8 References: 13IntroductionThe airline industry has been hit hard by the recent global crisis. This has reduced the number of commuters and forced the airlines loose a lot of revenue. On account of such a global crisis the airline industry is forced to look at ways like downsizing the work force and looking for alternatives by outsourcing some of the functions which are not its core activities. Downsizing here is concerned with “reducing the number of employees which will help to reduce the operating cost”. (Smith, 2010)This will have a beneficial effect on the short run as the airline industry will be saved from the extra burden but in the long run the implication might hurt them.
This calls for some strategic decision being taken so that the short and long term is accounted for. The airline needs to understand the repercussion this might have on the organisation. The management needs to look into the fact that downsizing and outsourcing will result in “a change in leadership style, some of the important functions being outsourced, loosing some of the valuable human force and an effect on the motivational level”.
(Sridhar, 2004)The airline industry needs to develop a strategy which helps in proper outsourcing and also ensure that the downsizing process passes without any hiccups. The airline needs to understand that the global crisis is a short term state and the changes it will have on their working one normal business cycle resumes. Considering this factors the airline needs to devise a strategy which helps in successful implementation of activities and carve a path for future development. The airline needs to also look at the long term objective while designing their activity as it can involve a huge cost when the airline hires again especially when the economy recovers. The airline should ensure that the transformation should be smooth and should be easily acceptable by employees and others so that the motivation level doesn’t dip and performamce doesn’t get hampered due to this.
Strategy for DownsizingThe airline while deciding to downsize the employee and outsource some of the functions can look for strategies which will help them deliver on the desired outcome.
It will hep them to improve efficiency and also ensure that the workforce remains motivated and work together as a group. Workforce ReductionThe airline to reduce the operating cost needs to reduce the head count. This can be done by tactics such as “early retirement, transfer, out-placement, buy out package, golden parachute, attrition and firing”. (Atwood, Coke, Cooper & Loria, 1995) This is a top down method and helps to reduce the number of employees. It ensures that reduction in the number of employees bring down the cost of operation and ensure that the objective with which downsizing was done is achieved.
Organisational RedesignThis is a medium term strategy and is aimed at “reducing the functions, hierarchical level, division, reducing some of the work by outsourcing and consolidating the work by reducing the working hour”. (Atwood, Coke, Cooper & Loria, 1995) This will work well for the airline as it will be able to ensure that the functions which don’t add much revenue is outsourced thereby improving focus and efficiency. It will also help to find the non core areas and differentiate those so that concentration and efforts can be laid on the important areas which will help to improve efficiency in the working.