Ryanair business strategies and implications for Human Resources

This report covers the implications the business strategies proposed by BBAMBI consultants will have on the Human Resource Management (HRM) function of Ryanair. The strategies proposed by BBAMBI were to improve customer service, build the brand, and increase revenue and reduce costs. The implications these strategies have on the HRM function are managing the change associated with the strategies, training of customer facing staff, and introducing an effective performance appraisal system throughout the organisation. For Ryanair to maintain economic primacy in the budget airline sector they must be able to successfully manage the recommendations listed above.

Introduction

BBAMBI Consultants conducted an analysis of the external environment for Ryanair in order to consider strategies for future business operations. BBAMBI have suggested a number of strategies for immediate implementation and made recommendations for longer term strategies. The short term strategies included improving customer service, developing the company brand, and increasing revenue and reducing costs. The strategies which were more involved were recommended to be put into effect over a longer term were becoming more environmentally friendly and developing into other transport markets. The strategies have significant implications for Ryanair’s Human Resource Management (HRM) function and this report will critically review these implications. The primary implications are change management, training, and implementing a more effective performance appraisal.

Managing Change

The report has identified some of the changes that will face Ryanair in the next few years due to the change in strategy. According to the CIPD, people management and development professionals have a significant role to play in any change management process. HR’s involvement in various aspects of change can make the difference between successful and less successful projects (CIPD, 2009a). A number of issues have been addressed in the literature as having a negative impact on change management. Resistance to change is the main issue with individuals or groups possibly engaging in acts to block or disrupt an attempt to implement change. Evidence suggests that that this can be reduced by involving those it will affect in the decision making process. Individuals who have been involved in the diagnosis, planning, devising and implementation of change are more likely to feel positive about it (Marchington & Wilkinson, 2008).

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2.1 Lewin’s Three Step Model

HR and management can plan for the changes at Ryanair by implementing Lewin’s three-step model of unfreezing, moving and re-freezing. By looking at change as a process with distinct stages the organisation can prepare and plan to manage the transition (Marchington & Wilkinson, 2008). Lewin’s model attempts to analyse the forces (driving and restraining) that impact on change. The model offers advantages in planning for organisational change by providing a simple approach to making and sustaining change (McCarty, 2007). Limitations of the model are that it does not take into account personal factors that can affect change. The model also assumes that organisations operate in a stable environment (Burnes, 2004).

(Millet, 2004)

The first step in the process of changing behaviour is to unfreeze the existing situation or status quo. It is necessary for HR to try and overcome the strains of individual resistance and group conformity. To prepare employees at Ryanair for change, HR and management need to build a trust and recognition for the need for change (Kritsonis, 2004). The second step in the process is movement where employees will begin to resolve their uncertainly about the changes. A method that HR can use in assisting employees in the movement stage is to persuade employees that the status quo is not benefiting them (Kritsonis, 2004). The final step attempts to re-freeze or create acceptance for recent changes, to replace old beliefs with new ones. If this step is not taken it is likely that employees will revert back to the equilibrium (Goode, 2008). An action that HR can use to reinforce the new values is to include them in policies and procedures (Kritsonis, 2004).

Training & Development

Ryanair needs to be able to improve customer satisfaction to gain a competitive advantage over their main competition, easyJet. Training of customer facing staff is vital for Ryanair to be able to successfully improve customer satisfaction, retention, and loyalty. Despite being costly, training of staff will improve upon customer satisfaction as many studies have shown (Aragon-Sanchez, et. al, 2003, pg. 961). Studies have found that the number of customer complaints significantly decreased after implementing training of customer service staff (Office Depot, 2006). In developing the training further, Ryanair should conduct a Training Needs Analysis (TNA) before implementing an on-the-job training and coaching programs for their customer facing staff.

3.1 Training Needs Analysis & Learning Plan

A TNA will assist Ryanair in determining any skills gaps their customer facing staff have in relation to their job requirements and current performance (Marchington & Wilkinson, 2008). A TNA study will not only highlight where skills gaps exist, but should also determine the cause and solution (Stetar, 2005). During the TNA the organization should consider means other than training to achieve their desired results as many practitioners highlight that training is not necessary in every situation. (Marchington & Wilkinson, 2008) (Stetar, 2005). Following on from the TNA report Ryanair should produce a learning plan, which will focus on the clear aims and main objectives which they are trying to achieve through the further training of staff. (Harrison, 2005,p122). For Ryanair the general aim is to improve customer service. A well planned training initiative may act as an enabler to Ryanair in achieving the business strategy and objective of increasing customer satisfaction (Tannenbaum & Woods, 1992).

3.2 Training

Ryanair need to pursue ‘follow on’ training from their induction process. It has been noted from a previous study conducted by Kinnie (2000) that it is not just induction and technical training, but employees ongoing investment in workplace activities which enhances their training and skills (Kinnie, et. al, 2000 cited in Redman & Wilkinson, 2009). It is believed that focusing on ‘on the job training’ is the most effective means of training (Marchington & Wilkinson, 2008). ‘On the job training’ could also include coaching or mentoring. The CIPD (2009b) surveyed coaching within a variety of organisations and just over half described coaching as a learning and development intervention and the rest suggested it is used for organisational development and change management. Coaching has also been said to assist in improving weaknesses, tackling underperformance, and improving productivity. (Marchington & Wilkinson, 2008). Despite training being an additional cost for Ryanair it may prove to achieve enhanced customer service, leading to an increase in customers, and therefore higher profits, as many studies have shown that training of customer service staff results in higher customer satisfaction (Aragon-Sanchez, et. al, 2003, pg. 961).

After the implementation of on-the-job training Ryanair will need to evaluate the effectiveness using the Kirkpatrick model of reaction, immediate, ultimate, and analyzing the return on investment (Marchington & Wilkinson, 2008). The most applicable means of measurement for Ryanair is the ultimate level, which measures the strategic impact of training on the organization (Marchington & Wilkinson, 2008). To measure the impact Ryanair should compare the number of previous customer complaints to the number of complaints after the training commenced.

3.3 Barriers to Learning

There are however disadvantages to training and development from an organisational point of view. Some barriers to training include cost, time, lack of resources, lack of line manager support, lack of awareness of potential benefits and employee motivation, and fear of trained staff being poached by competing companies. (Cannell, 2008).

Many companies compete on cost, just like Ryanair, and training is seen as an unjustifiable wastefulness and too costly (Bach & Sisson, 2000). Therefore, Ryanair may be hesitant to implementing further training. Ryanair are a ‘low cost, no frills’ airline and therefore need to keep all costs to a minimum. Furthermore, the fear of trained staff being poached could also be utilised as an excuse for Ryanair to not increase their training budget as trained staff might leave for a more lucrative competitor.

Performance Appraisal

4.1 360 Degree Performance Appraisal

It is suggested that all staff at Ryanair undergo 360 degree performance appraisal, with customer appraisal forming part of the 360 degree feedback for front-line staff. 360 degree feedback would allow the performance of those staff involved in each different strategy (customer service, branding, revenue and costs) to be monitored and managed more effectively. 360 degree feedback allows performance to be viewed from different perspectives and increases self-awareness (Armstrong & Barron, 2004). Maybe et al (1998) state that one difficulty with 360 degree feedback is that the employee may attempt to manipulate the process, although this can be mitigated by expanding the number of people who are appraising the member of staff.

Customer appraisal, in the form of mystery shopping and customer surveys, has been established as one of the ways to improve customer service in the strategic analysis and will expand the number of appraisers involved in the process. This report reinforces the value of the use of this technique and it is proposed that it is an extremely effective way to monitor the level of customer service provided as it is evaluated at the boundary between the Company and the customer (Redman & Wilkinson, 2009).

Mystery shopping has been criticised as a cynical way for employers to “spy” on their employees (Cramp, 1994). However, Erstad (1998) states that mystery shopping should instead be viewed as “a well-elaborated plan which serves as a management tool for improving customer service as well as enhancing human resource management.” A well developed mystery shopping programme that is effectively linked to reward and incorporates training can result in improvements in customer satisfaction by up to 20% (Parker, 1988). According to Dorman (1994), Mystery shopping should not be punitive and employees who fail the shopping task should be provided with training until customer service improves.

The proposal suggests that customer service data should be obtained at set intervals through the use of customer surveys. Customer surveys can be effectively used as part of customer appraisal and are now being used more frequently (Redman & Wilkinson, 2009).

4.2 Implementing Performance Appraisals

Performance standards and objectives should be prepared and communicated by the employee’s line manager (ACAS, 2005). Marchington & Wilkinson (2008) propose that training to develop analytical skills, review information collected and to provide effective feedback may be necessary.

Performance appraisals should occur throughout the year and be a continuous process (ACAS, 2005).

The performance appraisal process should be continually reviewed in order to ensure that it working successfully (IRS Employment Review, 2003). According to ACAS (2005) the success of implementing 360 feedback appraisals depends on the culture of the organisation and how carefully it is introduced.

5.0 Conclusion

It is clear that the proposed business strategies will have significant impact on Ryanair’s HRM function. In order for Ryanair to maintain its competitive advantage, the HR function will need to consolidate these factors and have the flexibility to meet the challenges they engender.

In doing so, the HR function will shape the culture of the organisation in such a way that will allow the other changes to take effect. Ryanair need to effectively manage the change required in implementing the proposed business strategies as they will involve introducing further training and a new performance appraisal system. Introducing further training and new performance appraisals is vital in this shift in culture and the reciprocal relationship between both will lead to the opportunity for Ryanair to achieve the proposed business strategies of improving customer service, building the brand, and increasing revenue, and reducing costs.