Managing Resource within a Changing Economic Climate - Essay Example

Managing Resource within a Changing Economic Climate (CX Airline) Table of Contents Introduction 3 a) Assessment of Cathay Pacific’s Financial Performance in the Global Economic Context 4 Present Economic Condition of the Global Airlines Industry 5 Financial Performance of Cathay Pacific in the Current Global Economy 9 b) Developing Recruitment, Selection and Retention Plans for Cathay Pacific 12 Recruitment Plan 13 Selection Plan 15 Employee Retention Plan 16 Conclusion 20 References 23 Bibliography 26 Introduction Cathay Pacific Airways Ltd. (Cathay Pacific) is a Hong Kong based airline corporation, which is recognised as a leading name in the global airline industry. It offers regular passenger along with cargo services across the different geographical locations. According to the present day context, the airline corporation provides its exceptional airline services in around 162 global destinations in over 40 countries and territories. The company was founded in the year 1946 in Hong Kong by focusing towards providing airline services within its home country and creating Hong Kong as one of the major airline transportation centres across the world [1] (Cathay Pacific Airways Limited, 2013). In keeping with the global recognition and its continuous striving efforts in the airline industry, Cathay Pacific significantly performs streamlined operations, which enables the organisation to build substantial economic growth. In recent times, it is observed that the financial performance of the organisation is rapidly increasing due to its exceptional business strategies. Currently, the airline operations of Cathay Pacific involve two major divisions i.e. Airlines Business Division (ABD) as well as Non-Airline Business Division (NBD) that substantially provide a major support to the overall business performances of the organisation. Moreover, the company also operates its effective airlines operations through Dragon Airlines (Dragonair), a major subsidiary division of Cathay Pacific which incorporates different airline services such as aircraft engineering and handling, aircraft catering as well as infrastructure management [2] (Cathay Pacific Airways Limited, 2011). Based on the different operational services and a range of airline services of Cathay Pacific, the aim of this report is to provide a clear assessment of financial performance of Cathay Pacific in the prevailing global economic environment. Moreover, the discussion of this report would further encompass the process of developing recruitment, selection along with retention plans for Cathay Pacific in the global airlines industry. a) Assessment of Cathay Pacific’s Financial Performance in the Global Economic Context According to Cathay Pacific’s annual report of the year 2011, it has been observed that the organisation was considerably affected due to the instability as well as uncertainty of the global economies. The most affected area of Cathay Pacific during the year 2011 was its cargo business which has been observed to be quite diminishing at the last three quarter of the year. The cargo business of Cathay Pacific was affected due to the decreasing demands in the potential markets such as Hong Kong and Mainland China at the respective financial year. Moreover, the increasing jet fuel prices was also a major affecting factor for Cathay Pacific in terms of earning substantial profits during the year of 2011. However, the company was able to manage the economic uncertainties and instabilities through maintaining the demand and continued to attain opportunities by targeting new markets. Moreover, the uncertain economic conditions of the global markets were also effectively addressed by the organisation with its long-term strategies such as continuous expansion of its aviation networks and fleets, unchanged investment on developing products and services along with striving upon enhancing its Research and Development (R&D) processes [2] (Cathay Pacific Airways Limited, 2011). Present Economic Condition of the Global Airlines Industry The global airlines industry can be considered as one of the rapidly growing segments, as has been witnessed from the past few decades. According to the present economic condition of the global air market, it can be observed that the industry is continuously gaining a majority of shareholders as compared to the other industrial sectors. The unabated capacity, superior service facilities as well as increasing number of global airline organisations have been identified to be the leading factors in the air market in terms of enjoying a rapid growth in its overall financial position. In accordance with the present financial indicator of the respective industry, it can be recognised that the share prices of airline industry is depicting an unbeatable growth from its four major segments including Asian, European and US Airlines. The global financial markets significantly continue to develop its position in the airline industry. Global Airlines Index [Source: (IATA, 2013)] According to the statistical data of IATA, it can be observed that the global airline industry has achieved 7% growth during the month of January 2013 in the ‘UK Stock Exchange of Global All Cap Index.’ The growth has been witnessed due to the improved efficiency measures as well as restructuring functions of the global airlines organisations which have immeasurably supported the global airline industry (IATA, 2013). In the context of measuring the profit level of the global airline industry, it can be observed that the regions such as Asia Pacific and North America have achieved considerable growth through maximising profits. The airlines of Asia-Pacific and North America have continuously performed cumulative growth on maximising profit level in different disciplines such as Revenue-Passenger-Kilometres (RPK), Available-Seat-Kilometres (ASK) and Passenger-Load-Factor (PLF) among others (IATA, 2013). Q4 Profits Data of Global Airline Industry (2011 and 2012) [Source: (IATA, 2013)] According to the financial performance of the global airline industry, it has been observed that the global airline companies have been experiencing a dramatic decline in terms of obtaining financial stability during the fourth quarter of 2011. However, the airline companies within the Asia Pacific region have witnessed significant financial development despite the remarkable declining in the economic growth rate of the global airline industry. With this concern, Cathay Pacific had played a crucial role towards the growing economic conditions of the global airlines industry during such dramatic economic declining period. Therefore, it can be apparently stated that the financial performance of the company has rendered major contribution towards the growing economic conditions of the global airlines industry (Cathay Pacific Airways Limited, 2012). The present economic performance of Cathay Pacific has been identified to be quite stable as compared to the other Asia-Pacific and global airline companies. This can be stated with reference to the stabilising financial performance of the company during the global economic downturn which was apparently imposing an adverse effect on various global airline companies. In accordance with the financial statement of the company, it has been identified that Cathay Pacific experienced 3.5% economic growth in the passenger revenue during the year 2012 as compared to the year 2011. The overall passenger revenue of the company has been further witnessed as HK$70,133 million, apparently due to its increasing capacity of carrying passengers to different global destinations. In the year 2012, the company also focused on providing its exceptional passenger carrying services to a total of 29 million global customers through its core airline and its wide ranging subsidiary facilities [4] (Cathay Pacific Airways Limited, 2012). Financial Performance of Cathay Pacific in the Current Global Economy According to the company’s recent financial performance, it has been identified that Cathay Pacific has played a major role in the Asia-Pacific region in terms of earning a large amount of profit and market share as well. The company has increased its passenger carry operations by 8.6% as compared to the performance of the year 2012. Moreover, the revenue of the organisation has also increased by 9.2% from the passenger carry operations of Cathay Pacific and its subsidiary group. In this regard, it can be stated that the revenue earning performance of the organisation is generated due to the availability of extensive airline routes, deliverance of quality based performances along with increasing global expansion of its potential routes. In the similar context, the cargo services of Cathay Pacific also accumulate different growth portfolios through rendering its extensive deliveries to different geographical areas [3] (Cathay Pacific Airways Limited, 2012) Source: [3] (Cathay Pacific Airways Limited, 2012) According to the above mentioned figure, it can be stated that the results and the financial position of Cathay Pacific have been quite stable and have taken a substantial growth turn from the year 2011 to 2012. The financial statistics of Cathay Pacific can be observed to be depicting a significant growth in the company’s financial position due to its rapid expansion as well as collaborative functions with the other global airlines organisations [3] (Cathay Pacific Airways Limited, 2012). From the perspective of the CX’s annual report of 2011, it can be observed that the financial position of the organisation has been quite outstanding thus facilitating in the overall revenue growth. The divisions such as passenger services, cargo services as well as catering and recovery services of the organisation have simultaneously performed imperative roles for the developing financial position of Cathay Pacific. The following figure replicates the annual turnover record of the organisation which had been observed during the year 2010 to 2011 [2] (Cathay Pacific Airways Limited, 2011). Source: [2] (Cathay Pacific Airways Limited, 2011) In the context of CX’s annual report of 2011, it has been recognised that the cargo business of the organisation was severely affected due to the lower demand from the key markets such as Hong Kong and Mainland China. The report has represented the annual turnover of the cargo business of Cathay Pacific which had been reduced by 1.7% to HKD 23,335 million due to the weak demand from Hong Kong and China. With this concern, the overall revenue within the cargo business had been reduced by 4.1% to 77% which has been a prominent factor for Cathay Pacific as witnessed in the year 2011. However, the passenger carry division had experienced considerable growth in terms of earning substantial revenue. The passenger turnover rate of Cathay Pacific was augmented by 14.2% to HKD 67,778 million during the year of 2011 [2] (Cathay Pacific Airways Limited, 2011). The current economic condition of the global airline and cargo industry is facing a tough situation to stabilise the financial position both at the industry level and the company level. However, Cathay Pacific has been performing with continuous growth in the different geographic locations with the virtues of its competitive strategies in the marketing and the HR dimensions. The following graphical representation depicts the economic growth of Cathay Pacific in different geographical perspectives. Source: [4] (Cathay Pacific Airways Limited, 2012) It can be observed from the above discussion that Cathay Pacific has achieved a positive growth irrespective of the global economic downturn when other companies were being adversely affected. According to the observation, the company has strongly performed in the North and Southeast Asian regions. Moreover, the financial turnover in the North American region has also experienced a feasible growth by the company during the year 2012. However, Cathay Pacific has performed considerably lower, especially in certain North Asian countries namely Taiwan, Korea and Japan. In the similar context, the financial turnover of the company has also faced financial downturn in the Southwest Pacific, South Africa and European region (Cathay Pacific Airways Limited, 2012). b) Developing Recruitment, Selection and Retention Plans for Cathay Pacific With due consideration to the current business environment in the global industries, the modern organisations are likely to face different challenges in terms of managing Human Resource (HR) in the emerging economic uncertainties. According to the present scenario, it can frequently be observed that organisations tend to undergo various downturn situations due to the uncertain conducts of the global economy. The continuous variation of the global economic environment is frequently affected by several factors and it also can hinder the overall human resources of a particular organisation (French & Rumbles, 2010). The changing and emerging variations in the economic environment can be considered as one of the major challenges for the global industries in terms of efficiently operating their range of business operations. From the observation of various researches, it has been recognised that the economic fluctuations severely impact upon the organisational human resources. The Human Resource Management (HRM) of an organisation consists of a wide variety of roles and responsibilities which ensures to improve the overall activities performed within the organisational processes. With this concern, it is an imperative decision for any organisation to develop effective HRM initiatives in order to cope with the challenging economic fluctuations in the global business environment. Therefore, the discussion of this section will be focused on developing effective HR policies and practices for Cathay Pacific in terms of recruitment, selection as well as retention initiatives. The proposed plan of developing HR strategy would enable Cathay Pacific to effectively perform its range of airline activities in various economic conditions. Recruitment Plan Recruiting can be considered as one of the initial and major activities for the Human Resource Manager (HRM) of an organisation. The process entails certain important functions for an organisation to ensure higher performance of the workers and also to provide positive outcomes for the organisation. Recruitment can be defined as an employment process of an organisation through which it generates a group of capable people for the different organisational processes (French & Rumbles, 2010). Therefore, the development of effective recruitment process for Cathay Pacific will be focused on three major recruitment processes such as internal recruitment, external recruitment and recruiting for managing diversity within the organisation. The internal recruitment in the Cathay Pacific will be conducted on positioning highly skilled and experienced workers to the supervisory level. The process would facilitate the organisation to improve and enhance the quality of the services provided by the workers which further would enable the organisation to increase its overall productivity (Breaugh & Starke, 2000). The external recruitment process will be highly focused on identifying the right person for the organisation through justifying and examining the capabilities and skills of the candidates. Moreover, the external recruitment process will further involve inspecting the creativity as well as innovative skills of the employees which can facilitate the organisation to increase its operational performances (Breaugh & Starke, 2000). Moreover, the recruitment process for Cathay Pacific will further focus on identifying appropriate people in order to effectively manage the diversity within its workforce. As it has been observed that Cathay Pacific operates its business processes in various geographical locations therefore it is an imperative decision to recruit people as per their capabilities of managing and organising the employees from different culture, religion as well as race (Gberevbie, 2010). Selection Plan In addition, the selection process is also a vital HRM decision for an organisation which enables it to select the right individuals for the respective roles and responsibilities. The selection process for Cathay Pacific will involve providing considerable attention towards various critical and psychometrical measures. The process may facilitate interviewer to consume time and it would also enable the interviewee to independently resolve queries in the selection process. Moreover, the selection process of the employees for Cathay Pacific will include demarcating the eligibility requirements of the candidates concerning their qualification, skills and experiences in the respective job roles and identifying the adequate capabilities of the candidates in terms of handling different uninvited working conditions (Farr & Tippins, 2010). An effective selection process for any organisation requires conducting skilled interview process. Therefore, the interview processes of Cathay Pacific for selecting applicants will be focused on ensuring equal treatment as well as opportunity for each candidate. The process can also be a beneficial factor for the organisation to reduce biasness during the selection process. According to the present competitive scenario of the global business environment, it is highly essential for an organisation to maintain ethical guidelines and legal principles while it is conducting any recruitment and selection activities. The biasness within the selection process can severely affect the organisational reputation and it can also result in lower productivity of the organisation. Therefore, the selection process for Cathay Pacific will be focused on maintaining effective guidelines and legal principles to ensure that appropriate applicants are selected for the organisation (Hays, 2012). Employee Retention Plan The retention strategy can be considered as one of the major decisions for an organisation which is beneficial for both the employees and the organisation as well. An effective retention strategy is merely conducted by the modern organisations to inspire employees and increase their commitment levels towards meeting the organisational objectives. Moreover, it can also facilitate the organisation to overcome various possible issues which can hinder the development process of the organisation (Chhabra, n.d.). The employee retention strategy can be identified as a systematic approach that is performed by the employers in order to build and foster a suitable working environment which enables and encourages the employees to uphold the organisational objectives. It also strengthens organisational capability in order to retain its potential workforce. The organisations of the present business environment frequently conduct various types of retention strategies for the workforce after their recruitment process which is extensively effective beneficial for the organisations to generate willingness and loyalty of the workforce concerning their respective roles. Moreover, this process can simultaneously increase the productivity of the employees and quality of the performance within the workplace (Labour Market Framework for Yukon, 2010). The major retention plan for Cathay Pacific will be discussed through the following factors: Adequate Compensation and Benefit Plan The employee retention plan for Cathay Pacific will be focused on retaining the employees through acknowledging their potential efforts, capabilities as well as unique skills in their respective job roles. Moreover, compensating the employees in different disciplines including increasing wages, providing bonuses along with rewards and other benefits can motivate them to increase their performances and it can also reinforce their level of commitment to achieve organisational goals. The strategy of compensating employees can be effective for Cathay Pacific to increase the productivity of its employees and it would also facilitate the organisation to reduce potential hazards within the workforce. The process will also focus on creating flexible arrangements of job roles which can also facilitate Cathay Pacific to retain its potentially important employees within their crucial roles and responsibilities (Singh & Dixit, 2011). This type of employee retention activities significantly helped Cathay Pacific to motivate its employees towards performing superior role to achieve the determined organisational goals. Moreover, the compensation and benefit plans of the organisation also encouraged its employees to further ensure the continuous improvement of the organisational financial position. Acknowledgement and Value In accordance with the present economic downturn of the global airlines industry, it can frequently be observed that the organisations tend to follow adequate measures and decisions of eliminating employees from their respective position. Moreover, the organisations also tend to adopt strict guidelines for the employees to acquire adequate outcomes which further result in reducing the number of employees from the organisation. These processes are frequently implemented by the multinationals in order to keep a balance between the profitability of the organisation and economic condition of the business environment (McCooey & McCooey, 2009). However, the retention plan for Cathay Pacific will be focused on acknowledging and respecting the employees and their potential efforts towards the organisation. The proper acknowledgement as well as assessing value of the performances of the employees can improve their productivity and it can also facilitate the organisation to achieve positive outcomes from each employee of the organisation (Phillips & Connell, 2003). Therefore, it can be stated that the practice of acknowledging and valuing each employee also played a vital role towards improving the financial position of Cathay Pacific in the global airlines and cargo industry. Employee Engagement and Personal Development In addition, the retention strategy for Cathay Pacific will also include the adoption of an effective technique concerning employee engagement along with facilitating them to maintain their health and safety issues within the workplace. Moreover, conducting certain activities to develop employees’ personal attributes such as communication and behavioural skills development, morale and value development and other relevant related functions can also encourage the employees of Cathay Pacific to remain with the organisation. In addition, the strategy of employee engagement within Cathay Pacific will further focus on providing equal opportunities to the employees in terms of sharing their personal ideas and opinions for improving the varied imperative processes of the organisation (AICPA, n.d.). In relation to the role of HRM in Cathay Pacific, the extensive effort and consideration rendered t\by the management towards employee engagement has improved the organisational financial performances by a substantial extent. As can be apparently observed from the above discussion, healthier and competitive employee engagement helped the organisation to strengthen its relationship within the various organisational dimensions through shared values which further supported it to increase the performance of the employees. Moreover, the function also encourages employees to enhance their performance and quality of their services which further enabled the organisation to strengthen its financial position. Contextually, it can be stated that the HRM techniques applied by Cathay Pacific has been one of the major supportive divisions of the organisation in terms of achieving its financial stabilisation. As per the observation of this report, it has been witnessed that the HRM strategies of Cathay Pacific played a crucial role for the organisation’s competencies in a range of business operations. Moreover, the HRM of the company also ensured to strengthen its financial performances through representing different crucial efforts to the organisation. According to the financial performance of Cathay Pacific, it has further been observed that the organisation has transformed its financial position in the global airlines and cargo industry [5] (Cathay Pacific Airways Limited, 2009). It is to be mentioned in this regard that the company has performed continuous growth in its passenger carry facilities. This significant growth has been attained by Cathay Pacific due to the collaborative and enthusiastic performance of its staffs. Therefore, the HRM division of the company can be considered as one of the major and primary resources, which has enabled the organisation to accomplish a larger number of customer base from the different regions of the world and thus strengthen its financial health [5] (Cathay Pacific Airways Limited, 2009). Conclusion Cathay Pacific can be recognised as one of the renowned organisations, which significantly competes by offering a range of airline services. The organisation tends to operate effective business strategies which facilitate it to attain a large group of global customers along with providing the organisation substantial benefits in terms of obtaining economic growth as well. As per the observation of the company’s annual report of 2011, it has been found that Cathay Pacific had simultaneously gained substantial growth in its various economic factors. Moreover, the organisation has also found to be quite successful in terms of earning revenue as well as strengthening its capital structure during the year of 2011. According to the observation of the financial report of 2011, it has been observed that the organisation has focused on the continuation of its effective business strategies to overcome the economic downturn in the global airline industry. Moreover, the other initiatives such as maintaining investor relationship and improving quality of its range of products and services have also played major roles for Cathay Pacific to remain as one of the leading organisations in the global airlines industry. In addition, the community development initiatives and various environmental protection operations of the organisation have also supported it to sustain in the growing airline industry. In the similar context, the continuous augmentation of organisational internal operations such as HRM system has also played an important role for Cathay Pacific to develop the performances of each individual within the organisation. The HRM of Cathay Pacific played a major role for the company in terms of providing exceptional services to the global customers. The HRM strategy of Cathay Pacific is highly focused on improving workforce capabilities through conducting different HRM practices within the organisation. In order to enhance the efficiency of the HRM system, the aforementioned plans such as recruitment strategy, selection process as well as employee retention plan would be quite effective for the organisation to simultaneously develop its economic position as well as the performance of its potential workforce. In this context, the human resource department is frequently involved in mitigating numerous challenges to successfully accomplish organisational operations. The organisations in the present business world are likely to face various challenging situations due to the prevailing economic uncertainties. Therefore, an effective and relevant recruitment and selection processes can significantly assist to effectively address the unwanted constraints within the working environment. Moreover, an effective strategy of retaining employees would also facilitate Cathay Pacific to successfully address any economic downturn situation in the global airlines industry. 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