. For instance, if Sammy and Bobby insist that the old staff have to be replaced with the young ones, so many operations may get paralyzed due to the time spent on recruitment and replacement of staff, orientation, and training (Esparcia, 2009). Moreover, it might take time for the new employees to have a proper understanding of the sequence of activities, develop customer relationships and familiarize with the company. The disorganization may also occur due to the need for the management to have an instant result from the young employees. The pressure at the workplace may cause disorganized activities within the firm. Furthermore, the interaction between the firm and its customers may be inefficient when there is a change of staff without proper communication with the clients. Messages may be directed to the wrong manager, or to the wrong attendant.

Uncertainty in Business

Inappropriate decision making, poor perception of workers and lack of communication may create a business environment where both the top managers and the workers are not certain of the results of the next action in business (Dentinger, 2009). The employees and the managers may not get appropriate updates of what is happening on the ground, and this may also hinder suitable decision making within the organization. Uncertainty in business may also arise in situations where the management has no trust in their personnel. In such a case, the managers do not know exactly what to expect in terms of the levels of services or financial returns at the end of the business period. Due to poor perception of employees, managers may constantly be expecting losses r meager firm performance while in actual sense, the firm performs to the expected standards, and according to the prevailing business environment.

Cultural Decay

Poor decision making, the employee-employer relationship, and communication might mar the renowned culture of the business. Since the airline is a long provide of aviation services, the managerial problems (and their other impacts) may make both current and potential customers develop mistrust for the organization and a consequent decrease in the customer base (Dentinger, 2009). The customers may also mistrust the airline upon getting the information that there is an improper relationship between the company and its employees.

Financial Loss

The company is likely to experience financial loss if proper managerial decisions are not considered. For example, the firm may lose finances if it goes ahead and replaces the old employees with unproductive young ones (Esparcia, 2009). The enterprise expects to lose finances of the levels of services depreciate, or when there is an interruption of the normal service provision times, rates, and quality. Moreover, due to improper decision making on why and when new employees should be recruited, the business may spend a lot of finances on the recruitment of new staff, and fail to recover the same amount within the appropriate time, if the level of services depreciate.

Poor Manager- Employee Relations

A good company is constructed by a team of managers and employees who are in good relationships with each other (Arun, 2007). The upright relationships also help in faster and more efficient decision making, which lead to a worthy financial performance of a firm. The decent relations ensure that the firm has an efficient communications system, hence in case of any problems within the organization, matters are discussed across the boards and an amicable decision is reached. Proper employee-employer relationships may be considered the backbone or organizational performance since it enhances proper decision making and the general performance of the firm. Due to the unfavorable relationships between the crew members and top managers of the company, there is no provision for them to have a joint meeting and discuss the managerial problems of a team. Table 1 (see appendix), shows the force field analysis for the suggested changes.

Driving Forces

The speed of customer service within the organization can improve due to the ability of the young people to handle tasks at a faster pace than the older people (Lallemand, 2009). The young generation is more innovative, hence can come up with new management and service provision ideas. The levels of services can be improved due to the availability of modern skills and knowledge in business operations. Young employees can adapt to the tough working environments, hence can deliver high-quality service under tough working conditions. The young employees are more flexible due to the diverse nature of their knowledge and skills, hence the organizations may find it easier to use one employee for different tasks and still manage to achieve the expected service standards. Youthful employees can work for a longer period due to their relatively fewer commitments and the lower demand for a rest. Generally, the young employees may have less salary demand due to their relatively low levels of experience and the need for further training at their workplaces. The firm is therefore placed in a better position to improve its profit margin, due to the significant reduction of expenditure on labor.

Restraining Forces

Lack of Employee Stability.

The organization may lack stability in the personnel department – the rate of employee turnover may escalate since most of the youthful employees look for better employment opportunities (Arun, 2007) The high rate of employee turnover may destroy the image of the company. Older personnel display a higher rate of commitment, due to their satisfaction with their current place of employment and the corresponding rewards.

The Decrease in Firm’s Performance

Generally, the performance of the firm may go down for some time after the recruitment of new young staffs, due to their limited skills. The company may incur training costs at the initial stages of worker training (Kivienemi, 2010). At the same time, quality of services may reduce during the period, creating lack of trust among the customers. Young personnel are too much dependent on technology, hence they may expect that all problems that emerge within the organization can be solved using technology. Old employees, who do not have much orientation to technology have a well-developed critical thinking mechanism, hence are in a better position to make faster and more efficient decisions in case of a problem that requires an immediate attention.

Difficulty in Control of Personnel

Ideally, young workers tend to embrace the culture of narcissism- generally, they do not constantly following instructions (Lallemand, 2009). Young employees need to work in an environment where they follow their own desires. Older personnel are easy to manage due to their adaptation to following instructions and aligning themselves to the rules of the organization.

Analysis of the Downsizing tactics

The proposed downsizing tactics are;

Changing the crew members’ service points from five stars to 3-star hotels.

Making the working conditions tough, so that the old employees can quit.

Reducing perks to the current old employees.

Extending the hours of work, and adding more duties to the existing ones.

Stiffening job entry requirements such as the demand for a college degree and knowledge of the third language.

Making tasks more challenging such that old members of the crew get it difficult to continue with the work and eventually quit.

Force field analysis

Table 2 illustrates the force field analysis (see appendix).

If the company lowers the level of crew members’ service hotel from a five star to a three-star hotel, the expenditure on catering services for the crew members may significantly reduce. The customer awareness of the company and its service improves due to an indirect form of self-advertisement to another class of potential clienteles. The crew members can also learn new client care skills.

On the other hand, some of the crew members may decide to quit working with the firm due to the downward change in the levels of the organization to employee service (Averard, 2014). The public image of the company may deteriorate- a majority of customers may question why the company has decided to reduce the levels of services it provides to its workers. The process of shifting crew members’ service points may have cost implications- the company might have been enjoying benefits such as discounts, credits, free and aftersales services (Myrna, 2009). Building a customer relationship with the 3star hotel might take a long time.

Introducing tough working conditions may improve the levels of obligation to work. General improvement of the quality of services may also be observed, in a case where the commitment of the employees is improved. Some of the unproductive members of the crew may quit the job, and this might leave the company with productive committed employees only (Averard, 2014).

However, the employees may have a negative attitude towards work, hence their interest may change to working for the salary, and not to deliver quality services. Consequently, the quality of services may reduce (Kritsonis, 2005). Deterioration of the company’s image is possible due to an abrupt case of employees resigning from work. A significant number of workers may quit, leading to a paralyzed operation of the firm. The replacement of the gone employees may take time.

Reducing perks to employees may make the expenditure of the firm to reduce, hence higher profit margins than before. Employees may work harder for the firm to generate more profits and increase their salaries, to cover the perks.

On the other hand, some of the employees may get demotivated to work, leading to a reduction in the output (Kivienemi, 2010). Workers may also quit and look for better places of employment. Employees may venture into dubious means of fetching extra income from the corporation, due to a reduction in their earnings, and this may lead to a reduction of the company’s profits and loss of crucial property. The public image of the enterprise may be marred due to cases of willful termination of employment by the employees.

Extending working hours and adding more duties to the staff may lead to an increase in the company’s output per given working period, hence an increase in the profit margins. The strategy may also cause a reduction in expenditure on additional labor, since tasks that may require additional personnel, is disseminated to the existing ones (Kemelgor, 2010). Adding more duties also creates a pool of employees who are flexible enough to handle different forms of tasks. However, some employees may quit due to exhaustion or the additional work art a constant salary. Reduction of the levels of services is highly expected since old workers may not have the ability to handle all of the tasks in an efficient manner.

By stiffening entry requirements, the organization is likely to attract only highly qualified personnel, hence the quality of services can improve. The public image of the firm improves due to its demand for only highly qualified personnel (Gandolfi, 2007). However, some of the old workers may agree to attend the training program at the expense of the company and end up working for a period that is not adequate to pay back the training expenses. Overhead costs of training the old employees may reduce the profit margin.

Intervention

Appreciative Inquiry

Appreciative inquiry helps the organization to identify what it wants more, for the improvement of its performance (Cooperrirder, 2011). The research tool utilizes the people around the organization as the source of information concerning how they perceive the management of the company, and their suggestions on what should be done to improve the performance of the firm. The method concentrates on the positive characteristics of the firm, and how the attributes can be used to renew the performance of the firm. The set of questions developed during the appreciative inquiry helps the company by improving its capacity to anticipate progress and believe that it has a positive potential. Appreciative inquiry concentrates on the problem and therefore identifies the energy that is not required. However, the process proposes that an organization is not a machine but a social reality that is created by coordination or its management (Njau, 2012). The appreciative inquiry also emphasizes the key organizational processes such as communication, managerial conflict and decision making as the core determinants of the success of a company. The technique helps to identify what works right within an organization, and how to improve on it for a better performance.

Appreciative inquiry assumes that;

Ø Organization’s direction of movement is determined by the kind of questions asked by its members, and what they think or talk about.

Ø The energy for positive change is created when members of the organization think more of what was done that made the company perform better at some point, and not what problems the organization is facing.

Appreciative inquiry is done in four cycles as illustrated in figure 1.

Figure 1: Appreciative Inquiry Process (Cooperrirder, 2011)

Table 3 shows the appreciative inquiry process (refer to appendix).

Discovery

The crew and the top management of Silvertail airlines undergo a structured group interview to identify and understand the periods when the organization performs better, and the factors that encourage the employees to work with the firm (Cooperrirder, 2011). The crew members also help the management to identify some managerial and operational aspects that are crucial for the firm, and those drag the firm to underperformance. At this stage, the crew members point out that the organization needs more, and what should be achieved.

Dream

The crew members and managers of Silvertail airlines organize for a conference and as a group, they envision the performance of the firm and set the desired peak period. Through the imagination of a period when the company performs at its best, the group develops a mindset that something needs to be done to maintain such a level of success (Cooperrirder, 2011). The crew project into the hopes for future performance by referring to the good and bad periods identified in the discovery phase. Each of the workers think of a specific way in which thay can help in the improvement of the performance of Silvertail airlines. Members of the crew also imagine a peak performance of the firm and suggest the changes that they believe if adopted, the desired perormamance of the company can be achieved.

Design

The top managers and crew members of Silvertail design the organization as per the observations of the dream stage (Cooperrirder, 2011). Silvertail may decide to assign the design task to a section of its members. The current performance situation of Silvertail airlines is merged with the envisioned state to create what the company should look like.

Deliver

At the delivery stage, the group experiments what has been designed to create what Silvertail airline will be. The managers identify how the new design can be incorporated into the community and other organizations to ensure that the targeted performance level is achieved (Cooperrirder, 2011). Through the experimentation, Silvertail airlines can identify what adjustments should be made to achieve the required outcome.

Downsizing Tactics

Downsizing tactics are aimed at reducing the number of employees, such that the expenditure on personnel can go down. The most commonly used professional downsizing strategies include;

Ø Natural attrition

Ø Hiring freeze

Ø Early retirement

Ø Buyout packages

Ø Layoffs

Ø Retrenchments (Appelbaum, 2003)

Hiring Freeze and Attrition

Employees who have resigned or retired are not replaced, and the workload is distributed among the remaining workers. In attrition and hiring freeze, only a small number of employees are eliminated (Averard, 2014).

Early Retirement and Buyout Packages

Senior workers are encouraged to leave the organization, without replacement (Gandolfi, 2005). The employee provides salary incentives such as those who are likely to go for early retirement do not suffer economically, until their retirement benefits are ready. The financial incentives ensure that the employees leave voluntarily, without any impression of layouts or firings (Averard, 2014).

Layoffs and Retrenchments

Employees are subjected to unpaid leaves and absences. However, when the business performance resumes, the workers report back. Layoff and retrenchments are only advisable if the business has a seasonal downturn (Cameron, 2004).

There are three main approaches to downsizing- these include;

Workforce reduction, organizational redesign and systemic approach.

Table 4 explains the downsizing approaches and their characteristics (see appendix).

Lewin’s Change model

Lewin’s change model constitutes of three steps which are;

Ø Unfreeze

The organization is prepared to accept the necessary change. The existing status quo is broken down before new ways of operation are devised. There must be a way to show that the existing structure or management procedures cannot continue and this can be evidenced by poor performance, customer dissatisfaction and losses (Kritsonis, 2005). The values, beliefs behaviors and attitudes of the organization are changed.

Ø Change

New ways of doing things are adopted and before this is done, everyone in the organization must be made to understand the benefits of such a change.

Ø Refreeze

Develop an efficient organization chart and specific job descriptions, as a way of adopting to the changes. Table 5 illustrates the Lewin’s change model (see appendix).

Conclusion

Proper management of a firm is necessary for the realization of the visions and missions that were set at the start of the company’s operations. The management is defined in several dimensions which involve proper decision making, finance management, human resource management, proper relationships between the workers and managers, among other dimensions. Lack of healthy management practices may cause the collapse of a business, which is manifested by low performance and disorganizations in the carrying out of company activities. Without acceptable management practices, a company may device and implement some detrimental tactics that according to the management, may help in the improvement of a firm’s performance. Such decisions may include downsizing the workforce through eliminating old workers, and their subsequent replacement with young ones. Such decisions may result into undesirable circumstances such as the deterioration of a company’s public image and reduction in the quality of services. Therefore, before managerial decisions are made, it is crucial to involve the employees, such that universally acceptable methods of downsizing are adopted. A company should also adopt other professional tactics of organizational improvement, to survive in the competitive business environment.

References

Appelbaum, S., 2003. Strategic downsizing- critical success factors. Quebec: Concordia University.

Arun, P., 2007. Challenges of Human Resource management in borderless world. Jalgaon: KCES’s nstitute of management.

Averard, A., 2014. Strategic Downsizing. Quebeq: Concordia University.

Cameron, K., 2004. Strategies for successful organizational downsizing. New York: Wiley Publishers.

Cooperrirder, D., 2011. Appreciative Inquiry handbook for leaders of change. Taos: Berret-Koehler Publishers.

Dentinger, S., 2009. Drivers and Implementation of change. Kalmar: The University of Kalmar.

Esparcia, S., 2009. Forces that drive oorganizational change in an adaptive virtual organization. Valencia: Universitat Politecnica de Valencia.

Gandolfi, F., 2005. How do organizations implement downsizing? An australian and New Zealand study. Cedarville: Cedarville University.

Gandolfi, F., 2007. Causes, Implementation and processes of downsizing. Virginia: Regent University.

Kemelgor, B., 2010. Forces driving organizational change: a business school perspective. New York: Wiley publishers.

Kivienemi, A., 2010. Downsizing as a strategy- effects on profitability and signal value for the capital markets. Oulu: Oulu Business School.

Kritsonis, A., 2005. Comparison of change theories. California: California State University .

Lallemand, T., 2009. Are young and old workers harmful for firm poductivity?. Dublea: Universite Libre de Bruxelles.

Myrna, J., 2009. Strategic downsizing - a new model for implementing workforce reductions. Silver Spring: Myrna Associates.

Njau, L., 2012. Challenges facing human resource management function at kenyatta national hospital. Nairobi: The University of Nairobi.

Stankiewicz, K., 2015. Contemporatry issues and chalpenges in human resource management. Gdansk: Gdansk University of Technology.

Appendix

Table 1: Forcefield analysis of the suggested change

Driving forces

Suggested Change

Restraining forces

The speed of customer service improves (Lallemand, 2009, p. 4).

Getting rid of old employees and replacing them with young ones

Employee instability at the place of work.

Improvement of innovativeness of personnel.

Decreased performance levels.

Improvement of quality levels of services.

The increment of training and orientation costs.

Enhancement of adaptation.

Yong people take time to adapt to the working environment.

Enhanced flexibility.

Much dependence on Technology.

Longer periods of work.

Difficulty in employee management.

Reduction of expenditure on salaries.

Table 2: Force Field Analysis

Driving Forces

Suggested change

Restraining forces

Reduction of expenditure on crew members’ catering costs.

Lowering the level of crew members’ service points from 5 -star to 3-star hotels.

Resignation of employees.

Improved customer awareness about the company.

Deterioration of company image.

The crew members may learn new and different skills of customer care.

Increase in recruitment costs.

Possible improvement of the levels of employee commitment to work.

Formulating tough working conditions

Negative attitude towards work.

Improvement of quality of services.

Deterioration of company’s image.

Improvement of staff quality.

Reduction of workforce.

Reduction in expenditure.

Reducing perks to the current old employees.

Demotivation to work.

Improved productivity.

Some employees may quit work.

Infidelity of the employees may arise.

The levels of services may go down due to employee demotivation.

Deterioration of public image.

Improvement of output.

Extending working hours and adding more duties

Exhaustion of employees and subsequent resignation.

Some employees may quit due to exhaustion.

Reduction in expenditure on additional labor.

Some employees may quit due to additional work at a constant rate of pay.

Improvement of flexibility of employees.

Reduction of the levels of services.

Extraction of efficient personnel.

Stiffening job entry requirements

Loss of apprenticeship revenue.

Improvement of company’s public image.

Some of the workers may opt out.

Reduction in profit margin.

Table 3: Questions to Ask during Appreciative Inquiry

Discover

Dream

Design

Deliver

What do you find impressive in this company? What encouraged you to stay?

Imagine or time of perfect performance of your firm- a time when people identify tour company as the best.

Ø During this period, how should employees be engaged in decision making?

Ø  What will be your main contribution that shall enable the company to achieve the extraordinary performance?

What new objectives can you set this year to ensure that your company works best, or specific objectives to ensure that you work better?

What are the small changes that can immediately be implemented to encourage employees to get engaged in activities that can promote organizational performance?

What do you consider the most important factor in your organization, which if eliminated, your firm will be no more?

Imagine your tam working to achieve its best this year. What are some of the factors or working tactics that shall enable your team to achieve this best? What changes are made within the group to make it perform better?

What additional skills or materials do you need to ensure that the performance objectives are achieved?

What has been your most important accomplishment in this company?

In what areas do you think employees should be involved for the improvement of organizational performance?

What kind of support do you need to ensure that you achieve your best performance? Which resources should you be provided with, for better performance?

 What are the factors that have made your work most enjoyable, or what are the driving elements that have assisted you in doing your work more efficiently?

Of all the ways your employees are involved in the improvement of organizational performance, what is the most important initiative that is best promising in improving employee involvement? 

In what ways can you contribute to improve the performance of the organization?

Table 4: Downsizing approaches (Stankiewicz, 2015)

Approach

Characteristics

Example

Workforce reduction

Reduces head count

Is focused on short term results.

Encourages transition

Attrition

Retrenchment

Lay-offs

Organization redesign

Aims at the redesign of structures and tasks of the organization

Focuses on medium term benefits

Encourages transformation and transition

Eliminate functions, products add layouts

Cuts hierarchical levels

Redesign tasks

Merge units

Systemic

Changes values, attitude and culture

Focuses on long term benefits

Encourages transformation

Change respon