Cathy_Pacific

Strategic Human Resource Management Scenarios: Cathay Pacific I. Cathay Pacific Airways Cathay Pacific Airways is a Hong-Kong based airline that has a comprehensive network of flights to over 90 destinations around the world. It is considered as one of Asia¶s biggest and most regarded airlines. The company was founded in 1946 in Hong Kong. The company since then has continued to develop Hong Kong¶s airline industry and supported Hong Kong¶s position as a major transportation centre in the region. The airline company was founded by (American) and (Australian). Cathay Pacific was founded in Hong Kong on the 24th of September, 1946.Cathay pacific is one of the most well known airline company in the world. It competes with different airline companies for prestige and notoriety in the airline industry. Recently the company underwent a change in image and strategies to counter the problems it industry has. It shifted the focus of its strategy into making sure that there will be an increase of clients who demanded their services, it also made sure that the services and technologies they use can be competitive to other airlines company. In 2006 the company was acquired by Dragon air but it still continues to operate in its own brand. This does not hamper it from continuously trying to provide the best service to its clients. This shows that with proper strategies used, a company can stay in the industry for a longer period of time. II. Environmental Analysis   Internal Environment: Strategic Capabilities   1. Human Resources/ Human Capital  Human resources or human capital is the intangible resources of abilities, effort, and time that workers bring to invest in their work (1999). The people at Cathay Pacific are the major contributors of strategic capability to the company. One of the advantages of Cathay Pacific over its competitors is the quality of service that the staffs provide to its customers. Service has a big impact on the customers¶ perceptions about the company¶s product. Because of the importance of its people, Cathay pacific formulated an employee development strategy through proper and effective training. This strategy is expected to strengthen Cathay Pacific¶s position in the marketplace. Employee development can be an essential ingredient of an organization¶s competitive advantage. Employee development includes all of the education and training that organizations might invest in their employees such as training employees to perform effectively in their current jobs, orienting employees to the workplace, developing them for advanced positions or programs, and building organizational capability for future success. Cathay Pacific promotes a working environment wherein the employees are free to act in both the company¶s and passengers¶ best interests. 2. Organizational Processes and Culture± Service Straight from the Heart  Cathay Pacific believes that its business is selling experience to the passengers.  The emotional bonding with the passengers is the key to building loyalty and one of the major factors that encourage the customers to repurchase the airline products. The biggest difference of Cathay Pacific to its competitors is its people. The employees at Cathay Pacific are the ones who bridge the gap between product development and customer expectation. The passengers in Cathay Pacific always feel welcomed, appreciated and reassured. Passengers that travel with Cathay Pacific know that they are in good hands. Service Straight from the Heart is a programme that aims to develop cultural change within the airline focused on improving customer service. Service is the principal means of differentiating between airlines and is highly influential in customer choice. Cathay Pacific has expressed within its programme its understanding of the importance of the people within the organization and its recognition of the contribution of those people to its success. 3. Customer Retention and Loyalty  Customer retention and loyalty are among the primary causes of Cathay Pacific¶s success. Customer service is a very vital aspect of the company. Cathay Pacific maintains its leader¶s status in the airline industry through its constant improvement in service. The company continuously makes effort to develop its self-help strategy in order to encourage growth among its employees. Self-help benefits are seen to make career management, career  planning including blended learning opportunities possible within the company. The development program aims to equip the employees with the necessary knowledge and skills to fulfill their current positions as well as prepare them for future career advancements. One of the most significant improvements that Cathay Pacific employs is incorporating human touching its high quality, reliable, and predictable service. The company wants to achieve growth through sustained, profitable growth. The company is committed to employee development and continues to enhance service and equip the employees with the ability to control the means of increasing the company¶s productivity, reduce costs and ensure customer loyalty by focusing on the areas that matter most to the customers. Emerging business needs and organizational challenges inevitably require improved performance from employees.   Providing learning and development that are focused on critical performance improvement needs is one of the methods by which managers continuously improve organizational effectiveness. A good ED system will generate substantial opportunity for performance improvement and serve to remedy deficient performance. Employee development also has an impact on employee morale. Cathay Pacific needs to make its employees feel important and show concern for the personal health and welfare of the employees. The employee development of Cathay Pacific helps employees to define career opportunities, assess career choices and clarify career paths and milestones to help the employees plan their advancement. The employee development of Cathay Pacific provides learning linked to career growth that will increase the likelihood that employees will remain satisfied and that competent people will be available to fill new openings, reducing the costs of external recruitment and selection. Key Internal Strength: Human Resources  One of the keys to successful competition in the global market is the effective deployment of human resources to achieve strategic capability and competitive advantage. Human resources as an internal resource of a firm are one of the sources of strategic capability. Human resources are among the top contributors to Cathay Pacific¶s strategic capability. Effective management of an organization¶s human resources according to (2002)is a major source of competitive advantage and may even be the single most important determinant of an organization¶s performance over the long term. Key Internal Weakness: Inadequate Employee Performance Management  Performance management helps organizations sustain or improve performance, promote greater consistency in performance evaluation, and provide high quality feedback. Performance management helps organizations link evaluations to employee development and to a merit-based compensation plan. Moreover, it forms a basis for coaching and counseling, permits individual input during the evaluation process, and allows for a blend of quantitative and qualitative evaluations. Performance management provides a process that helps manage employee expectations of job demands and factors that reveal how well the job is done (1991cited in and 2000). Performance management is the integration of performance appraisal systems with broader HRM systems as a means of aligning employees¶ work behaviors with the organization¶s goals. A performance management system consists of the processes used to identify, encourage, measure, evaluate, improve, and reward employee performance at work ().The employee performance management process that Cathay Pacific uses is not adequate to support the company¶s goals. It does not encourage the employees to take responsibility and does not help them to improve. The system that the company uses creates a standardized process. However, this process also supports wrong values around performance management. Environmental Analysis: PEST   Political  One of the external factors that have big effects on the operation of Cathay Pacific is government regulations and policies. Because Cathay Pacific operates worldwide, it is greatly affected by different regulations and policies. The company continuously asses the political environment and prepares itself for any possible problems and issues concerning the political sector. Economic  Economic factors also affect the company. Cathay Pacific was greatly affected by the Asian Economic crisis. For the past years Hong Kong experience economic growth as well as other Asian countries. The growth of other Asian economies pushed Cathay Pacific to expand its operations. Internally, the company is doing well. It constantly assesses the economies of the countries where it operates as economy affects the decision-making process and buyer behavior of the customers. Social  The company makes sure that the services it offers and the technology it uses to tender its services will be accepted by the public. The company does not authorize the delivery of some services that will cause outbursts or complains from different group in the society. The company makes sure that it has a very good relationship with different sector in the society. The company also engages in social activities that tend to develop a better relationship between it and the clients. Technological  The company offered new innovations in its technological aspect and introduced new concepts with regards to its industry. Since technology rapidly changes the company makes sure they are updated to what is happening and they can adjust to these changes. The company makes sure that the services they offer are updated with regards to what technology is used to tender their services. If other companies use new technologies to provide services, the company has the technology capable of competing with such technologies. III. Future Scenarios Optimistic Future Scenario for Cathay Pacific: Mergers and Acquisitions  Mergers and acquisitions have become one of the most important corporate-level strategies in the new millennium. Merger and acquisition strategies are important to firm growth and success in the 21st century. Cathay Pacific strengthened its position as Hong Kong¶s top home carrier in 2006 by integrating Dragonair and enhancing its partnership with Air China. Expansion (Mergers and Acquisitions) caused by stable economy, maintained competitive advantage, technological innovations and employee loyalty. If business will continue to do well for Cathay Pacific, further expansion through mergers and acquisition is expected. Moreover, the flourishing Asian economy is expected to contribute to the growth of the company. Through M& As Cathay Pacific aims to acquire excellent businesses and talented people. Pessimistic Future Scenario for Cathay Pacific: Downsizing  Downsizing caused by unstable economy and emergence and growth of budget airlines. Cathay Pacific remains among the most profitable airlines in Asia. As of the moment the company is not affected by the emergence of low-cost carriers in the Asian region. However, if Asia is to experience economic crisis like what happened in 1997, Cathay Pacific will be severely affected. The threats posed by the increasing numbers of budget airlines in Asia and elsewhere will become a serious problem in the future. Because of these negative scenarios, Cathay Pacific will be forced to downsize in order to cut cost. IV. Strategic Human Resource Management Mergers and Acquisitions  In an optimistic scenario, Cathay Pacific is expected to continue to grow. To support growth, Cathay Pacific is expected to restructure. Mergers and acquisitions are seen as strategies that will help Cathay Pacific improve its services and acquire competitive advantage. Mergers and acquisitions are also seen as an expansion strategy. Human resources or the company¶s people are one source of sustainable competitive advantage. In a fast-changing environment where technological innovations and other strategies can be copied, it is the human resources that bring a sustainable competitive advantage. During restructuring it is important to establish HRM policies and practices that will help create and sustain a climate of trust. Some of the issues that arise in mergers and acquisitions are HRM planning, recruitment and selection. The HRM function focuses its activities on ways to help the organization achieve corporate goals like growing operations through recruiting and hiring employees, orienting and training them, and making their initial and future job assignments. Strategic HRM Planning  Human resource management needs to be closely integrated with managerial planning and decision-making. A closer integration between top management¶s goals and HRM practices helps to elicit and reward types of behavior necessary for achieving an organization¶s strategy. Strategic management of human resources includes HRM planning. The planning process involves forecasting HRM needs and developing programs to ensure that the right numbers and types of individuals are available at the right time and place. Such information enables the organization to plan its recruitment, selection, and training strategies.   It is important that the management value human resources as a means of increasing productivity. The HR managers must be involved in the strategic management process. The HRM concerns must be integrated into the decision-making at the executive level. This will help Cathay Pacific deal effectively to changes in the industry as well as the changes in the business environment. Strategic planning leads to informed, purposeful actions. By articulating a clear common vision of why the organization exists, now and in the future, a strategic plan provides direction and a cornerstone for making important HRM decisions. Planning HRM activities expands awareness of possibilities, identifies strengths and weaknesses, reveals opportunities, and points to the need to evaluate the probable impact of internal and external forces. Recruitment and Selection  Once HRM needs are determined, the next step is recruiting employees. It is important that Cathay Pacific hire the most qualified people. Not only is it important to find the most talented applicants, but it is equally important to be viewed as the employer of choice with a strong value proposition. Identifying the right skills necessitates knowing not just the current culture and structure of the organization, but much more importantly, what the future of the organization needs to be. Selection of key talent and key employees begins with an understanding of the vision and the purpose of the organization. Recruitment and selection is critical to the success of strategy implementation. During mergers and acquisitions, it is vital to recruit and select applicants that will fit the new organizational environment and will quickly integrate with the new organizational culture. Downsizing  According to (2004) downsizing is commonly the result of a broader process of organizational restructuring, which refers to planned changes in a firm¶s organizational structure that affect its use of people. Such restructuring often results in workforce reductions that may be accomplished through mechanisms such as attrition, early retirements, voluntary severance agreements, or layoffs. Effects of Downsizing to Employees  Downsizing and other restructuring strategies such as takeovers and mergers and acquisitions have adverse effects on employee attitudes and beliefs. Restructuring is seen by millions of employees as a breach of the µpsychological contract¶ between them and the employer ( 2004). This breach of psychological contract leads to a rise in stress and decrease in satisfaction, commitment, intentions to stay and perceptions of an organization¶s trustworthiness, honesty, and caring about its employees. Managing Lay-Offs: Selection  The management needs to determine the criteria for selecting which jobs will be eliminated. Depending in part on the corporate culture, the criteria used frequently are a combination of job performance evaluations, the type of work remaining to be performed, and seniority. These factors need to be as objective as possible in order to protect the organization from legal and governmental challenges. Employees leaving and remaining must perceive that management was fair when determining which employees will be let go and which ones will stay. The criteria that the organization can use are: Job Performance ± job performance implies that the organization has fairly, objectively, and systematically evaluated the contributions of employees and selected those individuals for dismissal who are least effective.   Work Remaining to be Performed ± another selection factor is the work remaining to be performed.   Seniority ± aside from employees covered by union contracts where seniority is the primary determinate of layoff selection, length of service often is a factor in downsizing ( 2003). Employee Retention  Employee retention is one of the biggest issues in downsizing. Because employees feel betrayed, they lost motivation and employee loyalty diminishes. It is important to identify the most valued employees first. Typical methods for conducting these assessments include interviewing and testing techniques, use of outside consultants or psychologists, or other strategies. Retaining valued employees is important. Retention Tools    Focus Groups ± are discussions with 8 to 10 employees with a facilitator in order to understand employee complaints and concerns so that management can take quick action   Exit Interviews ± are individual discussions with departing employees so that management understands very clearly the reason for their departure Retention Bonuses/Contracts ± contracts and retention bonuses can be attractive to retain key employees and management level people   Rotational Assignments ± can be used to enrich an existing assignment   New Hire Orientation ± can be used to infuse the culture of the new organization by communicating the core values through a common orientation program in which various executives are invited to speak to groups of new hires on a regular basis ( and 2001)    Performance Management   I. Performance Management  According to (2002), performance management is the integration of performance appraisal systems with broader HRM systems as a means of aligning employees¶ work  behaviors with the organization¶s goals. A performance management system consists of the processes used to identify, encourage, measure, evaluate, improve, and reward employee performance at work (). Performance management is the process of identifying, evaluating and developing the work performance employees in the organization, so that organizational goals and objectives are more effectively achieved, while at the same time benefiting employees in terms of recognition, receiving feedback, catering for work needs and offering career guidance ( 2003). Performance Management Process   Performance Planning  A job description indicates the role of an employee within the organization and what results they are expected to achieve on the job. Ideally, job descriptions present a clear  picture of employees¶ roles, responsibilities, required outputs, and standards used to judge the quality of their performance ( and 2000).Performance planning is the process where in goals are set. Goal-setting should be done by the manager and the employee. To create a good performance plan, employees need to know where they are now (the current state) and where they want to go (the goal state).Goals should be measurable and achievable. The plan should include process and support during the execution phase to help managers and employees do the things necessary to have the plan succeed. This includes monitoring progress, identifying and addressing problems, and helping employees stay on their edge to maximize their growth and their performance. The plan should be modifiable during the execution phase to respond to changing circumstances ( 2000). Performance Review/Performance Appraisal  Performance appraisal is the process by which an employee¶s contribution to the organization during a specific period of time is assessed (, 2002).Performance appraisal is integral to the successful operation of most organizations. During this process, employees are evaluated formally and informally to determine the nature of their contributions to the organization. Appraisal occurs during time periods and in meetings that are scheduled to produce reasoned consideration of contributions, but it also occurs in formally as employee contributions are observed, or when an evaluation is brought to the attention of others (, 1993). Performance appraisal is treated as an evaluation and development tool, as well as a formal legal document. Appraisals review past performance ± emphasizing positive accomplishments as well as deficiencies and drafting detailed plans for future development. The performance evaluation also serves a vital organizational need by providing the documentation necessary for any personnel action that might be taken against an employee (, 2002). Performance management typically relies heavily upon performance appraisals but performance management is a broader and more encompassing process and is the ultimate goal of performance appraisal activities (, 2002). II. Performance Management in Oman International Container Terminal   Weaknesses of the Company¶s Performance Planning (Job Description)  1. Complex and difficult to understand The job descriptions are so complex. The lengthy statements of duties, authorities ,responsibilities and accountabilities are confusing not only for the employees but for the Managers as well.2. Inaccurate Information There are so many unimportant tasks and duties that are stated in the job description that makes it hard to understand. The employees also feel that the job descriptions set unachievable goals and exaggerated job responsibilities.3. Imposed and inflexible The job descriptions are often written and imposed on job holders from above. The jobholders do not have any participation in the performance planning and the creation of job description. Because the job descriptions are made at the top of the organizational hierarchy without any input from the job holders, they are often inflexible and not up-to-date. Current Performance Appraisal Tool: Rating Scale  The company uses a rating scale in appraising employee performance. The rating scale is among the widely used method of appraising the performance. The method is simple and easy to use. Rating scales according to (2003) are readily adaptable to suit specific jobs and organizations, and there are virtually no limit to the aspects of person or performance that can be rated. In simple terms, rating scales require the reviewer to rate the employee¶s performance in an absolute sense, not in comparison to other employees. Employees can berated on virtually any trait or characteristic or dimension of performance or behavior. The characteristics to be assessed are chosen and each step on the scale is given a brief description in terms of quantity and quality. Problems with Rating Scales  Rating scales are among the popular performance appraisal tools. They are easily to construct, use and understand. However, there are significant problems in using rating scales.1. Ratings are sometimes subjective.2. Not all the characteristics of a job are equally important and certain characteristics are more important for some jobs than for others.3. Ratings can be given easily enough for individual characteristics or dimensions, but it is more difficult to turn into a valid or useful overall assessment.