Qantas Position Downsizing Event - Case Study Example

Quantas Position Downsizing Event STUDENT ID NUMBER: UNIT NAME: UNIT NUMBER: NAME OF LECTURER/TUTOR: ASSIGNMENT TOPIC: DUE DATE: TABLE OF CONTENTS 1. Introduction……………………………………………………………………………..3 2. A brief description of the event………………………………………………………….3 3. Downsizing overview……………………………………………………………………3 4. Downsize decisions……………………………………………………………………...5 5. Alternatives……………………………………………………………………………...5 5.1. Cutting out the extras………………………………………………………..5 5.2. Considering wage and benefit cuts………………………………………….6 5.3. Sharing ownership…………………………………………………………...6 6. Downsizing planning……………………………………………………………………..7 7. Managing downsizing process……………………………………………………………8 8. Pro-downsizing……………………………………………………………………………9 9. Conclusion…………………………………………………………………………………9 References……………………………………………………………………………………..10 Qantas Position Downsizing Event 1. Introduction 2. A brief description of the event On late February this year, Qantas announced that it will slash approximately 5000 jobs. This will be done over a period of three years. Qantas is an Australian airline that is very instrumental in serving both the domestic and international community (Cogan, 2013). It has even been described as the world’s best airline in terms of customer service, safety and reliability. The decision to downsize positions for Qantas came as result of a massive loss that had been incurred (Hume, 2014). Qantas posted a loss of about $252 million. This happened over the period of six months ended December 31, 2014. The job positions to be downsized are of a wide range. This is from the management to non-operational jobs and other positions in maintenance. The Qantas top management also cited cutting of costs as another reason that drove them to the downsizing decision. This announcement elicited a mixture of reactions among the Qantas staff and the Australian government (Pearlman 2014). The top management however still sticks to its stand. 3. Downsizing Overview In recent times, many states and countries have fallen victim of poor economy. The effects of a falling economy are far-felt in corporations and companies (Enhert, 2014). Companies, on their part, attempt to avoid the adverse effects of a poor economy by downsizing their job positions. Downsizing is generally the reduction of a company’s personnel. Most companies, however, continue to downsize job positions even after the economy has recovered. Companies are therefore required to have lawful and justifiable reasons for downsizing. Different companies have cited a number of reasons for downsizing job positions. The major reason for downsizing normally is to reduce operational costs as in the case of Qantas (Heasley, 2012). This mostly occurs when the market conditions are not conducive. Often, companies may merge or acquire subsidiaries. The result of this is the duplication of support staff. There therefore arises the need to downsize in order to cut down on the workforce (Gadolfi, 2006). Other reasons for downsizing in companies include reduction of sales and consequent increase in profits, advancement in technology and outsourcing of specific business processes. Downsizing would benefit a company in several ways. Primarily, downsizing reduces labor costs by a big margin. Downsizing could also lead to elimination of wastages in companies (Edmond, 2013). Wastages in the form of payment of salaries and wages are cut down. Lastly, downsizing helps companies to focus on a limited workforce. On the other hand, downsizing could also be a huge setback to the company. A company could lose very valuable skills and knowledge through downsizing. Moreover, the remaining employees become stressed and lose the morale to work (Manson, 2014). This tarnishes the company or corporation’s image and could lead to losses in extreme cases. Companies should therefore strategize well and thoroughly before deciding to downsize job positions. They should make sure only the appropriate workforce is downsized and time the downsizing well. It is advisable for downsizing to be done early in the week (Manson, 2014). This is because the reactions of the remaining employees can be closely monitored and controlled during the subsequent days of the week. 4. Downsize decision 5. Alternatives 5.1. Cutting out the extras Instead of a quick resolve to downsize job positions, companies could instead choose to cut out the extras. Qantas Airlines, for instance, could have chosen to do away with the additional hiring of personnel and issue of bonuses (Creedy, 2014). These extra hiring and bonuses could be deemed entirely unnecessary after a thorough evaluation. Raises in salaries can also be slashed off. Non-vital upgrading of office equipment travels and office parties can also be done away with. Alternatively, the company could find cheaper options. Apart from saving them the agony of downsizing job positions, the employees’ morale to work remains affected (Sandilands, 2011). The costs incurred by the company also reduce a great deal. 5.2. Considering wage or benefit cuts Another great and effective alternative to downsizing job positions is wage or benefit cuts. In the case of Qantas Airline, reduction of the employees’ benefits or wages could have had a less effect than downsizing them altogether (Cameron, 2005). Even though the workers could feel a little bit infringed, they would still be far more appreciative that they are when downsized. A research by the British BC HRMA Research Group revealed that 10% of Australian citizens would rather take a pay cut that be downsized (Cogan, 2013). This shows the magnitude of effect that downsizing has on employees. This can be avoided by effecting wage and benefit cuts instead. 5.3. Sharing of ownership Lastly, companies can opt to share their ownership instead of downsizing. Individually operating companies are the ones which often experienced increased costs of operation (Griffin, 2013). They therefore go for downsizing as a solution. This is very ill-advised. Sharing of ownership could instead be a great solution to this quagmire. It brings on board additional capital that can cover up for the additional costs incurred. Instead of downsizing positions therefore, more positions could even be created (Gadolfi, 2006). The result is employees remaining motivated. This also eliminates the possibility of the corporation’s image getting tarnished. Very many companies and corporations especially in the one world alliance are able and willing to share the ownership of Qantas Airways (Hume, 2014). This would have salvaged it from the massive losses it is incurring. In addition to that, the workforce remains intact and the normal operations of the company are not tampered with. 6. Downsizing planning When downsizing is done repeatedly without a well thought out strategy, the organization’s effectiveness could dwindle to a near standstill. Downsizing is therefore a process that should be well calculated and executed with utmost finesse. It must be ensured that the organization’s intellect is maintained regardless of the downsizing. Similarly, how the downsized staff is treated really determines the morale of the remaining staff (Sahlev, 2013). Downsizing therefore needs thorough planning. Planning a downsizing of positions involves pointing out the target staff for the downsizing. The amount of compensation to them, if any, is then determined and possibly set aside. The organization then makes a decision of whether it will be involved in finding other jobs for the downsized staff (Cascio, 2007). The extent to which I will go with the finding of these jobs is also established. It is a concerted effort to keep the downsized employees happy and at the same time retain the morale of the remaining staff. Most organizations target the recently employed staff for downsizing. This is quite irrational. It should be avoided because downsizing needs to be based on the analysis of the business needs and not arbitrary statistics. The employees to be downsized should also be given a forewarning as prior to the down size as possible. Failure to give an early notice shows a lack of integrity on the part of the organization (Cameron, 2005). Even after the employees have been downsized and left the company, it is still the organization’s obligation to talk about it openly. Failure to do this leads to the remaining employees discussing it subserviently. This is not beneficial to the organizations. In overall, any organization should plan effectively for the downsizing process. An in-depth analysis should be conducted about what the company will look like after the downsizing, if the dignity of the downsized staff will be maintained and if the whole process will be in accordance with the law (Enhert, 2013). The company may also need to reconsider whether the downsizing is necessary after all. 7. Managing the downsizing process The Human Resource Management department is often faced with the daunting task of downsizing some positions in their organization (Manson, 2014). How this downsizing process is managed really determines the achievement of the organization’s business goals and its potential to escape legal liability. The downsizing process should therefore be managed very meticulously and efficiently. First and foremost, organizations are encouraged to develop a team that will plot the initial downsizing strategy. This could be individuals from the Human Resource Department and the top management. Initial discussions of the downsizing process are also encouraged to be limited to only the high level management and members of the strategic team (Enhert, 2013). The team should therefore have people with the ability to be highly confidential. Another aspect of managing the downsizing process is reviewing the employment policies, individual employment contracts and the rights and benefits agreed upon. Any agreements based on these aspects should be complied with to the latter (Sahlev, 2013). The organization should also comply with the worker notification laws and acts. Throughout the process, openness and honesty are encouraged. Regular communication should be made to employees concerning the state of the business. Even after the downsizing process, the organization should be very flexible to adapt to the new limited workforce. The remaining staff should learn to perform a wide variety of tasks and the management ability expanded. Innovation should be fostered to cut down more on costs even after the downsizing process. Qantas managed its downsizing process by progressively shutting down all its maintenance work outside of Brisbane (Pearlman, 2014). This remotely prepared the remaining workers psychologically for any eventualities. 8. Pro-downsizing Downsizing is an action undertaken purposefully by an organization. It has both benefits and setbacks. It therefore depends on how well the organization is set to combat the setbacks and embrace the benefits that ensue. Downsizing may result in increased communication and participation of an organization’s workforce. The organization may also be able to analyze tasks and personnel in advance (Griffin, 2013). The remaining employees increase their efforts to work. These should be embraced by the organization and be used to reduce the costs of operation. At the same time, downsizing may be met with a colossal lack of improvement. Instead, the organization could become more ineffective and get attributed negatively (Cascio, 2007). Managers of organizations should therefore help to facilitate the development of an advanced quality culture. The transition of both the employees who have been downsized and those remaining should be managed effectively. In case of the Qantas downsizing, it agreed with the Australian Labour Union before the downsizing process began (Creedy, 2014). Qantas also made an announcement about the downsizing early before beginning the actual downsizing process. 9. Conclusion References Part 1 Cogan, J. 2013, ‘Qantas Airways Announce another 1,000 Job Cuts’, World Socialist Web Site, 6 December, viewed 23 April, Collins, B. 2014, ‘Qantas Cuts 5,000 Jobs, Slashes Routes and Puts New Planes on Hold’, Business Insider, 27 February, viewed 23 April, Creedy, S. 2014, ‘Qantas to Slash 5000 Jobs as it Posts $252 Million First Half Loss’, The Australian, 27 February, viewed 23 April, Read More