Assignment 3

Length

Task 2: 2000 words (maximum) exclusive of appendices, diagrams, tables, references etc.

Task 3: 3 pages maximum

This assignment deals with the material covered in Modules 6 to 10 (inclusive).

This assignment is based on the ‘The Qantas Crisis’ case. The instructions are below the case study.

Read the following case:

The Qantas Crisis

Background

By the end of June 2011, Qantas, an Australian owned and operated airline was flying to 208 destinations in 46 countries, operating more than 5,700 flights a week across all its brands domestically and more than 970 international flights. It moved 44.5 million passengers.

The crisis which faced Qantas during 2011, is said have commenced in 1990 when the airline industry started going through a deregulation by the Australian government. During 1993 Qantas and Australian Airlines were merged and Qantas partly privatised with the sale of a 25 per cent interest to British Airways. During 1995 the remaining 75 per cent of Qantas was sold to the public through a float on the Australian Stock Exchange. As a result of previously being a government owned organisation the company’s cost base wasn’t competitive compared to other global airlines and its high wage base was masked by the growth still available. The company used to have a monopoly on flight paths to the US and UK which resulted in big profits and it has built a reputation for being innovative, with introducing business class during 1979. Ansett, also an Australian airline at that stage was the only other airline with a higher cost base and it collapsed in 2001. This collapse paved the way for Virgin Blue – now known as Virgin Airways that become a competitor of Qantas. Qantas responded with low-cost Jetstar and just like Virgin Airways, the latter also moved into international flight paths to provide an alternative to passengers. Since then Qantas set out on a modernisation path whilst adapting to the global environment. However its cost base continued to climb. In particular its labour structures and wage costs which date back to being a government owned organisation.

The crisis

Nearing the end of 2011, three unions, representing engineers, baggage and catering staff and long-haul pilots in Qantas went on strike over pay and conditions, for several months.  According to Qantas this action has resulted in at least 80,000 passengers being affected, more than 600 flights cancelled and seven aircraft grounded. The impact has been felt at 22 airports, both domestically and internationally involving 108 planes. On 29 November 2011, Qantas chief executive Alan Joyce, made the decision to ground the airline’s entire fleet. This action stranded 68,000 passengers around the world and locked out Qantas employees in response to the protracted industrial dispute. Nevertheless his decision paid off when the industrial umpire, Fair Work Australia, ordered disputing parties back to the negotiation table and planes back into the sky.

After this order, the parties were given 21 days to resolve the dispute. However the warring parting failed to reach a solution during this time and Fair Work (FWA) Australia brought the dispute between Qantas and three unions to a close through binding arbitration. FWA is the national workplace-relations tribunal. It is impartial and is also sometimes called the industrial-relations umpire. Even though binding arbitration could have taken months it would have led to an agreement that would be in place for up to four years and it would ban industrial action by the unions or the airline during that time.

Opposing views and reactions

The response from unions representing pilots and baggage handlers argued that Qantas has failed to display good faith in the negotiations, and that binding arbitration is something the airline had in mind all along. They argue that the reaction from Alana Joyce was totally out of proportion to the issues. On the one hand, their concern was for job security and outsourcing – rather than pay. The engineers, felt vulnerable for fear their work would be sent overseas and they want only limited outsourcing. The pilots union wants to ensure Qantas flights are operated by pilots paid at Qantas rates, not the lower Jetstar rates.  However it was said that Qantas pilots didn’t have any specific plans for strike action. “The only action Qantas pilots had been taking was inflight announcements about the industrial dispute, as well as the donning of red ties that carry the message ‘Qantas flight, Qantas pilots’. The Transport Workers Union, which represents baggage handlers and catering staff, wants to restrict work being sent outside Qantas. (8)Nevertheless, engineers did express their satisfaction with the move to arbitration, describing it as the appropriate outcome for the appropriate time.

On the other hand, Qantas, which has been seeking to cut costs and shift its focus to Asia, argues its survival is at risk and it needs to be able to manage its business in response to competitive pressures. Joyce argued that  the stakes were high for Qantas which made it easier for him to ground his planes. He felt that prolonged industrial action would have threatened the long term survival of Qantas. “This was the only solution we had,” Joyce said. “All I’m concerned about is Qantas. This was not anti-union, this was pro-Qantas … I’ll make whatever tough decisions are needed in order to ensure the survival of this great company.” According to Joyce he has been fighting for what sounds like a simple principle: a profitable group with a growing international division at Qantas. (4) “This was an amazing decision for us to have to make and it wasn’t made lightly. It was only made when every single alternative was exhausted to us and there was nowhere for management to go.”

The leader

When Joyce was chosen as CEO for Qantas Airways, he pledged to lift staff engagement and boost morale. This is in stark contrast to what occurred in reality during 2011.  Furthermore, his extraordinary action to call to ground the entire airline forced the federal government’s hand which brought about a situation which has never been seen in decades of industrial showdowns. Nevertheless Alan Joyce is adamant that this was a war he had no choice but to wage. In a tactical sense it seems to have been a winner despite the disruption caused to customers worldwide.  The three warring unions were forced into mediation and when that failed into mandatory arbitration.  On the surface it seems that Joyce has won the battle against the industrial action that was undercutting the confidence in the Qantas brand, however the usually genial Irishman has complex issues to lead. He has the challenge of winning back the hearts and minds of the Australian public and 35,000 employees who were collateral damage during the dispute.

Qantas’ chairman, Leigh Clifford argues that Joyce was the preferred candidate over other internal and external candidates in selecting a new because Joyce had a track record of getting a tough job done.  He describes Joyce as a leader who doesn’t sit on his hands.  “I like the way he leads. I saw that at Jetstar. I particularly liked the way he could express a vision. He’s not a pompous person, he’s a got a degree of humility. But when he acts, he’s very decisive.”

On a more personal level, it has been said that the young CEO Joyce, has an unremarkable energy. He commenced his job as CEO three years ago at the age of 42 and he radiates enthusiasm for his work. The Irishman grew up in the rough outer-Dublin suburb of Tallaght. He studied physics and mathematics and ­graduated with honours from Dublin’s Trinity College – Ireland’s equivalent of Oxford.  He has been described as someone who likes to laugh, and isn’t afraid to poke fun at his own hobby, collecting old airline timetables and reading about the lives of famous mathematicians.  His background operations research affords him a unique view of the world by allowing him to see a series of maths models at work in everything from queueing systems to the number of spare parts needed in maintenance shops. He tend to start with a hypothesis and seeking to prove or disprove it, once again a legacy of his training in the basic discipline of science.  Joyce argues that this is always his starting point and his decisions are always based on facts and although the information is never perfect the pulling together of the process is his strength. 4

The way forward?

According to Joyce, Qantas international needs to go back into its shell to recover before it can grow again. He wants to cull unprofitable international routes, strip back investment in new international aircraft, and rely more on alliances with competitors. His vision is for the pared back division to return to profit within the next three years and return its cost of capital within five.

The immediate cost has been severe. One thousand jobs out of a total of 35,000, including pilots, cabin crew, engineers and management, however almost all of these have been voluntary redundancies.

Qantas is testing the name “Red Q, a new Asia-based, premium subsidiary, which Joyce is hoping will drive expansion in the region and into secondary ports in Australia from a lower cost base. The vision also includes the continuation of low-cost subsidiary Jetstar into the international arena with a strong push into Asia through a new joint venture in Japan and a greater push into China and Vietnam. It is anticipated that there won’t be any growth in the short term.

Further adding to the pressure on Qantas is the severe competition from Virgin Australia in the domestic market.

Some outsiders interpreted Qantas’ action to ground all flights as an airline that refuses to be blackmailed into submission and an airline that locked out passengers to square off with its employees (3). Professor Ian Williamson from the Melbourne business school speculates that even though  the decision to ground the Qantas fleet achieved its desired short term result, the challenge has only just begun for the airline. (3) Looking at the facts of the case, it seems evident throughout the dispute that Qantas management didn’t demonstrate the ability to engage its workers at a time when the airline wants to achieve major transformation to remain competitive. The airline seems to be losing the productivity challenge which is core to any long term success the company aspires to.  Unlike the company’s shareholders, who have seen the share price plummet and have not received a dividend since early 2009, the airline’s staff have been mainly protected from competition forcing the airline to adapt.  Williamson argues:  “It’s not clear to me that Qantas management has the expertise to develop a more motivated and engaged workforce committed to enhancing productivity. That’s not something Fair Work Australia can do for Qantas.”

The industrial dispute has had a profound effect on customers, suppliers and other third parties. Qantas failed to provide adequate notice of anticipated interruptions to normal operations.  A well-developed communications strategy seems to have lacked in keeping these important stakeholders on side once industrial action started to escalate. Communication lines with Qantas workforce also seemed lacking particularly since Qantas was trying to achieve significant changes to work practices or employment conditions in the new agreement. In the case of Qantas, a well-developed communication strategy would have gone a long way in keeping the trust of its stakeholders. The main challenge for all the parties seems to be the rebuilding of trust, restoring good working relationships and rescuing Qantas’ reputation with its staff, customers, the government and other stakeholders.  9

Task 1

Task 1.1:Critically discuss the power issues evident from the case.

Task 1.2: Critically discuss the conflict issues evident from the case and how the respective parties have dealt with the conflict.

Task 1.3: Critically discuss the leadership style of Qantas CEO, Alan Joyce as evident from the case and the change management strategies that he has used in dealing with the strike.

Task 1.4: The survival of Qantas may be at stake if the issues aren’t resolved in the future. In you view, is a culture change required in Qantas?  Justify your answer by critically discussing the current culture of Qantas and evaluating whether a culture change is necessary.

Task 2 (maximum 3 pages)

Make recommendations: Draw up a table and summarise what improvements you could suggest in relation to each task above: (1) power and politics (module 7); (2) conflict management (module 8); (3) leadership (module 6) and associated change management strategies (module 10), (4) organisational culture in Qantas . (maximum 3 pages). (See the ‘Example posted  on the home page for this course’ to avail yourself of the presentation of this question)

SOLUTION

Task 1.1Critically discusses the power issues evident from the case.

Power Issues

The travel plans of approximately 68,000 passengers went haphazard and utter dismay when the Qantas domestic as well as international fleet was totally grounded as per the decision taken by CEO Alan Joyce, as a result of ongoing industrial disputes. AT the annual general meeting of shareholders held by Qantas, Alan Joyce asked for a pay hike from $3 million to $5 million per year which was accepted by the  shareholders and the very next day the whole company was being shut down by Joyce due to ‘extreme demands’ put forth by the workers.

Joyce timed the shutdown of all the operations at Qantas when the tourism was about to be at its high as Spring Racing Carnival was approaching, which is supposed to be Victoria biggest weeks for tourism. The damage and disruption to the airlines caused due to this big step was huge and that too without any prior warning. This is a true case of how to manage the things with power (Lemon, 2011).

Joyce was well aware of the amount of chaos the airline grounding would cause and the amount of pressure it would create on the government as well. This shows the best form of utilising power to get the things resolved as shown by Alan Joyce. Although the shutdown was not the Unions step, but regardless Joyce has been putting the whole blame on the unions. But this step would neither save his reputation nor the Qantas reputation which is put at stake. Joyce’s “bold decision” with a deep impact is a true example of power issue which can be derived from the Qantas Crisis (Lemon, 2011).

Since Joyce was completely worn-out and exhausted of negotiating with the workers Unions, Pilots and cabin crew for so long, thus manufacturing a crisis situation gave him a golden opportunity to skip this negotiation by exercising the power assigned to him by the company, Qantas. He clearly believed that the intervention of Fair Works Australia (FWA will get the desired results.

After the crisis situation Qantas and the three unions in question for engineers (ALAEA), for the baggage handlers (TWU and for long haul pilots (AIPA) have been asked to reach a decision or agreement within a time span of three weeks otherwise FWA will have to impose their own decision on them. This evidently demonstrates the power display or muscle-flexing of Joyce which suggests that he has the power to twist the nations arm behind his back.

Further the twist in tale came when Joyce went on PR offensive by giving television interviews on various television programmes and called on FWA to put an end to all the industrial actions in the Qantas crisis case (Rourke, 2011). On the other hand the Unions were angry with the timing of the grounding of the fleets, because Joyce was given a pay hike of about 70% in annual AGM meeting, the decision taken by Joyce was a result of the unions’ increased public speaking against his pay rise. Finally during the arbitration to prove his point Joyce said that he could have taken an easy decision and could have subjugated to the demands of the union, but he used his power and took the dramatic decision to grounding the airlines for the benefit of the company only. To make sure that this great airline Qantas and the brand name services for coming 90 years to go (Massola, 2011).

Tasks 1.2 critically discuss the conflict issues evident from the case and how the respective parties have dealt with the conflict.

Conflict management process and its stages

The process of conflict management covers or deals with long term management of conflicts and disputes which might or might not lead to resolving of the dispute (Conflict Management, 2008).Situations of conflict can cause both positive or negative  effects on the organisation as they might help in resolving some much more serious conflicts, enhance group cohesion and performance and helps in demonstration of capability or power of the conflicting parties (Turner and Weed, 1983).

Conditions which might lead to conflicting situation in organisations are:

• Communication barriers
• Conflict of interest
• Dependence on just one party
• Lack of cooperation
• Regulation of behaviour
• Differentiation in the organisation
• Competition for limited resources
• Prior unresolved conflicts\

Stages in the Conflict Process are depicted below in figure 1:

Figure 1: CONFLICT PROCESS (Session 5. Conflict management:Natural Resources Management and Environment Department , n.d.)

The three very vital components or elements of conflict are shown in figure 2:

Figure 2: Elements of conflict (Session 5. Conflict management:Natural Resources Management and Environment Department , n.d.)

The whole conflict management can be easily understood form the figure shown below:

Figure 3: Conflict management Process Source: http://www.emeraldinsight.com/content_images/fig/0540990604002.png

Conflict management approaches

Basically there are two theories of conflict management:

Traditional Theory: It considers people involved in conflict situation as trouble makers

Source: (Kirchoff and Adams, 1982)

Modern theory: It considers conflict as a natural process which is an inevitable outcome of interaction between human beings. It has been found that conflict situations lead to generation of new and fresh ideas and changes in the organisation.

Source:  (Kirchoff and Adams, 1982)

 Conflict management intentions and behaviour

Conflict management intentions are healthy motivators in order to resolve the conflict. Conflicts are inescapable factors of every organisation. People in the organisation might respond to conflict situation in different manners. So we need to find the response style of people in order to manage conflict in successful manner (De Bono, 1985).

From the Qantas case we can analyse the path followed by Alan Joyce indicates that he has reacted as an ‘Attacker’ and the three union members also reacted as ‘Attackers’ as they did not  keep their feelings to themselves and all of them were angry due to one or the other reason. Attackers can be either upfront or behind the back. But here the Union members have been upfront by expressing and attacking openly , while Alan Joyce was not attacking openly and  acted as behind-the –back attacker. It is very difficult to handle the behind-the-back attackers as we are not aware of the reason of criticism and many times the target is not even aware of the reason of the criticism at all.

Task1.3 critically discusses the leadership style of Qantas CEO, Alan Joyce as evident from the case and the change management Strategies that he has used in dealing with the strike.

Leadership Style of Alan Joyce

There are varied kinds of leadership styles which exist in the business organisations, however amongst all ‘Transformational leadership” is considered to be the best one. Transformational leaders always show inspirational side of their character as they want everyone in their team to perform their best as they do. This is the reason why transformational leaders are able to deliver high productivity and allow engagement from everyone involved in the team. However there is a downside of transformational leadership which is that while the enthusiasm of leaders is passed on to the team members, the leader needs to be supported by “detail people”. That is why a combination of transformational and transactional leadership styles is considered to be the best for the leaders to practice in business organisations (Leadership Styles, 2012).

Alan Joyce was appointed as CEO of Qantas and assigned the top job to boost the morale of the staff and to lift up the staff engagement. But the decision taken by Joyce to ground the entire airline was an extraordinary call which forced the federal government which had never been witnessed in the corporate world of Australia.

But if we see tactically, he emerged as a winner, because if we see finally he was able to break the deadlock between Qantas and the three unions as they were forced to mediation and if they failed it then they would have to follow arbitrary mediation. Thus this was a no choice situation for Joyce, the affable Irishman had to wage. He is adamant about rebuilding the brand image of Qantas, by building the trust of the customers and employees in the company. He was chosen and hired as he had something distinct above the internal and external candidates at Qantas, as he had the sparkle to get the toughest job done as the chairman of Qantas, Leigh Clifford says (Cleary, 2012). The few characteristics which are found in Joyce’s’ leadership style is:

• Superb leadership quality
• Expresses a clear vision
• Not a pompous person
•  Very modest and humble
•  Very decisive in actions

Thus if we check Joyce follows more of Transactional leadership style where the leader wants that the team members appointed should be ready to obey and follow whatever their leader tells them and the leader has the right to punish the team members if the work done is not up to the required standards and they are paid for the work done (Leadership Styles: Being the type of leader your team needs you to be., 2008).

This leadership style is effective in short term as the focus of the leader is on getting short-term tasks done and moreover there are various limitations in the sense of creative work or knowledge –base (Leadership Styles: Being the type of leader your team needs you to be., 2008). But this kind of leadership is very effective in other situations. This leadership is found to be very effective because the roles and responsibilities of every person in the team are already specified.

The change management strategies

Change is shift in the behaviour of  the whole organisation form one degree to another (KanterR.M., B.A. and Jick, 1992) and organisation development is synonym of change (Cummings and Worley, 2001).Organisational development is a system wide application  for the  improvement , reinforcement of strategies , planned development and  processes by applying  behavioural science knowledge which leads to effectiveness of the organisation.

A planned approach for strategic and change management is an overarching paradigm in change management literature (Cummings and Worley, 2001).In this approach the main requirement change management teams and strong leadership. The recent public relations theory is the best and most apt which related to management and  corporate communication strategy and follows the strategic management views of decision making and  structured planning. The traditional approach to change management follows the Kurt Lewin’s classical model for change. It deals with the forces which are helpful in sustaining the down-balanced systems (Graetz et al., 2002) (Garetz et al 2002). There are mainly three steps in this process: unfreezing, moving and freezing.

Unfreezing involves detaching the problems, which exist using communication. Moving refers to recognition of the requirement of change and more specifically structural and cultural change in order to establish new values and processes. Refreezing means reinforcement of changes so that the new equilibrium can be revived (Burnes, 1996).

Task 1.4 the survival of Qantas may be at stake if the issues are not resolved in future. In your view is a culture change required on Qantas? Justify your answer by critically discussing the current culture of Qantas and evaluating whether a culture change is necessary.

Cultural Change

Organizational culture is the pattern of basic assumptions, norms, artefacts and values which are being shared by organisational members (Cummings and Worley, 2001). Culture is helpful in giving guiding principles for interaction patterns, expectations, employee behaviour and measurement of work. There exist three layers in case of corporate culture.

The change strategies which are driven by culture depict a clear-cut set of values and principles as well which helps in driving transformational processes in order to create an emotional commitment from the employees (Beer and Nohria, 2000).

Levels of cultural analysis

According to Edgar Schein organisational learning, planned change and development can only be understood by understanding the culture which sit eh primary source of resistance to change in organisation. The bottom line for the leaders is that if the leaders do not become aware of the culture the culture in which the organisation is embedded will start managing them. Thus cultural understanding is vital for leaders if they want to be effective leaders. The three levels of culture defined by Schein are:

• Artefacts
•  Espoused Values
• Basic Assumptions and Values (Schein, 2010)

 Development of culture map

Cultural mapping is an important and significant tool which helps in identification of resources of the community along with the strengths of the community. This process is very valuable in planning and implementation stage in order to find the early resources as well as the efficiencies for organizations. It also helps in creating links between cultural and arts groups by bringing togtheer the common aspirations and values of culture.

Source: (Niagara Culture Plan, n.d.)

Stages in Culture Mapping:

Stage 1: Planning

• Determination of objectives within community
• Obtaining etch buy-in form colleagues  and community leaders
• Setting the budget
•  Identification and Mapping resources.

Stage 2: Project Design

• Design inventory
• Draft survey questionnaires and  interview questions
•  Setting interim and final deadlines

Stage 3: Implementation

• Public announcement
• Targeted research-interviews
• Board-based research-surveys
•  Assembling inventory
•  Taking  Stocks

Stage 4: Synthesis

• Roughing out the map
• Analysis of results
•  Interpretation of results
•  Checking the community

Stage 5:  Finalising the map

Stage 6: Going Public

TASK 2

Make recommendations regarding:

1. 1.     Power and politics
2. 2.     Conflict management
3. 3.     Leadership and associated change management strategies
4. 4.     Organisational culture in Qantas

Bibliography

Beer, M. and Nohria, N. (2000) Breaking the Code of Change, Boston , MA: Harvard BUSiness School Press.

Burnes, B. (1996) Managing CHange: A Startegic approach to organizational dynamics, London: Pitman Publishing.

Cleary, A. (2012) Alan Joyce’s high-stakes gamble to save Qantas, 3 february, [Online], Available: http://afr.com/p/alan_joyce_high_stakes_gamble_to_sdVQonUWN0DtqSmFVH3g2J [31 May 2012].

Conflict Management (2008), [Online], Available: http://www.pon.harvard.edu/category/daily/conflict-management/?cid=5 [31 may 2012].

Cummings, T.G. and Worley, C.G. (2001) Organization Development and Change, 7^th edition, Ohio: South-Western College Publishing.

De Bono, E. (1985) Conflicts: A Better Way to Resolve Them, London: Harrap.

Graetz, F., Rimmer, M., Lawrence, A. and Smith, A. (2002) Managing Organizational Change, Milton, Qld.: John Wiley &Sons.

KanterR.M., B.A., S. and Jick, T.D. (1992) The Challenge of Organisational Change, new York: Free Press.

Kirchoff, N. and Adams, J.R. (1982) Conflict Management for Project Managers, Drexel Hill: Project Management Institute.

Leadership Styles (2012), [Online], Available: http://www.mindtools.com/pages/article/newLDR_84.htm [31 May 2012].

Leadership Styles: Being the type of leader your team needs you to be. (2008), [Online], Available: http://www.leadership-toolbox.com/leadership-styles.html [31 May 2012].

Lemon, G. (2011) Tie me bloody Kangaroo down, Joyce, 31 October, [Online], Available: http://www.thepunch.com.au/articles/tie-me-bloody-kangaroo-down-joyce/ [31 may 2012].

Massola, J. (2011) Joyce rejects union allegation Qantas argued iin bad faith, 22 Nove,mber, [Online], Available: http://www.theaustralian.com.au/business/in-depth/joyce-rejects-union-allegation-qantas-argued-iin-bad-faith/story-fnaskcqt-1226202253616 [31 May 2012].

Niagara Culture Plan, [Online], Available: http://www.niagararegion.ca/government/initiatives/culture-plan/pdf/App1-CulturePlan.pdf [31 May 2012].

Rourke, A. (2011) Stranded passengers await outcome of Qantas crisis talks, 30 October, [Online], Available: http://www.guardian.co.uk/world/2011/oct/30/qantas-grounded-crisis-talks-australia [31 may 2012].

Schein, E.H. (2010) Organizational Culture and Leadership, 4^th edition, Son Francisco: john Wiley & Sons.

Session 5. Conflict management:Natural Resources Management and Environment Department , [Online], Available: http://www.fao.org/docrep/W7504E/w7504e07.htm [31 May 2012].

Turner, S. and Weed, F. (1983) Conflict in Organizations, Englewoods Cliff: Prentice-hall.

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