Etihad Airlines: Strategic Approaches to Effective People Management - Case Study Example

CROSS-CULTURAL STUDY REPORT ON ETIHAD AIRWAYS Introduction Currently, many businesses are involvedin globalisation activities because of the rapidly increasing business opportunities across the world. In this case, most business managers are trying to establish effective business systems that can ensure they create competitive advantages and a market position that gives them effective returns. With globalisation, one of the main things that businesses are doing is to create a cross cultural work place where all people are free to work and offer their skills without any forms of discrimination. A cross cultural work place is important for businesses because they present themselves as valuing and appreciating all people, which enables them to penetrate and reach markets that they had not reached before (MacLean 2006, 28). For this reason, most business in the airline and other industries re trying their best to ensure that they recruit people from different parts of the world in order to blend in work to give the company competitive advantages. The airline industry has been celebrated across the world for making it possible for people to travel and meet across borders. Many companies have been established with individuals, corporations and even governments in order to take advantage of the vast opportunities that exists in the world’s international travel industry. It is important to note the current wave of globalisation, the need for travelling has become very common and an essential human process for personal social, economic and political factors among others. Etihad Airlines is one of those companies that continue to influence the flight industry in Asia and many other parts of the world. This company is the actual flag carrier for United Arab emirates and conducts its operations from UAE to other countries in Asia and the rest of the world as well. Actually, Etihad Airlines has a great presence in East Asia, Southeast Asia, South Asia as well as in other European countries. This paper examines the issue of cross cultural competence in Etihad airlines, examining how it is influencing it competitive advantages. Etihad Airlines Etihad Airlines is among the two most flag carriers belong to the UAE, alongside Emirates Airlines. The headquarters of Etihad Airways is located in the city of Khalifa, which is close to the city of Abu Dhabi in proximity; the airlines was established in July 2003, by a royal decree but commenced its full operations in November of the same year (Thompson 2013, p. 24). The founders of the airline chose on the work “Etihad,” which is an Arabic word that simply means “union.” Since its inception to date, the company has continued to experience increased growth and development. At present, the airline runs approximately 1000 flights within a week to more than 96 cargo and passenger destinations across Africa, Europe, Middle East, Asia and even in the American continent among others (Thompson 2013, p. 34). To manage all these flights, the company boasts of a fleet of Boeing and 10 Airbus aircrafts. In 2010, the company is estimated to have transported about 10.3 million people, which was a 23 % increase, compared to the previous year; in the same period, it recorded about US US$4.8 billion in terms of revenue, having about US$42 million in terms of the net profits (Thompson 2013, p. 47). Currently, Etihad airlines is ranked in fourth position in terms of the largest airline company in the Middle East, while in the United Arab Emirates, the company is ranked in second position, after Emirates airlines that is based in Dubai (Thompson 2013, p. 41). Besides transportation of passengers to different destinations across the world, Etihad airline also runs Etihad Cargo and Holidays as its other subsidiary services. The company’s growth prospects began taking shape in 2011, when it first recorded a net profit of about US$14 million, which was in accordance with the company’s strategic plan that had been announced in 2006 by its executive officer by then, James Hogan (Thompson 2013, p. 72). In December the same year, the company made an official announcement that it had acquired about 29.21% stakes in a Germany Company, air Berlin, which was had been ranked the sixth in terms of largest airline in Europe. During this time, James Hogan was appointed to be the airlines Vice Chairman (Thompson 2013, p. 81). During the air show in Dubai in 2013, Etihad Airline gave a public announcement that it was going ahead to acquire approximately 33.3% stakes in another European high performing company, Darwin Airline, which is a Swiss carrier. At the start of 2014, Darwin Airline received a new rebranding; changing its previous brand to Etihad according to the agreement arrived at in 2013. In 2014, the company decided to venture further in its growth and expansion strategies by taking by agreeing on a 49% stake in Alitalia, which is among the largest carriers in Italy, coming at an estimated cost of €560 million. This deal was sealed in August of 2014 with Italia CAI officially changing its particular operations to Alitalia, which is a new entity in the market in which Etihad airlines has a 49% ownership, with the remaining 51% being taken by other shareholders, Alitalia CAI. Strategic approaches to effective people management For a long time, the success of organizations has been found to be dependent on effective and reliable systems and methods of people management. At the same time, the central focus on this strategy is the organizations’ human resource management strategy. This strategy is always expected to make an alignment of the particular human resource practices in the organizations’ wider objectives. As far as the airline industry is concerned, the need for human resources is always seen in the way, companies attract new clients from the services that they offer, many people always prefer using flight companies that have workers who understand and love their job, they are always available to answer their questions and other issues that often come up. It is important to realize that the success of service industries often relies on the manner in which the company’s human resources portray their professionalism in articulating their particular responsibilities at the work place. For this reason, effective HRM strategies have to ensure that they create effective virtual teams, highly fragmented worked groups, sub-contracted labor as well as effective delivery structures especially for multi-organizational projects. Cross-cultural Human Resource Management issues As soon as the world ushered in the 21st century, the concept of globalisation got accepted as an important step that would steer organizations into success across borders. In this perspective, globalization became an important dimension by which companies would market themselves in new markets and exploit the opportunities therein. Many companies started rushing to cross border in order to increase their customer base and market share. The emerging companies started exploring how other multinational companies were succeeding and managing the complex aspect of management. Currently, the market has come to be described as the global market, which means that customers are being shared by companies and other business organizations from across the world. In this new context, the global market has been the cause of increased opportunities for multinational businesses and profits. However, amidst all these advantages, globalisation has also been bringing many challenges on these companies, prompting the need for effective research to devise strategies that can make them successful in their functions. In the face of increased competition, international companies, in their bid to survive and increase their market share needs to devise strategies they can use to strengthen themselves from within. One of the things that these companies need to have a proper focus on is effective people management that understands the diverse cross-cultural issues. Additionally, in the current international business world, the knowledge and capabilities that are incorporated in effective human resource management are very significant towards the success for local and international businesses. Generally, effective human resource management holds an important stake towards the growth and success of institutions and business organizations. This is because; businesses have come to realize that people are the most essential resources that any business should have; without people the management function of the business cannot function even with the best strategies for production and service delivery. Following a rapid growth in business globalisation, workforces in businesses and organizations are fast becoming multicultural and diverse. In this perspective, managing the global work force has become a force that exerts huge pressure on human resource managers in an effort to acknowledge and adapt to the diverse cultural differences that exist at the work place (Namaki 2008, 57). Human resource managers have had to realize that in their management, they need not to ignore these complex issues because they can result in a cross-cultural misunderstanding that can be costly to the business in both the short and long run. Following the increasing significance of establishing economies in the wide business environment, human resource management is faced with an increased difficulty towards establishment and management of effective cross-cultural relationships in their work place (Namaki 2008, 72). Creating a workplace that understands and respects the cross cultural differences in multinational has become an important source of competitive advantage. In this regard, human resource managers in international businesses have been devising strategies and approaches in which they can achieve and manage this global concept. Cultural behavior at Etihad Airlines Generally, the work place has often been seen as an area that comprises of many forced relationships. This is because; people from different cultural backgrounds often find themselves having to share their resources and a common workplace (Carr 2004, p. 43). Under normal circumstances, the process of creating social circles often happens on voluntary basis; in this perspective, people often decide on their acquaintances and friends by conscious choices. Additionally, they often decide on whether to terminate or carry on with certain relationships that they find pleasing in various ways (Hutchison 2013, p. 55); however, when it comes to the workplace, this dynamism does not happen. People are expected to work effectively within the existing organizational culture. Etihad Airlines has risen to become a global company that does not operate in the United Arab Emirates alone but it’s a global airline, operating in many destinations across the world (Balakrishnan & Jayashree 2011, 32). At Etihad airlines, the need to succeed in these diverse destinations ahs meant that people from different backgrounds and ethnic cultures be employed to steer the company to its growth and development (Balakrishnan & Jayashree 2011, 34). Employing people from different places globally is important because it helps the company to penetrate those markets and increase their market share. It is important to realize and acknowledge the kind of cultural diversity that exists at Etihad Airlines. Currently, Etihad Airline employs more than one thousand people from different cultures that come on board to work in the company’s prevailing organizational culture (Carr 2004, p. 65). Most of these people are often exposed to different unfamiliar practices and cultures they may not have been used to according to their cultures, however, the company’s human resource department ensures that these people are well inducted and made to appreciate the kind of organizational culture at the company (Hutchison 2013, p. 69). The department has developed different ways and strategies by which its human resources are trained to fit within the company’s systems. As far as international human resource management is concerned, organizational culture can be described as the set comprising of set beliefs, norms and values as well as different dramatized events and personalities that symbolize the unique attributes of a particular organisation. These set offers the context for effective action by people working in such an environment. At Etihad, human resource functions ensure that all these factors that make up an organizational are effectively checked on in order to ensure that all people in the organization discharge their duties in the most effective way (Balakrishnan & Jayashree 2011, 37). It is important to acknowledge the fact that values and beliefs are simply words that appear frequently in various definitions while norms can best be taken to mean the traditions, authority framework or the kind of routines that exist in the organization. At the work place, especially in an international airline like Etihad, this culture and related attributes make up the experiences, which every employee being recruited at the company brings on board. At Etihad Airlines, all the employees have one main mandate, to work together in order to achieve a common goal, which is steering the company to growth and success by increasing its market share (Balakrishnan & Jayashree 2011, 39). When the goals of an organization are seen to be specific, the particular organizations often tends to take on their own lives while gaining other values, beliefs and developing practices that hold a stake in their failure or success. The work of the human resource in these contexts is to create an effective distinction of these belief systems, which are then referred to as corporate or organizational cultures. At Etihad Airlines and in any other multinational company, culture refers to a behavior that develops whenever a group begins to work together. This behavior is often unwritten and unspoken, as well as the rules that guide its operation (Ciulla 2007, p. 42). This kind of behaviors can also be understood as the manner in which people carry out their different activities in various places and sets the context within which people make judgments about the appropriateness of their actions and behavior. Reinforcing cultural behavior at Etihad Airlines In the face of globalisation, Etihad has had to ensure that it creates effective systems and strategies in which it can handle the cultural diversity in its workplace, following the increasing need for employing people from diverse cultures (Balakrishnan & Jayashree 2011, 87). The human resource department at the company has been using appraisal programs in order to assess and manage the different issues and complexities that its human resources face. Additionally, the company ensures that it conducts regular trainings to its employees on ways of managing the cultural diversity at the company. In this approach, the new employees find it easier to cope and fit in the cultural diversity, working collaboratively with their fellow employees from other professional and cultural backgrounds (Carr 2004, p. 69). Additionally, through different career development programs like team building, Etihad Airlines has managed to reinforce its organizational culture and diversity among its staff, who have always responded by executing their efforts to their full potential to enhance the company’s growth and success. Generally, organizational beliefs are known to have the capacity to influence the kind of work practices that take place at the work place, including the philosophical stances and communication practices among the organization’s employees. In many multinational companies, an organizational process referred to as “socialization” helps new employees to effectively adapt to the kind of organizational culture at the work place (Carr 2004, p. 93). When the employees fail to have an effective adaptation, then pressure is increased co-workers and supervisors who are deemed to be better acculturated. In such a perspective, the employees can become isolated at the work place, causing them to move away or discharge their duties ineffectively (Ciulla 2007, p. 59). This realization has made the human resource department at Etihad Airlines to actively engage new employees in finding out their views about their experiences at the company in order to make the work place conducive for them. Conclusion In conclusion, it is important to acknowledge that organizational culture has the capacity to unquestionably influence the kind of behavior exhibited by human resources at the work place. In this perspective, the kind of performance expected from these employees is also affected. The fact that human resources hold a great stake in the growth and success and performance of the company should promote the human resources department to keep abreast of any strategies and approaches that can be adopted in order to increase the effectiveness of these employees. Etihad Airlines has managed to establish itself as one of the greatest and most successful airline companies because of effective strategies and approaches for employee development and success. By developing an organizational culture that acknowledges and nurtures cultural diversity, the airline has been effective in achieving its development goals and objectives. Bibliography Balakrishnan, M., & Jayashree, P. 2011. Etihad contributing to the UAE vision through emiratisation. Emerald Group Publishing, Bingley. Carr, S. 2004. Globalization and culture at work exploring their combined glocality. Kluwer Academic, Boston. Ciulla, J. 2007. Honest work: A business ethics reader. Oxford University Press, New York. Hutchison, E. 2013. Essentials of human behavior: Integrating person, environment, and the life course. SAGE, Los Angeles. MacLean, N. 2006. Freedom is not enough: The opening of the American work place. R. Sage, New York. Namaki, M. 2008. Strategy and entrepreneurship in Arab countries. Palgrave Macmillan, Basingstoke England. Thompson, R. 2013. A celebration of Dubai aviation. MEED, Dubai, UAE. Appendix: Sample questionnaire that was used by the senior managers in examining their experience with Indian workers Personal Information 1. Name ……………………………………………………………………………… 2. Designation in the company ……………………………………………………… 3. Year Employed ……………………………………………………………………. 4. Previous positions held ……………………………………………………………. Company Information 1. How many staff do you have in your department …………………………….. 2. How many nationalities are represented among in (1) above ………………… 3. What are your views about having staff from different cultural backgrounds? ……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………. 4. Are there any advantages that that the company derives from having cross-cultural staff? ………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….. 5. How many Indian employees do you have? ......................................................................... 6. How would you rate their performance in the company? ………………………………………………………………………………………………………………………………………………….. 7. What strategies do your employ in ensuring that these staff understand the organizational culture after hiring them? …………………………………………………………………………………………………………………………………………………………………………………………………………………………………….. 8. What measures does the company employ in maintaining the welfare of these cross cultural staff? …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….. 9. Comment on the prevailing organizational culture at the work place and how it can be improved to help cross cultural staff? ………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………. 10. Any other comments? ………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… Read More