How poor management and stubborn work force can drive an organisation into losses

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Indian airlines were named as Indian on 7th December 2005. Indian Airlines was merged with Air India on 27th February 2011.Air India headquarter is located at the Air India building at Nariman Point in South Mumbai, It is the 16th largest airline in Asia. Air India has two major domestic hubs at Indira Gandhi International (Delhi) Airport and Chhatrapati Shivaji International Airport (Mumbai). Indian Airlines (IA) continuously facing losses over the years and human resources problems regarding the frequent strikes by IA pilots. Indian Commercial Pilots Association (ICPA) has served the notice 14 days before as per Section 22 of the Industrial Disputes Act. They will strike work on 9th March 2011. IA Unions are notorious for their adamant attitude and frequently demanding or forcing the management to accept their demands, with different reason for each strike, unions always pressurized IA for more money. From November 1989 to June 1992, there were 13 agitations by different unions. During December 1992-January 1993, there was a 46-day strike by the pilots and yet another one in November 1994 and this raise questions on IAs vulnerability. AI's continuous HR problems attribute to its lack of proper manpower planning. With each strike/go-slow and subsequent wage negotiations, IA's financial woes kept increasing. At times IA tried to fulfil demands for wages hike and other perquisites but the demands from union members are still on.( (ICMR, IBS canter for management research, Wikipedia)

In this essay I will focus on how poor management and stubborn work force can drive an organization into losses, I am also going discuss about three interventions which will help to solve these problems. According to me the very important intervention first intervention would be

Employee selection (set up of assessment centers ,Careful and responsible recruitment accompanied by HR Managers with high responsibilities)

IA should apply Strike insurance scheme, Compensations and benefits (There should be a bond between union and the employer).

Performance appraisal

.key words:

Recruitment: ''personnel selection is a methodical placement of individuals into jobs, its impact on organization is realise when employee achieves years or decades of service to the employer. The process of selection follows a methodology to collect information of an individual in order to determine if that individual should be employed. The methodology used should not violate any laws regarding personnel selection'' (from Human Resource Management (2 Vols.) By H.L. Kaila pg 43)

Employees: "employee as defined who enjoy the full benefit of all the rights provided under the Employment Rights Act 1996, such as the right not to be unfairly dismissed and redundancy pay rights. Other rights provided under ERA 1996 (eg those which prevent employers from making unauthorised deductions from wages etc ) are available to all workers, a more broadly defined term which includes "employees" but also includes many others - ERA 1996 s.230(3)).

Strikes: Strikes are a common feature in many industrialized economies. During

a dispute, employees often receive wage substitutes, such as strike pay,

unemployment benefits or social security payments (from Human Resource Management (2 Vols.) By H.L. Kaila pg 43)




Laszlo Goerke


UniversitaÈt Konstanz)

(September 1998; revised August 1999)

Indian airlines was a major airlines based in Mumbai, which was setup under air corporations act in 1st august 1953. It was established after legislation came into force to nationalise the entire airline industry in India. Indian Airlines primarily focus on domestic flights and also some international flights in neighbouring countries in Asia. Air India is the oldest and largest airline of India, and it was founded by J.R.D Tata in 1932. Indian Airlines Limited is partly owned by the Government of India (51 % of share capital) through a holding company and has 19,300 employees as of March 2007.

(ICMR, IBS canter for management research)

Intervention one: (The Oxford handbook of human resource management

Journal by John Purcell, Patrick M. Wright page no 297 Suzanne Wheatley

Legal Information Management / Volume 10 / Issue 04, pp 279 -282

Published online: 08 December 2010)

Recruiting right employees is like an investment and greatest resource for a company. It is very important to get right people at right time which can help companies (IA) growth. Before recruiting a new staff member in the company HR department should be aware of the recruitment of their organization which is very important for an organization like IA to be smooth and successful in recruitment. Their Selection criteria should be ready, Recruiting right and skilled staff can also be used as strategic response to overcome these constraints faced by IA. During recruitment Selection procedure also impacts on the organizational-level outcomes such as profits, productivity and standard. Whenever employees are encouraged for their work, and are motivated for their performance, it helps employees to feel confident and satisfied with their work, which directly generates new ideas. High performance work place makes work more enjoyable for the employees. Organization should provide a good environment to employees so they can perform their best and a good performance of an employee will benefit both company and employees them self. This performance management is possible when organization, managers and employees are satisfied with their working conditions. For an employee to work in ethical way any employer must consider a good relation with staff, trust and authorities throughout the organization, harmony between personal and organizational values, Human Resource department of IA should also consider some objectives to encourage high performance that can be measured and achieved, which will be relevant with time limit, and agreed by all the staff members. If IA consider all these points while recruiting a new staff member I feel that the productivity of IA will increase rapidly. Profits and standard of any organization are the result of a good working condition and productivity. If IA succeeds building a good relation with their employees, they will reduce frequency of strikes and exodus of its pilots. It will directly improve the services, and a better service will help to change customer's view which will lead to profit of the company. To reach at this point the very first step from IA should be a thoughtful planning about their recruitment procedure and they should also consider requirements and vacancies available for pilots so there will not be any issues relating manpower planning and underutilisation of existing manpower. As Harvey Mackay, well-known, irreverent, author and speaker, says about networking, ''Dig Your Well, Before You're Thirsty''

Second intervention:



Laszlo Goerke


UniversitaÈt Konstanz)

(September 1998; revised August 1999), (Strike insurance and collective bargaining JOHN S.HIRSCH, JR. PG 399. Industrial and Labor Relations Review © 1969 Cornell University, School of Industrial & Labor Relations)

(Bargaining theory, tread unions, industrial strike activities by ORLEY ASHENFELTER AND GEORGE E.JOHNSON) The American Economic Review, 1969 - JSTOR

According to me the second intervention on IA's issues could be offering a fair compensation and benefits to the employee, based on subjective and objective performance evaluation. And strike insurance scheme will be one of the very important steps by IA, as strikes have been one of the major reasons for IA'S continuous losses over the year. Strike refers to, employees refusal to work, and consequences are paid by both employer and employee. Union is assumed to call a strike if one of its wage demands is rejected these strikes works as a screen mechanism for the company. When union demands a wage increase which can be rejected or accepted by company, if demand is rejected union will call a strike and demand double wages, this process goes on unless company accepts union demand or employee leaves the company which will cause company a zero profit, this loss of profit force firm to accept wage demands. Strike insurance fund may help Indian Airlines to reduce uncertainty and hence lowers strike activity. ''strike insurance Is a private agreement by which competing employers contract that if one of them is in trouble another will compensate with some amount of money which is been decided in advanced.'' majority of Strikes are result of faulty negotiations, and strike funds can increase bargaining power. IA facing strikes because of ''wage structure and the rate of change of aggregate money wage'' according to Charls Holt's by theory and analysis of industrial disputes may help to clarify the role of that unions pay in the determination if wages. Keeping good understanding with trade union IA can avoid frequency of strikes. (Tread union is A group of employees in a particular sector, whose aim is to negotiate with employees over pay, job security, working hours, etc, using the collective power of the members). There should also be compensations and benefit for employees based on their performances. Compensation includes payments, salaries structures such as bond based program, commission based program and performance based program, compensation is payment to the employees other than their salaries which differs as per the performance and contribution towards company. When employee is aware about all the financial facilities available with better performance they may not support any strike. IA human resources department should assure and convince pilots that even though Air India pilots comes under exempt classification in which employees are paid fixed amount of salary in certain intervals, IA (Indian airline) pilots (non-exempt: paid hourly wages) can earn more money by working more hours and they will get more benefits such as retirement plans, health life insurance, life insurance, disability insurance, vacation. In the process of hiring a new staff , there has be a bond to be signature by applicant so there will not be any misuse of the facilities offered by IA. and every employee it can be a pilot or an union member will have to rethink before calling a strike, as breaking a bond may cause them a huge loss.

(Employment Rights Act 1996) by Roderick Ramage, solicitor,

first published in New Law Journal ([email protected]) on 17 September 1993 and subsequently in the Service Agreements chapter of Kelly's Draftsman 16th & 17th editions

Third intervention: performance appraisal. (EFFECTIVE PERFORMANCE APPRAISAL

Type: General review

Author(s): Gregory D. Rankin, Brian H. Kleiner

Source: Industrial Management & Data Systems Volume: 88 Issue: 1/2 1988) Critical Issues in Performance Appraisal

Type: General review

Author(s): David K. Banner, James M. Graber

As i have discusses about compensation and benefits and how they will help IA to improve their working conditions, in this intervention i will describe in detail about the type and applications of performance based appraisals. According to Dulewicz (1989) ''a basic human tendency to make judgements about those one is working with, as well as about oneself ''. Which means without careful structured system of appraisal people may tend to judge performance informally. According to me not only pay rates impacts on employees performance but morels and self esteem can also influence their work. To make appraisal effective there are some important points to be considered such as, ''clear performance goals, quantified levels of performance must be clear, personal rewards should be tied to organisational performance, supervisor and employee should identify ways to improve the latter's performance and implement a plan together, feedback should be provided to the appraiser, and the system must comply with all legal requirements.'' Improving performance appraisal method is application of social definition of appraisal that will match with intention decided by an organizations. The basic agenda of performance appraisal is to encourage an efficient employee for his work and on the other hand to pressure unsatisfactory employee to work even more harder, it should also consider past and current performance of an employee, performance appraisal can be productive and will benefit both employee and the employer.

(by Gregory D. Rankin, Brian H. Kleiner)