HRM210作业材料.docx

HRM210 Assessment 1 | ERICP50-52 Case studyThe mood around the boardroom table reflected an understated excitement. Jet reds managing director James miller switched off the PowerPoint presentation to address the senior management team. You can clearly see that the major challenge that we face is that our cost base is much higher than that of our competitors. We have a legacy of a bureaucratic public sector culture. We are highly unionized and restricted by uncompetitive labor practices. Our wages and salaries are among the highest in the industry. To add to our problems, fuel prices are escalating, the A$ remains high, security costs are increasing and the competition is getting even more cutthroat. In short, we have to face the reality that our profit and market share are in rapidly decline. To continue operating the way we are means certain bankruptcy for jet red. We have to change.I agree, said Abdul Safi, chief financial officer. The problem is that many of our employees and their unions refuse to acknowledge whats going on. They seem to think that if they complain loudly enough it will make the global recession and the competition go away. Cant they understand? snapped Angela Wong, operations director. Our profits are in freefall. Our share price has already dropped by 40 per cent this year. The writing is on the wall. If we dont tap into the expanding Asian market, reduce headcount, outsource maintenance, eliminate unprofitable routes and reduce debt jet red will be bankrupt. Our fuel bill increase by $2 billion this year. We cant continue to operate like we are still a public sector entity. The new business strategies proposed by James are our only hope for survival.Jet reds HR director, Nalene Suresh, pushed at the file in front of her. You are all aware that the unions have warned that they will fight all attempts to outsource any operations or to reduce headcount. Implementing these new strategies is not going to be easy. Mention productivity improvement to our employees and they immediately think more unpaid overtime, more work intensification, more management pressure, worse work-life balance and more job losses. Our worker engagement levels are at all-time low. There is no trust. We have no credibility with our employees.A murmur of agreement went around the boardroom table.I hear what you say Nalena, but we have to have productivity improvements. We must reduce costs if jet red is to secure its survival and long-term competitive position, said James. Fuel costs alone have gone up by more than 10 per cent in the last 3 months. There is no choice.Nalena sighed. The trade unions will argue that by making such claims we are trying to create a climate of fear to extract concessions on pay and conditions. We will be criticized for paying obscene salaries to management while forcing job losses on workers. They will argue it is impossible to compete with low-wage countries and that we are leading a race to the bottom.Yes I know, it will get ugly, said James.Nick Campbell, director of engineering, smile. Not to mention the political hornets nest we are going to create. The prime minister owes their position to the unions. We are not going to get a favorable reception from the government, they cant risk alienating their trade union base.Yes, I hear what you are saying, but there are times when the tough decision have to be made-and this is one of them, James responded. Cutting unprofitable routes, introducing a performance culture and investing in a new discount airline based in Asia are all necessary.You realize by establishing an overseas subsidiary we will be accused of destroying a national icon. The pilots will claim that an Australian airline should be flown by Australian engineers and not some foreign engineers with suspect qualifications, said Nalena.Its a classic case of the right to manage versus the right to job security, said Angela. By closing our Sydney maintenance operations 500 jobs will go but we will save up to $100 million a year.Dont forget our fleet renewal program, added Nick. Technological improvements mean that less maintenance is required on our new aircraft. A whole range of existing inspection procedures are now redundant, which means we can streamline our maintenance operations even further.Along with getting rid of 500 licensed engineers, said Angela.Precisely, said Nick. We have labor costs at least 20 per cent higher than our competition. We simply cant get the required return from the capital invested.For the record, our return on equity last year was just 2 per cent, said Abdul.That is all very well, said Nalena. But what about the human element? We are talking about peoples lives here not just financial returns.I hear what you are saying Nalena but Asia is our path to survival and growth, said James. All airlines pay the same for their planes, fuel, airports and landing coststhe big variable is labor. If our labor costs are uncompetitive, it is simple, we cant compete. Having an Asian-based airline will end the disadvantage of being a high-cost end-of-the-line carrier. Asia gives us profitable growth. People need to realize that we now must operate as an independent business not a government-subsidized national icon. The alternative is a much smaller airline with limited prospects and even greater job losses.What about Brendon Ryan, the Airline Workers national secretary? He says our Asian strategy is nothing more than a deunionizing exercise. You can expect him to fight us hard. And dont forget he has serious political ambition. Ryan has more than one agenda in this dispute. Jet red will be an important vehicle for him to make his presence felt on the national stage, said Angela.Regardless of the union attitudes we must get our employees to understand the reasons behind our new strategies, said Nalena. At the moment, we dont have their commitment or trust. Their loyalty is to their union, not Jet RedLook, whatever the unions say, interjected Abdul, Jet Red is a publicly listed company with a prime responsibility to its shareholders. We operate in a globalized economy. Management must be free to operate in the way it feels best. Jet Red must be free to pursue global opportunities. By creating a new business offshore, we are exporting our intellectual know-how and gaining access to the booming Asian markets. The alternative is for the government to nationalize the airline and let the taxpayer subsidize its operations. What James is proposing will increase Jet Reds profitability, provide funds for investment and keep jobs in Australia.I know that, said Nalena, but to achieve these changes we need an engaged workforce. A workforce willing to accept change and the need for productivity increase. At the moment, we suffer from appalling customer service, high labor turnover and endemic absenteeism.Unfortunately, said James, our legacy of being a government-owned monopoly now thrown into open competition means that change, trauma and conflict are inevitable.You all realize that an “all out” strike will cost Jet Red at least $2 million a day, said Abdul.To say nothing about the damage to our public image and standing with our customers, added Nick.The Engineers Union is already lobbying the federal and state governments for support to maintain maintenance jobs in Australia, said Angela. But Airbus 380 superjumbo and Boeing 787 Dreamliners do not require heavy maintenance in Australia, said James.The Engineers Union wont accept that, said Nalena. They will argue that if Jet Red wants to be seen as an Australian airline, it must do its maintenance in AustraliaYes, and can you imagine any politician publicly saying that they support the loss of Australian jobs. Just look at how eager they were to spend taxpayer money on an inefficient car industry. All they care about is votes not productivity or competiveness, Angela said sarcastically.Our proposal to employ foreign pilots and to use merit rather than seniority as a direct attack on working conditions and Australian jobs.Profits before passenger safety and Australian jobs. The union scare campaign has already started, snapped Angela.To accept their arguments will destroy any cost savings, sighed Abdul. Offshore cabin crew are paid about $2000 per month while our cabin crew get about $5000-$6000 per month.The politicians are also raising objections, said Angela. Some are claiming Jet Red has a moral obligatio