Employee Relations in British Airways and Jet Airways - Case Study Example

Employee Relations - British Airways and Jet Airways Critical examination and comparison of employee relations in British Airways and Jet Airways The employee relations in British Airways and the Jet Airways will be critically examined using the Salamon’s 4Ps of Industrial Relations, i.e. perspectives, participants, processes and practices. Furthermore, both firm’s employee relations practices are evaluated using the pluralist, the unitarist and the conflict perspectives. The context of these theories is presented in the literature as follows: ‘from the unitarist perspective conflict between labour and management is viewed as being both unnecessary and avoidable; conflict occurs because of poor communication’ (Leat, 2001, 15); on the other hand, ‘the pluralist perspective assumes that decision – making processes within the state take place primarily under circumstances of individual political equality and freedom’ (Alford et al., 1985, 36); finally, ‘conflict theorists, in general, argue that science and technology benefit a select few’. 1a. British Airways Perspectives In Britain employee relations are based on the arrangements between employees and employers; however, minimum rights exist for employees; any violation of these rights leads to the relevant reaction of the unions. In the past the power of the country’s unions to decide on the framework of employment across the country has been significant; today, the power of British unions has been limited because of the ‘recessions, New Right politics, restrictive legislation on industrial action and massive restructuring in many organizations’ (HRM Guide, employee relations, Britain, 2010). Employment relations in Britain are developed in accordance with the rules including in the Employment Relations Act of 1999; British unions participate actively in disputes caused because of the violation of employees’ rights in Britain. Participants Trade unions have an important role in the development of employee relations in BA. The employees of British airways are represented by the following trade unions: the British Airline Pilots Association (BALPA) – which represents the pilots of British Airways – and Unite, which represents the employees working in the other positions across the organization. The government does not have an active role in the formulation of employee relations in British Airways; however, the British courts are likely to influence the internal organizational environment by ruling on disputes between the firm and its employees (an example is the dispute of October 2006 for the right of an employee to wear a cross). The firm’s managers define the framework in which employee relations are developed and at what level the claims of the employees will be accepted. Employees in British Airways try to protect their rights on a fair compensation for their work while the managers try to emphasize on the need for reducing the firm’s overall expenses – including the compensation of employees- in order for the effects of the recession on the firm to be effectively controlled. Processes In British Airways the participation of employees in the development of employee relations is strongly supported by the firm; however, there are cases, when the managers without the consent of employees take important decisions on employee relations. In a report published by USA Today where it is noted that ‘after reporting its biggest full-year loss post-privatization, airline chief Willie Walsh announced he will not receive a salary for the month of July and is urging employees to follow his lead’ (USA Today, 17/6/2009); the firm’s chief made clear that he is willing to reduce the firm’s expenses taking any action necessary. The suggestions of the firm’s chief were not accepted positively by employees; it was made clear that this would be a practice that could last for a long period of time – not just a month. It was this prospect that led employees in BA to react dynamically organizing strikes and other similar initiatives in order to show their opposition to the suggestions for working without being paid. Moreover, only 1 in 6 employees of the firm accepted to participate in this scheme (CNN, 25 June 2009); the above fact indicates the lack of integrity in the workforce of the firm; it is clear the firm’s employees do not share the same view regarding their role in the organization. Practices Employment relations in British Airways have been developed through negotiations between employers and employees; however, under the influence of the recession the relationship between employees and the top management team has been worsened. In fact, the employee relations in British Airways had suffered a severe trauma; this trauma could take a long time to be completely healed. In accordance with a report published in BBC News, ‘even when the BA strike is finally resolved, what might be hard to rectify is the working relationships between staff and bosses and among employees’ (BBC News, 1 April 2010). In the negotiations that took place recently between the employers and the managers, the ability of the firm to persuade the employees on the appropriateness and the fairness of its practices was led to a failure and the employees decided to continue the strike (Trading Markets, 29 March 2010). It was clear that the bargaining strategies used by both sides need to be reviewed and alternated. It is clear from the above that employee relations in British Airways are closer to the unitarist perspective; chances exist for the improvement of employee relations in the firm by improving the communication between employer and employees; the pluralist perspective and the conflict perspective are not likely to apply; equality seems to exist among employees who are not free to set their own rules in the workplace. 1b. Jet Airways Perspectives In India there is a series of laws regulated the various aspects of employment; for example: the Equal Remuneration Act of 1976, the Industrial Disputes Act of 1947, the Industrial Employment Act of 1946, the Payment of Wages Act of 1936 and so on; the Industrial Disputes Act of 1947 regulates the disputes between employees and employer in organizations across India (see the official website of India Pakistan Trade Union, 2010); the unions have power to intervene in disputes between employers and employees; in the case of Jet Airways – as explained below – the intervention of the unions led to the decision of the firm to hire again the employees who had been fired – referring to the events of October 2008. Participants Employee relations in Jet Airways are based on the decisions of the management team; employees also participate but only partially; the unions have power to influence the decision of employer in regard to specific rights/ benefits of employees; for example, when the firm decided to fire 1000 employees – in October 2008 – the union reacted dynamically; in fact, the protests organized by the union had been so strong that led the firm’s managers to recall their decision to fire 1000 employees; all sacked employees returned to their position. In accordance with a relevant report ‘after two days of protests and agitation, an emotional Jet Airways Chairman Naresh Goyal on Thursday reinstated all the employees who were retrenched’ (IBN Live, 16 October 2008). India government does not seem to intervene directly in the development of employee relations across the country. Processes Up to the appearance of the global crisis in 2008, employees in Jet Airways had been supportive to their firm’s initiatives regarding the support of the community; employee relations were based on the mutual understanding and good communication – see the financial contribution of the firm’s employees to the victims of the Tsunami and the earthquake in Kashmir (Jet Airways, corporate website, Community Services 2008). In October of 2008 (the 15th of that month) the firm’s managers decide to fire 1000 employees – in order to reduce the firm’s operational expenses (NDTV, 2008); it was a decision that did not leave chances for opposition; no negotiation with employees had taken place – it was a decision based purely on the firm’s financial interests; moreover, only 300 sacked employees in Jet Airways – from the total of 1000 that were sacked with no previous warning – were protested against the specific decision (DNA, 15 October 2008); at this point ethics in Jet Airways seem to be differentiated from those applied on BA; In the case of British Airways specific suggestions were made to the employees – there were no limitation in the firm’s workforce. Practices The practices of Jet Airways in regard to its employee relations are characterized by the decisive role of the management team; the participation of employees in the development of employee relations across the organization seem to be limited. In this context it could be stated that employee relations in Jet Airways respond rather to the unitarist perspective; however, conflict perspective could be also applied – based on the fact that some of the firm’s employees manage to keep their rights under any market conditions. 2. British Airways and Jet Airways – identification of the company that handles its employee relations more effectively The evaluation of the effectiveness of the policies used in the two firms regarding the management of employee relations need to be based on specific criteria: a) the sense of understanding of the employees’ needs; managers in British Airways have proposed a solution that seemed to be effective for the limitation of the firm’s expenses for a specific period of time; the problem has been the fact that this period of time was not clearly defined – a fact that had a decisive role in the development of the employees’ opposition to the suggested mode of work. In Jet Airways managers did not ask for negotiations with employees; they fired 1000 employees using as a justification the pressures that the firm suffered because of the global crisis. In accordance with the above, managers in Jet Airways could be possibly characterized as unable to understand the needs of their employees – and the difficulties that the fired employees would have to face; however, the practices of managers in Jet Airways are only slightly differentiated from those of British Airways. In BA, the managers suggestions to the employees to work for free can be regarded as a proposal to the employees to leave the organization – no person would be expected to accept such a term unless for a short and specific period of time. In other words, managers in BA did not fire employees but their suggestions to the employees to work for free can be regarded as suggestions to leave the firm; it is the same decision – to reduce the workforce in order to reduce operational expenses – but it is described through different methods. At the end, it has been proved that managers in Jet Airways can feel the difficulties faced by their employees; the above assumption is based on the fact that the managers of this firm asked the sacked employees to return to their positions. On the contrary, managers in British Airways kept their view on the effectiveness of their ‘work for free’ plan – despite the strong pressure by the employees’ and the union’s protests. The specific aspect of managerial behaviour in British Airways should be further examined, b) Managers in Jet Airways took a decision that caused severe stress to the employees; however, this decision was recalled shortly, in just 2 days, after the intervention of the union and the protests of the employees; this fact proves that managers in Jet Airways are more willing to hear the view of the employees when critical strategic decisions are to be taken – even if this initiative is taken afterwards – i.e. when the decision had already been taken. On the other hand, managers in British Airways are likely to follow specific method of implementing the firm’s strategic policies; the view of the interested parties, in this case the employees, can be heard but it is not expected to affect the decision of managers; this decision is not changed even after long negotiations and strong protests – as proved through the facts presented in the previous section. The method of implementation of strategic policies in Jet Airways is more favourable for the employees – even if such a fact is not easily identified; in practice, managers in Jet Airways proved that managerial decisions are likely to be changed when the conditions in the internal or the external environment impose the relevant change. From a similar point of view, the hierarchy of needs in Jet Airways seems to be different compared to British Airways; in the latter, the firm’s financial performance is the only criterion for the development of various strategic plans; in Jet Airways, people are considered as having more value – not only regarding their role in the realization of organizational objectives but also regarding their needs as developed in the context of a specific social and economic framework. Managers in British Airways have refused to change their decisions – almost a year after their announcement - even if the viability of the proposed plans is limited taken into consideration the level of resistance developed against the implementation of these plans in the organization. 3. Suggestions on the ways in which each company can improve and develop its employee relations Taking into consideration the issues developed above, suggestions could be made to the managers of both firms to improve and develop the employee relations within their organization; these suggestions can be developed using the relevant literature and taking into consideration the characteristics and the objectives of each firm; the resources available for the realization of the relevant plans should be also helpful to decide on the policies that could help to the improvement and the development of employees relations in both organizations (Bohlander et al., 2009, 12). Specific methods for the improvement of employee relations would be suggested to Jet Airways; these methods would be different – at least up to a level – from those suggested to British Airways – under the influence of the differences in the objectives and priorities of each organization, as explained in the previous section. In this context, it is suggested that the following methods should be developed by Jet Airways in order for employee relations in this firm to be improved: a) a team of employee relations practitioners should be established (Gennard et al., 2005, 8); these individuals can ensure that the organizational decisions referring to employees are going to be developed after negotiations with the employees – or at least that the views of employees on the firm’s strategic HR plans will be made known to the firm’s manager prior to the implementation of these plans (Christensen, 2006, 38). Employee relations practitioners could also identify the threats/ problems in the employee relations in the organization; measures could be taken prior to the development of the problem across the organization, b) mechanisms should be established in the firm ensuring that the resistance in changes suggested in the workplace will be kept at low levels (Dicker, 2004, 22) – referring not to the limitation of the employees’ freedom to state their opposition to managerial decision but to the establishment of procedures through which employees will be informed on the firm’s key strategic decisions; in this way, the employees will be able to evaluate the necessity of the firm’s strategic decisions and decide to act accordingly and c) alternative methods for the employees to express their opposition to strategic business decisions should be developed (Leat, 2007, 23). In this way, it will be ensured that next time that employees need to state their opposition to a specific business plan protests will be avoided; dialogue would be rather promoted. Employee relations in British Airways also need to be improved; specific methods could be suggested taking into consideration the firm’s strategic position and its structure; other factors, like the employee needs and the volume of the workforce should be also taken into consideration when developing the relevant plans (Mullins, 2007, 25). British market is characterized by the strong competition – in all its sectors; the balance between work and payment has been often set under dispute (Crafts et al., 2007, 220). In this environment, the active participation of employees in the development of the HR plans is required – ensuring that disputes in the workplace are avoided. For this reason, the firm’s employees should elect a team of representatives – choosing among them – that will have the power to discuss with the employer the entire key issues related with employees across the organization; the promotion ‘of the objectives of the firm’ (Gospel et al., 2006, 149) and the employees’ needs (Boxall et al., 2007, 96) should be set as the criteria for this team’s decisions. At the next level, a mechanism should be developed for the evaluation of the firm’s current needs in terms of human resources; through this mechanism the position of employees in the organization should be changed – if there is such a need, in accordance with their skills (Torrigton et al., 2008, 63); in other words, a re-allocation of responsibilities should take place across the organization; in this way, the skills of employees could be used more effectively towards the achievement of the organizational objectives. References Alford, R., Friedland, R., 1985. 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Elsevier Mooney, L., Knox, D., Schacht, C., 2008. Understanding Social Problems. Cengage Learning Mullins, L., 2007. Management and organisational behaviour. Pearson Education Torrington, D., Hall, L., Taylor, S., 2008. Human Resource Management. Pearson Education Online sources BBC News, 1 April 2010, British Airways strikes toxic staff legacy, available at http://news.bbc.co.uk/2/hi/business/8597519.stm British Airways, 2010, available at http://www.britishairways.com/travel/globalgateway.jsp/global/public/en_ British Airways, 2010, Community – supporting our employees, available at http://www.britishairways.com/travel/csr-employee-support/public/en_gb CNN, 25 June 2009, Thousands of BA staff agree to pay cut, available at http://edition.cnn.com/2009/BUSINESS/06/25/british.airways.work.free/index.html DNA, 15 October 2008, Jet Airways employees protest against retrenchment, available at http://www.dnaindia.com/money/report_jet-airways-employees-protest-against-retrenchment_1198300 IBN Live, 16 October 2008, Jet Airways reinstates all retrenched employees, available at http://ibnlive.in.com/news/jet-airways-reinstates-all-retrenched-employees/76024-7.html Jet Airways, 2010, available at http://www.jetairways.com/ Jet Airways, 2008, Community Services, available at http://www.jetairways.com/EN/GL/AboutUs/CommunityServices.aspx India Pakistan Trade Union, 2010, available at http://www.iptu.co.uk/content/india_employment_law.asp#5 NDTV, 2008, Jet Airways sacks 1000 employees, available at http://profit.ndtv.com/2008/10/15094029/Jet-Airways-sacks-1000-employe.html USA Today, 2009, British Airways asks employees to work without pay, available at http://www.usatoday.com/travel/flights/2009-06-17-british-airways-work-without-pay_N.htm Read More