Virgin Blue Airline Human Resource Management - Case Study Example

Virgin Blue Airline HRM Report Name: Institution: Table of Contents Introduction 3 Human Resource Challenges 4 Part 2 5 Virgin Blue HR Practice 6 The Virgin Blue Airline HR objectives 6 Theoretical Expectation 10 Conclusion 12 References 13 Appendix 14 Introduction This research seeks to identify human resource involvement in the Virgin Blue airline services and analyze the ultimate success of this Virgin Blue airline in the recent years. The Australian Virgin Blue Airline was first introduced in 2003 after the fall of Ansette Airlines (Pate, 2006). The airline is also known for low cost carriers’ services on both domestic and foreign fleets. The company was first found by Richard Benson a business entrepreneur. The success behind virgin blue airline is driven by a brand that posses a superior imagination, flair and business expertise which allow the airline to stand out as one of the top airlines worldwide. Virgin Blue is a flagship carrier of Virgin Blue Airlines Group which comprise of Pacific Blue, Polynesian Blue and V Australia. The airline reports indicate that the airline controls more than 31% on the domestic market under the modern fleet of Boeing 737-700 series. In addition, the Embraer E190 and E170 E-Jet aircraft operates an estimated average of about 3000 flights every week among 28 Australian cities. Virgin Blue’s annual passenger figures exceed 18 million travelers. The airline has retained its evolving business strategy of keeping its promise to serve its traditional leisure base, hence becoming more relevant to the corporate market. The firm has an innovative human resource practices and internal branding exercise. The virgin brand covers over 200 privately held companies. The founder extended the virgin brand to diverse and serves distinct businesses. Considering the diversity to new unrelated areas virgin’s creative human resource management and leadership values plays a key role towards maintaining a core brand values (Harvey, 2006, pp. 64). Human Resource Challenges The airline operates a number of IT based systems in various functions. The system is used in pointing out possible solutions that serviced specific need and price point within the airline. This was used for several years. However, these systems were not interpreted to generate a detailed business intelligence reports required in providing action able business insights for managers. Instead, the airline staff had to Develop base information from each system Re-enter information into the spread sheets Create and format airline information in the spreadsheets Considering time and energy employed by the airline’s workforce, the process was intensive and prone to error (Harvey, 2006, pp. 93). It is also noted that the large volumes of data collected lengthened the processing times a situation that affected availability of information needed by management purpose. In order to accurately track operational information that is useful to both investors and the airline management team. The airline’s human resource team at virgin Blue needed a central data collection point in conjunction with an improved BI solution, responsible in providing automated reporting systems in order to effectively and efficiently support its continued growth. The airline management entered into business partnership with Catapult BI. This business strategy was selected essentially in helping the airline workforce provided with a suite of standard sales reports, while improving access to ad hoc analysis and generating a single virgin Blue data warehouse (Pate, 2006, pp. 78). The airline human resource management went further and provided oracle and business objects, particularly the Cagnos a potentially integrated data reporting tool was selected to easily integrate data in the airline data warehouse while improving its ability in providing an enhanced robust processing performance. Reports from the sales operation department confirms that Catapult BI demonstrated deeper understanding of the airline operations and effectively addressed the needs of the business. Part 2 This research once more focuses on Virgin Blue airline. The report compares Virgin Blue airline to other domestic airlines operating on this same market, servicing Gold Coast, Qantas, Jestar and Tiger Airways (Harrison, 2001, pp. 69). Over the years virgin blue airline’s HR system has had an ongoing research on strategies and competencies applied in the operation system of the airline, which is useful in differentiating business performance of the airline from that of their market rivals. Air travel has changed the way people and business live, work and experiences the world in today. This industry remains a strategic division which plays a funder mental role across the globe, considering that this industry promotes tourism, global trade, foreign investment and hence promoting economic growth. On the contrary, all airlines within the industry operate in a highly dynamic atmosphere where various legal, social, technological and economic forces interact with each other, and thus influence decision made. The success of this airline cannot be associated, with low-fare, point-to-point carrier and frequency alone, but rather this can also be referred to its well established HR practices were nurtured by its long term leader Richard Benson. He developed a culture aimed at achieving fun and employee satisfaction. He also delivered numerous employee orientated organizational practices, training and motivational programs. His fun loving way of treating employees and his charismatic leadership qualities makes him a supreme hero driving the airline management strategies to a different level, in an industry that calls for determination and total commitment, for the business to remain competitive in the market. Virgin Blue HR Practice Virgin Blue airline is known for its innovative breakthrough as a front player in delivering lower-fare and quality service for Australian domestic flight. Its human resource is known for its unique culture and innovative HR policies (Wallace, 2006, pp. 79). HR practices at Virgin Blue are named ‘people operations’ which are designed to underline the fact that is not a mere administrative function but rather is established to build a strong employee-employer relationship. Virgin Blue’s HR practices clearly reveal impressive results of the airline’s approach. This has helped the airline in increasing employee productivity, this explains the discussion on whether Virgin blue airline is the ‘best place to work for’ culture at this airline remains attractive and motivates employees creating a business motive in realizing the airlines objectives. The Virgin Blue Airline HR objectives To analyze how employees help the airline in differentiating its services and itself from its main competitors in the airline industry To analyze how the airlines attract the best-knowledge workers and retain employees in a competitive environment. To develop and maintain an innovative HR practices and create a reputation and airline image of ‘best place to work for’ a Virgin Blue culture To evaluate the future implications of the airline’s HR practices in the long run. Virgin Blue Employee as a Brand The HR system has established a culture within Virgin Blue airline were human resource are viewed as a source of competitive advantage. In a span of two years Virgin Blue Airline has emerged as the air transport solution powerhouse within the region, the lower-cost travels and more importantly the airline attributes this success to is extraordinary innovative and most valuable assets, the Virgin Blue airline employees. Since its inception, the company has predominantly hired only best talent within the airline industry. The HR at the airline prefers hiring creative personnel rather than experience. For several years the airline human resource practitioners has constantly strived to attract, employee and retain bright and inspiring employees. The airline focuses on motivating its employees through creating a challenging yet fun-filled working environment coupled with array of perks ranging from free food among other employee stock options. In order to foster creativeness among the airline workforce, Virgin Blue management has adopt. The airline industry across the world has been in a restructuring process. More importantly the human resource has been mostly affected in the process (Huang, 1999, pp. 58). The entry of low cost carriers such as the Virgin Blue airline, this according to report in the industry has influenced market performance, considering that the low cost carriers’ entry is responsible for an estimated 26% of air traffic, up from a rated that is below 10% in less than ten years. The low cost carrier continues to gain market share, where the airline industry is reported to have increased from 2% to 7% between 1999 and 2002 and this trend is reported to be expanding steadily. The entrant of Virgin blue airline and Tiger airline in the Australian market build pressure on the response of the legacy carriers attracting a combination in shaping the future of employment relations within the industry. Australia has three main domestic airlines. These include Qantas, Virgin Blue and Jetstar operating from Coolangatta Airport. Among the three airlines Virgin Blue airline has consistently prevailed over several challenges and has emerged successful. The timing of Virgin Blue airline in to the Australian market can be considered fortunate as the airline services timely filled the gap that had been created by collapse of Ansett airline way back in 2001 (Pate, 2006. Pp. 39). The Qantas dominated the Australian market, while entrance of Virgin Blue was viewed to be a potential threat, as the Assett’s failure made it possible for Virgin Blue to grow fast, becoming the Australian second domestic carrier, rather than just a lower price alternative in the industry, considering that this is one industry where airlines face severe financial distress due to oil crisis, recessions and issues of insecurity due to terrorism attracts (Boxall, 2003, pp. 28). The Virgin Blue airline is reported to have grown rapidly and prospered over a short time. The airline is reported to have developed cheaper traveling services attracting, families traveling who choose to travel short distance by air rather than spending multiple hours while using either rail or road transport. The airline offers their customers short, frequent, low-priced suitable flights, a service that is not offered by either of her competitors. However, introduction of this service sends a clear message to the airline’s immediate rivals, who can easily imitate and hence the airline lose off its competitive advantage (Pate, 2006, pp. 57). Regarding the rise of competition brought about by new airlines entrants, for example Tiger Airways strategic human management concept has to be effectively being put in place in order to succeed. The need to asses its competitive environment and identify key factors that has influence over the action taken (Alamdari, 2005.pp 45) Virgin Blue airline approach to labor and employment relations are reported to have adopted a highly unionized and offers wages that are more competitive compared to immediate rivals in market. Baney and Hesterly (2006), argues that SHRM theories are based on set of identified assumptions and hypothesis describing how competition in any given field is likely to evolve and further explain how the identified changes can be exploited to earn profit. Virgin Blue airline is no different from this, as it is developed to realize set standards of the organization. The firm has greater assumptions and hypotheses accurately reflect on how the organization gains a competitive advantage from implementing the set strategies. However, if the identified assumptions and hypothesis turn to fail, the strategic human resource management concepts developed by Virgin Blue airline are the source of competitive advantage. Huang (1999) confirms these sediments. Huang agrees that there is an extremely close link between business strategies and human resource management applied methods. He further argues that companies that closely involve and coordinate their business strategy and HRM activities achieve better performance than companies that fail support this concept. Considering Virgin blue airline success in Australian air transport industry, there are a number of factors contributing to the success of this business. Virgin blue’s success cannot be solely be associated to physical quality of the airline resources or even technology that significantly counts, but rather the people and skills employed also makes the difference. According to Wallace (2006, pp. 337), human resource management refers to the policies, practices and system influencing employees’ behavior, attitudes and ultimately influence employees performance. Wallace in his works argues that it is this understanding defines the competitive advantage organization gain from differentiating their workforce service to the business. Virgin blue’s HRM system involves efficient and effective measures in handling issues of employees particularly in areas of recruitment, training, employee development and managing diversity within the Virgin business Brand (Botten, 1999, pp.74). The airline is accused of discriminating against old employees. The Human resource management policies developed within it operation defines the Virgin Blue flair in employment. However, this practice has helped that business achieve its objectives through developing knowledge and skills their employees. It is also, reported that this practices is responsible in driving the virgin business, as the quality of its human resource influences organizational ability enabling the business to easily adapt to changes within the Virgin blue airline working environment. Baney and Hesterly (2006), defines this competitiveness as the needed ability for maintaining and gaining market share within the industry. Over the years the human resource of Virgin Blue Airline have in unity worked effectively and efficiently in addressing needs of the customers thereby ensuring profitability on the side of the business while satisfying business shareholders. Theoretical Expectation Virgin blue airline being among the lower-cost competitors in the Australian market, its introduction to the market in this market has continued to be a major driver facing legacy carriers cut on their labor among other costs involving wage, benefit among other strategies. Importantly, Virgin blue human resource management has adopted an effective recruitment strategy which assumes recruiting candidates who posses high skills. Basing on Boxall and Purcell (2003) argument, they believe that recruiting candidates with inappropriate skills may prevent or even stall organizational growth. The Virgin blue human resource management attempts to attract highly skilled candidates by attracting highly skilled employees through promoting the airline as a great place, the airline has for years consistently follow a set of HR and labor relations strategies creating high rank of employee fulfillment, dedication and involvement in productivity earned through enhance behavior (Kochan, 2005). The airline is driven by a human resource team that has ever remained sensitive and positive to labor management relation which is indicated by a speedy and reduced level of conflict witnessed due to employee collective bargaining. While Virgin Blue continues to develop their strategies, the gap between Virgin Blue’s labor costs and other carriers has closed in considerably. This effect puts Virgin Blue at almost same level other legacy carriers within the Australian market. In the world airline industry, successful international carriers adopt different business level strategies in facing competitive advantages. These can further be classified into two groups. These involves growth strategy and standard Competitive strategies, according to Harrison and Harvey (2006, pp. 122) , growth strategy will primarily involve both airline in-house issues and external expansion of the airline or any given organization, with stability whereas that competitive strategies dwell on the cost leadership, differentiation and focus, a case that well illustrates Virgin Blue airline leadership. The Virgin Blue airline business strategy deals with decisions and an action concerning each business unit, the concept is adopted by the Virgin Blue airline HR practices to strengthen their competitive in the marketplace (Harrison, 2001, pp. 39). These competitive challenges arise within this industry and can be explained by rising trends of recession, privatization, market congestion and availability ever adjusting technology. These calls for airline management, particularly the HR practice to adopt range of strategies that are significant and create competitive advantage. Conclusion Competitiveness in the airline industry depends majorly on size, market share and geographical coverage. The Virgin Blue airline gained from globalization concepts despite its main target market being domestic services flight. The airline has extended its geographical routes covering a wider and range of regions in Europe, America among other geographical regions. The Virgin Blue airline management has been keen on maintaining already established ‘Virgin’ brand, with a considerable focus put on strengthening a globally accepted brand image, quality and customer service. With this in mind the HR at Virgin Blue airline and leadership in general introduced cost control measures essentially in improving efficiency. This has radically changed the airline industry market not only in Australia but rather across the globe, in different market segments. HRM principles and technologies are proposed to offer successful strategies in securing organizational objectives. This according to Huang introduces a cost efficient system, substantial reduction of workforce level, new operational practices and income control, a situation that triggers reduced productivity and due to reduce employee morale. References Alamdari, F. A. (2005). Impact of the Adherence to the Original Low-Cost Model on Profitability of Low Cost Airlines. Transport Review , Vol. 25, no. 3, pp. Botten, N. A. (1999). Competitive Strategies for Service Organisations, Hampshire, Macmillan Press Ltd. Hampshire: Macmillan Press Ltd. Boxall, P. (2003). Strategy and Human resource menegement . New York : Palgrave Macmillan . Harrison, J. A. (2001). Foundations in Strategic Management . New York: Ohio Thomson Learning. Harvey, G. A. (2006). Employment Relations, Management Style and Flight Crew Attitudes at Low Cost Airline Subsidiaries: The Cases of British Airways/Go and bmi/bmibaby. European Management Journal , Vol. 24, no. 5, pp. . Huang, T. (1999). The effects of linkage between business and human resource management strategies. London: MCB University Press. Kochan, T. A. (2005). Airborne Distress: How Can Labor Recover in the Airline Industry? New Labor Forum , Vol. 14, no. 2 (Summer), pp. 39. Pate, J. M. (2006). The European Low Cost Airline Industry: The Interplay of Business Strategy and Human Resources. European Management Journal , Vol. 24, no. 5, pp. Wallace, J. S. (2006). Industrial Relations Conflict and Collaboration: Adapting to a Low Fares Business Model in Aer Lingus. European Management Journal , Vol. 24, no. 5, pp. 338. Appendix HR – Human Resource SHRM – Strategic Human Resource Management Read More