Culture In 2009, Air Canada requested Ottawa for $200 million as part of their financing plan to come out

of the recession. This money would mainly be spent on labor peace (Dealbook, 2009). Furthermore they allowed an union appointee on its board and agreed on an employee profit sharing program for 2010. Why did they do this? It was necessary as Air Canada faced labor problems for a long period. The employees and management had different dominant values and didnt share the same values and beliefs. The CEO Rovinescu wants to give the staff more decision making power but he acknowledges that changing the corporate culture is a gradual process (Jang, B., January 2011). This is confirmed by the slides of lecture 6 from the Course ORGS 4350 by Willow Sheremata, which mentions: Organizational cultures are very difficult to change because employees resist changing values and beliefs. However, in February 2011 the Take Off EH! describes in the article Can Calin Rovinescu Overhaul Air Canadas Culture? that Air Canada had made much progress. The CEO (Rovinescu) credits the employees for this, as they were dedicated to the company and worked hard. Rovinescu further mentioned that the culture is transformed in one of leadership, ownership and entrepreneurship and a comprehensive study proved a 20% increase in employee engagement. Air Canada hopes that rewarding the employees for the current financial success and as recognition for the sacrifices of last year will keep the labor peace. Unfortunately their wish didnt come true. During October 2011 Air Canada was again caught between employees and customers in a labor dispute (Jang, B., 2011 October 10). The union

announced a strike. Air Canada wanted to make a low-cost division and hire new attendants at lower wages. Then they are able to offer bargain fares by chopping labor costs (Jang, B., 2011 October 10). This is strategically necessary. However the current employees feared that this strategic turn will threaten their wage and job security. Air Canada offered job assurances to their employees but still more than 65% rejected a tentative agreement. This clearly shows that the trust in the management of Air Canada is very low. Even the trust in the union leaders is gone, as the 2200 flight attendants signed a petition to oust them. Air Canada just cannot get rid of the culture reflecting their history as a government-owned Crown corporation (Rosenthal, J.W., Bova, F., Thomas, J., 2007). They tried to smoothen the relationship with their employees, however, the bitter dispute has poisoned the well. This makes it even harder for management to reach their goal: improve the corporate culture, according to Raymond James Ltd. analyst Ben Cherniavsky (Jang, B., 2011 October 12). The job uncertainty employees experience is off-putting for your work motivation and will influence customer service. The customer service is also influenced by the strike as there will be lines-up and the management advises against checking in bags (Auston, I., 2011 June). The corporate culture was not focused on customer service, if you compare that with WestJet, they have one of the most admired cultures in Canada (Parkinson, B., 2011 February). The trust customers has in Air Canada could have been affected by only the noise of the possible disruptions, even without a strike really happening, this has affected the bookings and the customer relationships, according to George Smith, a former Air Canada director of employee relations (Marowits, R., 2011 October).

It is clear that Air Canada doesnt have a strong positive culture that could inspire loyalty. It is the other way around and clear that the culture of Air Canada doesnt help their strategy execution. It decreases customer service and cost the company a lot of money because of the strikes and the decrease in bookings because of uncertainty. We would like to recommend Air Canada to change its corporate culture, however, that is what they found out themselves too. But, instead of financial compensation we would like to advise more training and informal activities. This will lead to an informal atmosphere and a better relationship between management and employees. Furthermore in the trainings, the focus should be on customer service and how to implement this in daily work life.

Dealbook, 2009 June 16, Air Canada Asks Ottawa For Emergency Loan, retrieved on 2nd of November from http://dealbook.nytimes.com/2009/06/16/air-canada-asks-ottawafor-emergency-loan/?scp=11&sq=air+canada&st=nyt Jang, B., 2011 January 12, Air Canada catches updraft; CEO Calin Rovinescu gives a behind-the-scenes look at the four hectic months negotiating with lenders, unions and Ottawa that culminated with the airline securing $1-billion, Globe & Mail, retrieved on 2nd of November from www.theglobeandmail.com Parkinson, B., 2011 February 11, Can Calin Rovinescu Overhaul Air Canadas Culture?, Take Off EH!, retrieved on 2nd of November from www.takeoffeh.com Jang, B., 2011 October 10, Air Canada caught between employees and customers in labour dispute, Globe & Mail, retrieved on 2nd of November from www.theglobeandmail.com Rosenthal, J.W., Bova, F., Thomas, J., 2007 October 15, Air Canada, Selling the Company by the Slice, Yale School of Management, retrieved on 2nd of November from http://mba.yale.edu/mba/curriculum/pdf/aircanadacase.pdf Jang, B., 2011 October 12, Air Canada strike called off after Ottawa intervenes, Globe & Mail, retrieved on 2nd of November from www.theglobeandmail.com Auston, I., 2011 June 14, Government Will Try to End Strike at Air Canada, The New York Times, retrieved on 2nd of November from www.nytimes.com Marowits, R., 2011 October 26, Air Canada Looking to soothe labour relations, experts suggests, retrieved on 2nd of November from www.therecord.com