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Mpo Assignment Rageshkumar 2019hb58032
Mpo Assignment Rageshkumar 2019hb58032
MBA ZG 515
RAGESH KUMAR M S
ID: 2019HB58032
FLYING LOW
‘FIGHTER’ PILOTS?
IA’s eight unions were notorious for their defiant attitude and their use of
unscrupulous methods to force the management to agree to all their
demands.
Strikes, go-slow agitations and wage negotiations were common.
Each had a different reason, but every strike was about pressurizing IA for
more money.
From November 1989 to June 1992, there were 13 agitations by different
unions.
The strategies adopted by IA to overcome these problems were severely
criticized by analysts over the years.
Analysts noted that the people heading the airline were more interested in
making peace with the unions than looking at the company’s long-term
benefits.
TROUBLED SKIES
Frequent agitations were not the only problem that IA faced in the area of
human resources.
There were issues that had been either neglected or mismanaged.
Various allowances such as out-of-pocket expenses, experience
allowance, simulator allowances etc. were paid to those who were not
strictly eligible.
Excessive expenditure was incurred on benefits given to senior executives
such as retention of company car, and room air-conditioners even after
retirement. All these problems had a negative impact on divestment
procedure.
Privatization was expected to give the IA management an opportunity to make
the venture a commercially viable one.
Freed from its political and social obligations, the carrier was expected to be
in a much better position to handle its labour problems.
The biggest beneficiaries would be perhaps the passengers, who would get
better services from the airline.
stand?
after the sector was opened up for the private players. Evaluate IA’s
Answer
The Air Corporation Act was repealed in the year 1994, thus throwing the
aviation market open to private players.
Corporate houses entered the fray to milk the large opportunity available.
As a result, Indian Airlines witnessed mass exodus of its pilots to private
airlines.
Indian Airlines had to face the heat of the open market competitors and
consumer expectations.
To gain competitive edge Indian Airlines launched a new image building
advertisement campaign.
Emphasis was put upon the improvement in services both in-flight and on-
ground and flights strictly adhering to schedules.
New flights with younger and dynamic crew were also launched to attract
consumers.
As a result of the above effort Indian Airlines could garner 17% increase in
passenger revenues during the same year.
Meanwhile the other competitive player provided better services and networks
on offer for consumers.
Failures in Competition
The airline failed in its image rebuilding initiatives where in the contributing
cost of the human resource spiralled out of tolerance levels.
The inefficiencies and expenditures were attributed to the organisations
growing losses.
Staff cost increased alarmingly to Rs 5.9 bn during 1994-98 period.
Although many private companies were vanquished, those which went on to
eat up IA’s market share.
This was evident by the fact that in 1999 IA’s share was 47% where as that of
private airlines was of 53 %.
These failures could also be attributed to the unnecessary interference by the
civil aviation ministry which neither had the necessary competence or
expertise to take intricate decisions.
The decision making interference ranged from deciding on the crew’s quality
to major technical decisions.
More than required beaurcratic involvement in the organisational affairs was
responsible for the failures.
Answer
It is true that IA’s human resources problems were due to its poor human
resource management policy.
Recurring human resource problems were attributed to its lack of proper
manpower planning and underutilization of existing manpower.
Employee unions were infamous for resorting to unscrupulous methods on the
slightest pretext and arm-twisting tactics to get their demands accepted.
In turn, the management of the airline was more interested in making peace
with the unions rather than looking at the company’s long-term benefits.
Mounting wage bills as a result of the many employee wage friendly schemes
depicted the simplistic approach of the management.
Improper monitoring by management and abuse by employees of the
Productivity linked incentive scheme reflects the inefficient functioning.
Uncontrolled increase in the number of employees and the number of surplus
and redundant posts with maximum number of employees per aircraft.
This abnormal increase in staff was attributed to inefficient manpower
planning, unproductive deployment of manpower and unwarranted increase in
salaries and wages of the employees.
The recruitment and creation of posts were done without proper scientific
analysis of the manpower requirements of the organization.
In place of 6 directors in departments there were 9 directors.
In total there were 30 full time directors, who in turn had their retinue of private
secretaries, drivers and orderlies. These were superfluous staff that just
added to the organisation’s bill.
There were no basic educational qualifications or job specification prescribed
for senior executive posts.