Chapter 1: Company Background and History of AirAsia Bhd

AirAsia Bhd was established in 1993 and began its operations on 18 November
1996. In the year of 2001, Tune Air Sdn Bhd, a company owned by Tony
Fernandes’s, has acquired the airline from DRB-Hicom. The registered office of Air
Asia is in Petaling Jaya, Selangor and its head office is at Kuala Lumpur International
Airport in Sepang, Selangor. Furthermore, Low Cost Carrier Terminal (LCCT) at
Kuala Lumpur International Airpot is the main base of Air Asia, while Kota Kinabalu
International Airport, Senai International Airport and Penang International Airport are
its secondary hubs.

AirAsia is well known as one of the award winning and largest low fare airlines
in the Asia expanding rapidly since year 2001. With a fleet of 72 aircrafts, AirAsia
flies to over 61 domestic and international destinations with 108 routes, and operates
over 400 flights daily from hubs located in Indonesia, Thailand, and Malaysia. Today,
AirAsia has flown over 55 million guests across the region and continues to create
more extensive route networks over its associate companies. AirAsia have faith in the
no-frills, hassle-free, low fare business concept and feels that keeping costs low
requires high efficiency in every part of the business. Through the corporate
philosophy of ‘Now Everyone Can Fly’, AirAsia has sparked a revolution in air travel
with more and more people all over the region choosing AirAsia as their preferred
choice of transport.

Chapter 2: Organizational Structure of AirAsia Bhd

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 Organization structure helps an organization to assign a hierarchy that defines
roles and responsibility. It is the outline that plan who reports to whom and who is
responsible for the position they stand in. In the organizational structure, it is usually
recorded and shared the job titles and the reporting structure. In the organizational
structure, there are some elements that can fulfill the organizational structure such as
departmentalization and decentralization.

AirAsia is a decentralization organization. Decentralization organization is a

systematic delegation of authority at all levels of management and in all of the
organization. The authority in retained by the top management for taking major
decisions and framing policies concerning the whole. Rest of the authority may
delegated to the middle level and lower level of management. Executives and
business owners assign tasks to management and employees, and maintain a very
open communication. In decentralization organization, the problem met will be solve
very quickly, such as customer service problem. When the organization makes
decision then the employees will provide more input into decisions and feel less
estrangement. The decision making is quicker than centralization organization
because of the decision making is together with the lower level worker as multiple
person have the power of decision making. Decentralization is best suited for larger
sized organization such as AirAsia.

AirAsia will use departmentalization as dividing the AirAsia organization into

different departments, which perform the tasks according to the departments’
specializations. Functional structure, geographic divisions, product-based divisions
and teams is the main features in the organizational structure. Functional structure
AirAsia is grouping of activities or tasks based on the functions. For example, quality
and safety department, IT department, commercial department and communication
department. These all features is related with the hierarchy in the organizational
structure of AirAsia. For the geographic divisions, AirAsia also involves in this
division. In this company, there are some geographical division in the world, such as
Indonesia, Thailand, India and Philippines. Each AirAsia group have one manager to
control the organization and they need to report to the CEO of the geographic or the
functional head of the AirAsia. AirAsia also uses the product-based division in the
organization. For example, AirAsia has a division of the flights and provide the
services to the customer. The organization enable focus on the certain service line.

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The team of the AirAsia organization is different use of it. In each of the AirAsia
group, the company has team to provide the goods and service to the customer. The
features of this organizational structures enables provide goods and service to
customer.

According to the situation above, it means that AirAsia is an organic

organization structure. As the organization structure is flatten and the communication
is horizontal and directly across organization rather than vertically between the
manager and their direct reports. In the organization, it is great deal of formal and
informal participation in decision making under decentralization. From this, AirAsia
employees are often found working in the groups and share input on tasks together. It
is a greater scale in the Air Asia because the verbal communication between the
parties is more face-to-face time within the hierarchy of power. The structure in the
AirAsia organization is more adaptable and flexible to changes. The environment of
the job is more freedom afforded the employees and management is better
maintained.

Chapter 3: Organization Culture of AirAsia Bhd

Organizational culture is defined as a set of values, beliefs, perceptions, and code

of conduct that are shared and learned by all members, which create a distinctive
character among organizations (Martins and Martins, 2003). In simple words we can
say that organizational culture is the personality of an organization and, similar to the
personality of an individual (Johnson, 1990). AirAsia also has set up its own unique
and effective culture and there are some characteristics of its own.

3.1 Innovation and risk taking

In AirAsia, organizational culture reflects the personality of CEO and founder of

AirAsia, Tony Fernandes. One of the traits of corporate culture is innovative and risk
taking cultures, which means that a company with strong innovation culture
encourages their employees to take risks and engage in innovative behaviour to
improve their jobs performance. Tony Fernandes uses his innovative thinking to
create a clear mission “Now Everyone Can Fly” which charges the lowest ticket
prices to the customers. AirAsia as a pioneer of low cost model in Asia and was also
the first carrier to work directly with fully ticketless travel. AirAsia has been

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successful in producing automated ticketing processes and to minimize the
operational costs due to its unique culture. Besides, AirAsia culture is more openness
and flat hierarchical which encourage employees to take risks and voice out their
opinions or ideas. Good idea will be proposed by someone and implemented it
quickly because the company has little bureaucracy. It helps to discover talents within
the company and improves the organizational productivity and efficiency.

3.2 People-Oriented

The second characteristic of culture existed in AirAsia is people-oriented

cultures. The cultures which is mostly put a great deal of important on how
management decisions will influence the people within the organization. People-
oriented culture is also more concern about the employees and treat them with respect
and dignity. Tony Fernandes focuses on his employees and believes that employees
are their best asset for great achievement in business. He provides equal opportunities
such as training and development to AirAsia employees who are qualified and
competent to attain higher goals. Other than that, Tony Fernandes is concerns about
the remuneration and well-being of employees. AirAsia provides a competitive
compensation package such as salary and benefits to the employees in order to ensure
that their effort are properly compensated and stay motivated. Toney Fernandes also
believes that the quality work from the employees is one the vital thing to ensure the
airlines perform well. He encourages the employees to pursue their own passions.

3.3 Team-Oriented

The following features of organizational culture in Air Asia is team-oriented

cultures. This means that the work activities in an organization are organized around
teams instead of individuals and the employees tend to have a good relationship with
their colleagues and managers. In AirAsia, Tony Fernandes facilitates a team culture
through providing cross-training to its employees so that they are able to lend a hand
to one another when needed. AirAsia also concentrates on training intact work teams.
Tony Fernandes says that loyalty is an important element which is looked into and
motivates his employees to be always faithful, integrity and work as a team. In this
case, ECOS (Employee share ownership scheme) is made available to all staff of
AirAsia in order to boost loyalty at work.

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Chapter 4: Employee Key Competencies in Air Asia Bhd

Employee key competencies are those traits, abilities, commitments or attributes

that are needed by employees in order to perform their job in the most effective way.
There are 7 key competencies needed by individuals to be effective, which includes
self, communication, diversity, ethics, across cultures, teams and change competency.
In Air Asia Bhd, there are few competencies can be discuss after a thorough
understanding of the organization behaviour.

4.1 Self Competency

First and foremost, the first key competency can be found in Air Asia’s
employees is employees self-competency. Employee self-competency includes their
self-assessment, personal goal setting, balance work and personal life and engaging
themselves in new learning. Employee self-competency plays an important role in an
organization because it involves the ability of employee to adapt and be flexible as
new requirements emerge, and the ability to effectively perform their jobs to achieve
expected results.

Air Asia not only focused on how much money earned but also focus on
employees’ career development needs. Air Asia employees are high performing
because they have the opportunity for them to learn and grow. For instance, Air Asia
Bhd had signed with CAE (a global leader in flight training solutions) a joint venture
agreement to set up a world-class aviation training center. The center is named as the
Asian Aviation Academy, it is a part of the joint venture between AirAsia and CAE.

Moreover, by establishing this training center, it would positively contribute to

AirAsia’s vast expansion plan by providing high skilled training to AirAsia personnel
which required for the airline’s fast growing fleet and operations. The facilities in the
training center will provide AirAsia training services for pilots, flight attendants,
engineers, ramp handlers, guest services staff and aviation management.

4.2 Diversity Competency

Besides, the other competency that AirAsia emphasized on their employee is

diversity competency. Diversity competency includes the organization values and
respects the uniqueness of individuals and groups as potential sources of
organizational strength. AirAsia focusing themselves in creating a diverse, positive,

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respectful and fun working environment for people of all backgrounds. Besides, the
organization also gives equal employment opportunities by creating an environment
free from any discrimination regardless of colour, religion, race, gender, sexual
orientation, nationality, marital status, ancestry, socio-economic status or physical
disabilities.

For instance, Philippines AirAsia has announced on 14 th August 2016 that the
organization is open to all gender applicants across all organization positions, as part
of its move to promote gender equality in the workplace. The organization values
diversity in the workplace, and offers equal employment opportunities to everyone
irrespective of their gender identity and sexual orientation. In addition, Philippines
AirAsia CEO Dexter M. Comendador has also added that he would like to tap into a
diverse pool of talented, skilled and creative individuals to be part of their Allstars
team.

4.3 Ethics Competency

Ethics competency includes the knowledge, skills, and abilities to incorporate

values and principles that distinguish right from wrong when making decisions and
choosing behavior. Manager and employees often experience ethical dilemmas
(situation in which a decision must be made that involves multiple values).

In AirAsia, the first thing about ethics is the organization don’t break the law.
Ethics is also about how the organization behave towards each other and the outside
world. At AirAsia, the management and employees obey all applicable laws and
regulations, both in letter and in spirit. AirAsia treats all stakeholder, guests,
suppliers, employees and the community around with respect.

In AirAsia, there is a specific code of conduct which includes specific ethical

policies that must be followed by employees, directors, agents and representatives.
For instance, the code of conduct emphasize on doing the business fairly, impartially,
ethically and with the utmost regard to safety. Besides, another policy stated in
AirAsia code of conduct is AirAsia employee don’t do anything that may raise
question about AirAsia’s honesty, impartially, reputation or ability to conduct its
business.

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Chapter 5: Potential sources of workplace stress and how to manage those
stresses
5.1 Sources of stress: Role ambiguity
One of the employees has made a review that Air Asia Company has a messy
structure in the company. In this situation, the potential source of stress is come from
organizational factor which is role ambiguity. Role ambiguity is a role expectation
which is not clearly understood and the employee is not sure what to do. Individual
who experienced role ambiguity may remain confused about their role or tasks. The
reason why the employee comments the Air Asia have a messy structure is because it
has too many commands given in one tasks from different functional areas. It may
lead to unclear direction given from leaders to the lower management in
accomplishing their tasks. Thus, the employee may feel stress when their work has
done may not align with the requirements of manager and this will cause the
employees to have job-related dissatisfaction and affect their performance in work.
Due to messy structure, the company has change management decision very
frequently. The employee in the company may feel stress when they cannot catch up
with the company latest situation or decisions. It will cause the delay of task and
decrease in employee confidence level.

5.1.1 Managing stress: Provide training to leaders

The lower management in Air Asia may feel stress when there is unclear
direction given from leaders or managers. The ineffective leadership is a root cause of
role ambiguity. Organization can introduce professional trainers or top management
to provide training to leaders or managers in order to identify when their own
behaviors might lead to role ambiguity and encouraging them to modify these
behaviors. Managers has play important role in accomplish the tasks in the group and
managers should give clear and concise instructions to reduce uncertainty in
performing the tasks.

5.2 Sources of stress: Role overload and unbalance personal life

An engineer staff in Air Asia has claim that they have stay longer than other
department staff, but unfortunately they have no much opportunity of career
enhancement or salary reviews for them. In this situation, the potential source of

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stress is come from role overload. Role overload is the condition when the employees
is expected having bulky of tasks to perform. In other words, it is lack of
reasonableness or balance in the extent of expectation from doing the job. An
engineer staff has plays an important role in airplane firm. However, the engineer
staff has make a negative review due to the long working hours and without obtaining
any additional allowances or benefits from the company. The employees may feel
stress when their work could not accomplish in given period of time and at the end
they have to work overtime until the tasks is complete. As a result, the engineer staffs
have to confront an unbalance personal life and they will feel physical and emotional
exhaustion that may lead to health problems.

5.2.1 Managing stress: Redesign of job

One strategy for helping employees in Air Asia deal with negative stress caused
by role overload and with conflicts between work and personal life is redesign jobs
that include too many tasks and responsibilities. Job redesign is review job
responsibilities of the employees and reallocated jobs among staff in order to improve
output and their performance. Redesigning jobs can lead to improvements in both
productivity and in job satisfaction. In order to manage the stress of employees who
have long working hours, Air Asia can redesign the jobs by reducing the number of
tasks an engineer staff must perform in a days or increase the number of engineer
staffs. Therefore, the engineer staff in Air Asia is able to have normal working life
and balance personal life. It may increase their job productivity and encourages them
to perform better.
5.3 Sources of stress: Poor leadership skills and poor interpersonal relationship
An executive in Air Asia has made a review that the evaluation is made based on
director’s discretion without sitting down and discussing weaknesses and strengths
with that particular employee. In this situation, the potential source of stress is come
from organizational factor which is poor leadership skills of top management and
poor interpersonal relationship between higher and lower management. The
performance evaluation in Air Asia is made without communicates and giving
feedback to the lower management. There is no communication between top
management and lower management which inaccurate and wrong evaluation or
observation may be arises. Employees may feel stress when they did not know the
standards of performance evaluation in the perspective of directors. Besides, most of

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the employees want to know how they are doing and how management views their
performance. However, in Air Asia, directors did not discussing the weaknesses and
strengths with that particular employees when evaluate their performance. As a result,
the lack of feedback has caused them cannot make personal development in
performing the jobs.

5.3.1 Managing stress: Improve organizational communication

One of the sources of stress of employees in Air Asia is come from the
performance evaluation made without communication. In order to managing this
stress, organization can improve intergroup communication by using 360-degree
performance appraisal to evaluate the employees. 360-degree performance appraisal is
a performance assessment tool that incorporates feedback from variety of people with
whom he interacts regularly. Therefore, lower management is able to know well about
their strengths and weaknesses in order for them to have personal development. The
stress of employees will be reduce due to they know whether they should improve or
alter themselves in any particular areas when performing the jobs.

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Conclusion

AirAsia Bhd has operated over 11 years in Malaysia and was leading the low cost
in the region. After analysing the organization structure, culture, employee key
competencies and workplace stress, the corporation is an effective organization.

The organization structure of AirAsia is decentralized and departmentalized

organization. There are many specified departments within the organization and
authority is delegated to the middle level and lower level of management and
maintain open communication within higher and lower management.
Correspondingly, AirAsia is an effective organic organization structure because it is
flatten and horizontal communication. The organization is more adaptable and
flexible to changes.

Besides, the organization culture of AirAsia is innovation and risk taking, as the
culture is being imposed by CEO of the organization, Tony Fernandes. By imposing
this organization culture, it creates a motivation to employee to involve themselves in
risk taking and engage in innovative behaviour to improve the effectiveness of job
performance. Moreover, AirAsia organization culture includes people-oriented and
team-oriented. The employee is treated as part of the asset of the organization. The
employees are treated as a family in the organization, they are called Allstar.

Furthermore, there are few employee key competencies in AirAsia which

includes employee self-competency, diversity competency and ethics competency. In
AirAsia, self-competency enhance the effectiveness of job performance by employee
by providing training to effectively perform their jobs and to achieve expected results.
In addition, diversity competency in AirAsia ensure equal opportunities by creating an
effective working environment without any discrimination. The ethics competency is
important for AirAsia to be an effective organization by obeying the laws and treats
all of the stakeholders with respect.

Last but not least, the workplace stress in AirAsia that could affect the
effectiveness of the organization includes role ambiguity, role overload, and poor
leadership and interpersonal skills. The workplace stress can be solved easily to
ensure the effective of organization, the possible solutions can be providing training
to leaders, redesign of job and improve organization communication.

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