Outsourcing.
Outsourcing is where organisations use external providers for those activities that are either non-essential or demand an injection of management resources and capital. This allows the organisation to focus more on the core of the business operations (Dessler et al 1999). Outsourcing is extremely important where HRP is concerned. It can be used as a strategy when skilling of resources will be expensive and time consuming and it can also make forecasting easier if the organisation knows that activities can be successfully outsourced (Dessler et al 1999).
Globalisation.
The implications of globalisation on HRP are huge. Organisations have moved from being local market organisations to expanding across the world (Dessler et al 1999). The results of this on organisations are seen mainly with their employees and the staffing structures needed to run a more complex operation (Dessler et al 1999). Emphasis needs to be placed on ensuring employees have global experience and employees actively encouraged to know at least one other language (Dessler et al 1999). Employees also need to have more flexibility and mobility within the world. Globalisation has a major impact on local employment opportunities and conditions; with globalisation organisations are able to move their productions to different countries which have lower labour and infrastructure costs (Human Resource Management Study Book).
Technological Development.
Technological development has changed HRP drastically, especially in recent years. Technology has increased so far and so fast in just a few years that organisations need to employ staff with a hight level of technical understanding and this generally means employing staff which are highly skilled or tertiary educated. This leaves little or no room for the less skilled and less educated (Human Resource Management Study Book). The growth and sophistication of communication and information technology has changed the types of positions, and the hierarchy within organisations, with authority now coming from the more skilled and knowledgeable employees (Human Resource Management Study Book).
New Organisational Structures.
Organisations are changing their structure to keep up with the pace of the new external environments. Organisations have to adapt to a changing market place and constant pressure for innovation by established alliances and networks both internally and externally from the organisation. Employees are now bought together in cross-functional teams which then separate once the goals have been achieved (Human Resource Management Study Book). Networks and alliances are formed to give the organisation access to outside skills and knowledge (Human Resource Management Study Book).
Casualisation and the Service Sector.
As organisations change from manufacturing to knowledge based businesses and the service sector, the workforce has needed to become more flexible and efficient (Human Resource Management Study Book). The increase of technology and telecommunications has created a more flexible workforce, which includes casual and part-time employment (Human Resource Management Study Book).
The increase of employment within the service sector has also meant an increase in casual employment which leads to a lower level of unionisation. This leads to changes being required with HRP where modifications are required in payment, training and working conditions (Human Resource Management Study Book).
Environmental Issues Affecting American Airlines and Southwest Airlines.
The environmental issues affecting American Airlines appear to arise from them being a more traditional organisation and they do not seem to be moving with the times. The first area of concern for American Airlines is the use of lower paid pilots to fly the new regional jets. The older pilots are being threatened by this form of outsourcing and advance in technical development. The older pilots also dislike the erosion of their authority by the company dictating which types of aircraft they can and cannot fly. This is also a technological development issue. American Airlines does have some positive sides to its technological development. It has developed yield management and frequent flyer programmes to keep up the times and offer a better service.
Southwest Airline’s environmental issues look more positive as the organisation seems to be far better prepared for the future. The HRP has been analysing and targeting any foreseeable problems. There doesn’t seem to be any hierarchy problems with the pilots since all the pilots fly the same modern aircraft type. The service quality seems to stem directly from the CEO who is very customer orientated, and he hires his staff with that in mind; which could come under the workforce diversity issue. The CEO is more interested in the employees’ qualities rather than their education, which may have an impact on their technological advancement in the future. Without the more skilled employees the management structure could still be seen as more traditional and the organisation structure has yet to change.
The Importance of Strategic Human Resource Management.
Strategic human resource management (SHRM) is the approach to managing people which seeks to achieve competitive advantage through strategic development of a highly committed and capable workforce (Appleby 2000). This means that the HRM section within the organisation needs to understand where the organisation is heading and link its own goals and strategies to those overall goals and strategies of the organisation (Human Resource Management Study Book). By linking the goals the organisation can improve business performance and develop organisational cultures that foster innovation and flexibility (Dessler et al 1999). This provides a competitive advantage through proactive integration of staff and business goals.
The importance of Employment Relations.
Dessler et all (1999) states that Employment Relations (ER) is the theory and practice of managing the employment law. Employment law deals with all aspects of the common law and state law affecting the employment relationship (Dessler et al 1999).
To increase the desired length of the employee/employer relationship organisations must progress from a high turnover, no long term goal organisation to a long term investment organisation that strongly supports both recruitment and retention. This kind of organisation provides recognition and provides rewards for productivity, output and achievement (Gautschi 1999). By keeping employees and employers happy we reduce the amount of involvement of employment law and unions.
Virgin Blue’s engineers were threatening strike action due to the change of aircraft pre-flight checks from being performed by engineers to pilots. The engineers argued that there were safety concerns caused by pilots doing the safety checks. The engineers bought in the Australian Licensed Aircraft Engineer Association as their union to argue for them as part of the employment law relationship, whilst the Civil Aviation Safety Authority (CASA) checked proceedings and concerns (The Australian 07 March 2003).
The Importance of Recruitment.
Recruitment is the process where potential new employees are informed of the opportunities for them in a particular organisation, their interest in that organisation is stimulated and their application for a vacant position in that organisation in encouraged (Human Resource Management Study Book). The purpose of recruiting is to maximise the pool of job applicants, help increase the success rate of the selection process, help reduce the probability of a new recruit leaving the organisation after a short period of time, meet the organisations legal requirements, start identifying potential job applicants, increase organisational and individual effectiveness and provide feed back to the organisation (Human Resource Management Study Book).
American Airlines and Southwest Airlines Practice in SHRM, ER and Recruiting.
American Airlines shows little SHRM, there doesn’t seem to be any real collaboration between the CEO and the HR department. This problem is mainly due to the CEO and not the HR department. The CEO seems to have many problems with the pilots both professionally and non-professionally. The HR department is trying to strategise by outsourcing pilots and increasing their technical development by using new jets, however the HR department had not managed to foresee a problem high enough to cause a 32 month dispute. The pilots no longer have trust in their employers, therefore the organisation and the employees cannot work side by side to create that competitive edge.
However, Southwest Airlines has a trust between employee and organisation that can give them that competitive edge. This can be seen when the employees took a pay cut during a fuel price increase to help cut costs. The CEO has tried to create an employee friendly policy; the CEO sees his employees as a family, whose birthdays and anniversaries are as significant to the company as their work related accomplishments (Bisoux 2003).
Recommendations.
American Airlines need to look very carefully into its SHRM. There is little or no trust from the employees. If this is not rectified this will only cause more problems in the future and they need to take immediate steps to regain employee trust. Southwest Airlines needs to look at its recruitment. Its policy of recruiting by personality and the ability to give good service (rather than just by qualifications) is commendable. To ensure they do not face the future with a shortage of employees that have sufficient technical knowledge and skills they need to ensure they have a balanced recruiting policy and a good in house training system in place.
Conclusion
This paper has looked at the different aspects of HRM. It has looked at the importance of HRP, SHRM, ER and recruiting. The paper has given examples and recommendations where the two airlines can improve to crease a stronger and more trustworthy working environment to give them a competitive advantage. An organisation’s HRM strategy will have significant impact upon its success (Gautschi 1999).