Coursework Information Sheet
To be supplied to students when they receive the coursework assignment task
Unit Co-ordinator: Pauline Loewenberger
Unit Name: Leading People in Organisations
Unit Code: SHR601-6
Title of Coursework: Written Report on Case Study:
Formative (feedback purposes only)
The university policy is that you will receive prompt feedback on your work within 15 working days of the submission date. Exceptionally where this is not achievable (for example due to staff sickness) you will be notified as soon as possible of the revised date and the reasons behind the change.
Submission Date: 26th October
Feedback Date: 3rd November
Details of how to access the feedback: Turnitin
You are permitted only a single submission. Please make sure that you submit the correct document as mistakes cannot be rectified.
The Formative Task:
Critically evaluate the Assignment Case Study for evidence of High Performance Work Systems and support from Human Resources. You must support your analysis with relevant theories and models using quality academic sources.
You will need to present your analysis in Report Format (see below) of approximately 1500 words in in length (excluding references).
• Please refer to the learning outcomes on the next page and the assessment evaluation criteria on the final page. This is how your work will be marked.
• You are required to submit a formative assignment for feedback by the deadline of 26th October.
• The formative assignment must be submitted using the appropriate Turnitin link in the Assessments section of the BREO unit site
• Feedback on the formative assignment will be provided through Turnitin
Core learning outcomes
On completion of this unit you should be able to: Assessment number
1 Demonstrate a comprehensive knowledge and understanding relating to people management theory in the context of modern work organisations. 1
2 Critically evaluate and synthesise theories and models in practice to improve performance through effective leadership of people. 1
Assessment number In order to pass the assessment you will need to:
1 Apply theory to practice and demonstrate an adequate level of critical analysis of relevance to the effective and efficient management of people for optimum work performance.
2 Demonstrate the ability to analyse complex case studies by applying the most appropriate theories for adequate critical analysis, and recommend improvement.
Exhibit evidence of critical reflection on your personal value and beliefs systems and identify any issues relating to limiting beliefs and the behavioural flexibility necessary for growth within a modern organisation.
SHR601-6 Leading People in Organisations
Assignment Case Study
Comparing internally consistent Human Resources (HRM) at
Airport Express Train, Oslo, Norway
and Southwest Airline, Dallas, TX, USA
(Kuvaas and Dysvik 2012)
This case study provides a comparison between internally consistent human resources (HR) in two very different organisations with respect to size (small versus large), age (new versus old), ownership (an independent company reporting to the Norwegian Trading and Business Commerce versus listed), competitive strategy (cost leadership and customer service versus differentiation and customer service) and national context and labour laws (Norway versus the USA).
The main similarity besides that they both operate in the travel industry is that they try to achieve competitive advantage through people by implementing internally consistent HR. Internally consistent HR is the degree to which various HR practices are internally consistent, complimentary and reinforcing each other.
Historical background of Southwest Airlines (SA) and the Airport Express Train (AET)
Despite the severe economic collapse that hit the airline industry in 2009 SA still prevailed and managed to remain profitable. The results for 2009 marked SA’s 37th consecutive year of profitability. SA was established in 1971 with three Boeing 737 aircrafts. SA became a major airline in 1989 when it exceeded the billion dollar revenue mark. SA is currently the US’ most successful low-far, high-frequency, point-to-point carrier. SA operates 537 Boeing 737 aircrafts between 68 cities and more than 3200 flights daily coast to coast making it the largest US carrier based on number of domestic passengers (Southwest Airlines 2011).
CEO of SA, Gary Kellt, concluded the 2009 Annual Report to Shareholders by stating that:
“I will forever be grateful to our people for what they achieved in 2009. They preserved with dramatic challenges, continuous change and amid much economic anxiety. Despite that they produced outstanding results in on-time performance, baggage handling and customer satisfaction. Our customers rate Southwest service levels, arguably higher than ever. And we remain among the top low-cost producers of major airlines and America’s preferred low-fare airline. Our employees are the best and the reason Southwest continues to outperform our competitors.”
Clearly the CEO of SA believes that their remarkable success comes from their employees and how they are selected, trained, managed and taken care of, as we explain in this case study. SA is a widely debated and cited success story. When first we approached the AET we thought it was just another company trying to benchmark ‘the SA way’. Trying to imitate a successful company may however be a risky venture as evidenced by the problems Delta experienced when implementing Leadership 7.5 in 1994 – an effort to reduce Delta’s costs per available seat mile to match SA’s 7.5 cents (Wright and Snell 2005). However after having interviewed Kari Skybak, the director of HR at AET, we learned that they did not know much about SA. Rather her own inspiration with respect to HR at AET derives from Hanne Carlsson, the former CEO of Scandinavia Airlines (SAS) who transformed the company in the early 1980s by creating a business airline with exceptional customer service and punctuality. In 1982 SAS was awarded the title Airline of the Year by Air Transport World (Scandinavian Airlines 2010). Another inspiration with respect to the importance of nice and clean trains, is from Walt Disney’s emphasis on quality and keeping their facilities clean and customer-friendly to the largest extent possible.
AET (Flytoget 2010) is a member of an international niche of approximately 40 air rail links who have the dedicated task of bringing flight passengers to and from major airports. The major airport served by AET is Oslo Airport-Gardermoen, carrying more that 18.1 million passengers in 2009. In 2008 AET had approximately 300 employees (100 conductors, 120 stewardesses and 300 consultants) and served a total of 5.7 million passengers. It currently has 16 trains and 217 departures each 24 hours. AET has 10 minute departures between the airport and Central Oslo, a distance of 47 kilometres and 20 minute departures through the city into the heavily populated suburbs close to the airport. Recently AET extended its line by another 20 kilometres westward to the city of Drammen,
AET is a young company established in 1998 with the goal of achieving a total public transportation share for airline passengers of more than 50%. Getting people to leave their cars behind and change their travel habits drastically required a solution that was better than anything else available with respect to short travel times and comfort, reliability and punctuality. Trains were also considered to be the best environmental solutions. Since the beginning the philosophy of AET has been to deliver an exceptional produce down to the smallest detail. For instance, through you will often see other trains covered by pieces of graffiti AET trains are always cleaned before they are used. The customer is at the centre of attention and the journey should be highly comfortable and easy. AET prides itself with effective ticketless payment solutions, good travel warranties, and effective procedures to manage disruptions. For comparison purposes the fare for travelling from downtown Oslo to the airport is NOK 170 ($1 is approximately NOK 5, 90) and from Drammen to the airport NOK 250. In contrast the fares for travelling with the Norwegian state railways are NOK100 and 182 respectively. Accordingly AET attracts customers who are willing to pay more for a more pleasant journey.
AET’s market share is currently 36% which is the world’s highest market share for an air rail link service. In combination with other means of public transportation (buses and public trains) the total share of public transportation is now 60% compared to the goal of 50% which was set in the 1990s. AET has a 90% punctuality rate within 3 minutes and a regularity rate in comparison to planned journeys of 99.5%. These numbers are especially impressive when compared to trains operated by the Norwegian State Railways which score markedly lower on the same effectiveness measures. AET has also experienced remarkable development in customer satisfaction ratings from 92% in 2001-3 to 96% in 2008 and receive customer satisfaction and brand awards. In 2010 AET was ranked first on the Norwegian Customer Satisfaction Barometer while the Norwegian State Railways came out among the last on the list (179 among 190). Earnings before interest, taxes, depreciation and amortization have risen from NOK 87 million in 2000 to NOK 195 million in 2008.
With respect to HR and employees AET was awarded as number one on the Great Place to Work ranking in Norway 2008 and came out 3rd in 2010. AET’s business concept is to offer the best means of transportation to and from Oslo airport by emphasising security, punctuality and service. AET achieves this ‘through unique identity, the most effective solutions and an enthusiastic staff’. Thus, and in similar ways to that of SA, AET emphasises its people, security, profitability and the environment.
The context for HR in Norway
Compared with other countries a high percentage of the adult population in Norway (4.8 million in Jan 2010) is in employment (Statistics-Norway 2010a). This is mainly due to the majority of Norwegian women being in employments (7/10 women and almost 8/10 men; Olberg 2008). The unemployment rate is Norway is low and currently at 3.3%. for the last 20 years there has been a large increase in the number of people working in the service industry and in jobs with higher demands for formal education, whereas the number of employees working in traditional production industry has declined. In Norway approximately 64% are employed in the private sector and 36% in the public sector. 40% of employee in the private sector are members of trade unions, compared with 81% of employees in the public sector (Olberg 2008).
The Norwegian welfare state represents a cornerstone in the Norwegian society and exerts considerable influence on work conditions in Norway. The fundamental principle for the Norwegian welfare state is that its citizens should contribute based on their assets and receive according to their needs. Norwegians enjoy considerable benefits from the cradle to the grave. Examples include free health care, free education up to Master’s level, unemployment and sickness benefits, retirement at 67 for all and 5 weeks’ paid vacation. In addition on the birth of a baby parents are given 46 weeks leave on 100% pay or 56 weeks on 80% pay. Nearly all children are offered a place at kindergarten from the age of one year. The welfare system is capitalized by taxes, the average rate is 25%.
With respect to the work context in particular the working conditions in Norway are regulated by the Working Environment Act issued by the Ministry of Labour in 1977. In section 12 of this Act it is emphasised that jobs should provide workers with a reasonable degree of freedom, opportunities for learning and career development, variation and meaningful context , recognition and social support, and to relate their work to the wider societal equation. These requirements were introduced in joint agreement between the main labour organisations in Norway representing both employers and employees and based on research on Norwegian organisations emphasising employee involvement at work.
Despite the fact that a labour-friendly law does not guarantee good working conditions Norwegian employees experience among the highest level of satisfaction with their working conditions among European countries (EWCO 2007). These conditions include aspects of work conditions perceived by employees such as job security, having good friends as colleagues, feeling at home in their employment organisation, being provided with opportunities for personal development, getting paid well, and having good opportunities for career advancement. With respect to other aspects of working conditions such as pay differences, the differences between hourly wages for employees are among the lowest across the 30 countries included in the Organisation for Economic Cooperation and Development. In 1995 the top 5th percentile with respect to hourly pay wages in Norway earned 1.98 times the hourly pay was of the average worker. In 2006 this difference had marginally increased to 2.08 times. In contrast in countries such as Canada and the USA the difference was almost 4 times between the top and lowest 10th percentile in the 1990s (OECD 1996).
SA provides job security for its employees because it does not want to put its best assets, its people, in the arms of the competition. Besides it is much easier to achieve flexibility and cooperation in becoming more efficient and productive when promising employment security. As former CEO Herb Kelleher has written:
“Our most important tools for building employee partnerships are job security and a stimulating work environment …. Certainly there were times when we could have made substantially more profits in the short term but we didn’t. We were looking at our employees and our company’s longer term interests. As it turns out providing job security imposes additional discipline because if your goal is to avoid layoffs then you hire very sparingly. So our commitment to job security has actually helped keep our labour force smaller and more productive than our competitors.”
Even in the aftermath of 9/11 SA did not lay off a single employee owing to the average cut in flights by 20% and average lay off by 16% of the workforce in the US airline industry in the weeks that followed after the attack. Rather SA used the crisis as an opportunity to show that they were serious when they talked about taking care of our people. According to Jim Parker at SA (Gittell et al 2006), ‘we are willing to suffer some damage even to our stock price to protect the jobs of our people’.
According to the director of HR at AET, Kari Skybak, they do not have any official policy that promised job security. However, conversely they have never been confronted with situations wherein downsizing would be an option. After all the company has grown continuously since it was established in 1998.
Organisations that promise job security and that want to obtain profits through people need to ensure that they recruit the right people in the first place. This require among several things being an attractive employer and having a large applicant pool from which to select. In 2009 SA received 90.043 resumes and hired 831 new employees. The company spends a lot of time screening and hires primarily for attitudinal fit with the SA values and culture (happy people and team workers), as skills can be learned.
Kari Skybak at AET tells that it also recruits based on attitudes that fit with the company values which are, effectiveness, innovation and enthusiasm. In practice it tries to ensure that its employees act as ambassadors of the company. In the last round of recruitment in 2009 it received 400 resumes for 12 train stewardess positions. In 2010 the company also planned to introduce recruitment cards that its employees can distribute to former colleagues and friends.
Self-managed teams and /decentralisation as basic elements of organisational design
Part of SA’s cost advantage comes from having people who will do what is required to achieve extremely short turnaround time from landing to take off. Short turnaround times and being on time require team work among those responsible for different operations (e.g. check-in, boarding, mechanical operations, cleaning, baggage etc.) and that every employee feels responsible for almost everything. Accordingly at SA they typically use team goas rather than functional metrics. A Boston Consulting Group consultant noted ‘SA works because people pull together to do what they need to do to get a plan turned around. That is part of the culture. And if means the pilots need to load bags they’ll do it (O’Reilly and Pfeffer 2000).
Also AET puts heavy emphasis on decentralised decision making as employees on the trains have the authority to solve ant problem that may arise on the sport and immediately.
High compensation contingent on organisational performance
SA’s compensation practices include relatively heavy use of collective pay for performance, compressed pay levels, and consistent and fair treatment (i.e. not giving executives large pay increases when others are asked to accept a pay freeze). The company adopted the first profit-sharing plan in the US airline industry in 1973. Through this plan and others employees own about 8% of company stock.
At AET conductors are better paid than their largest competitor, the Norwegian State Railways, train stewardesses, however, have slightly lower pay levels than in NSR but higher than comparable positions in the service industry. However, according to the number of applicants per available position and the Great Place to Work ratings this does not seem to negatively affect the attractiveness of the company. AET does not have a collective pay for performance plan.
Given SA’s emphasis on selecting for attitudes and fit and employment security, heavy investment in training becomes an important part of the package on internally consistent HR practices. At SA’s University for People approximately 25,000 employees are trained each year. Several different training programs are conducted with emphasis on content such as doing things better, faster, cheaper; customer service; understanding other employees’ work and how to keep the culture alive and well.
As in SA newcomers in AET begin by attending a 3-day introduction program including general information about the company, different functions and operations, customer service and communication, on the job training and visits to every train station, to the head office and the maintenance department. On the first day of the program the top management team, including the CEO welcomes newcomers. After the program a top management representative gives a brief speech and hands out a certificate stating that they have completed the training program.
After the induction conductors and train stewardesses complete five-week programs dedicated to their different functions, where they are trained in, for instance, security, communication and the AET culture. In addition e-learning programs are offered that make it easier for shift workers to conduct training. Newly hired administrative employees engage in a 4-week program wherein most of the time is spent on trains and train stations to learn and understand daily operations. This is also useful because the administrative staff is mobilised when incidents happen, such as delays and cancellations.
In 2009 a new training program that educates hosts for Norway’s capital, Oslo, was introduced. The program is offered to provide additional developmental opportunities for the employees and at the same time increase customer service. This is mandatory for newcomers and optional for current employees.
Reduction of status differences
A fundamental premise of getting competitive advantage through people is that companies area able to get the best and most out of all of their people. At SA the atmosphere is extremely informal and egalitarian and everything is done to point out that every single employee is important. Compressed pay and benefits are part of this but the value statement from the early 1980s, the Golden Rule, sums up their approach: ‘Above all employees will be provided the same concern, respect and caring attitude within the organisation they are expected to share externally with every Southwest customer’.
AET also emphasises few hierarchical levels and informal communication between all employees, in addition top management is not only called upon in cases of incidents on the train or the stations, they regularly spend time on trains at least monthly.
Widespread sharing of information on such things as strategy, financial performance and operational metrics ensures that employees have the information to be involved an able to contribute to do things better and it signals that they are trusted not to misuse the information. At SA information on costs, operation and financial data is shared among all employees.
AET operates almost around the clock and several steps have been taken to ensure sharing of information throughout the company. The main channel is the intranet, but SMS, internal leaflets and notice boards are also used. Intranet publishes information on the news of the day at AET, facts and figures, strategy and business plans, financial and operational results, work processes and regulations, employee manuals, who does what with pictures and a calendar with important meetings, training and social activities.
Both SA and AET are successful companies but learning from success stories is risky for several reasons. As a final note then it should be mentioned that the value of implementing the type of HR described as high commitment, high involvement or soft, is also supported by research evidence. First a meta-analysis (Combs et al 2006) of the relationship between HR and organisational performance including a total of 19,319 organisations and 92 individual studies shows positive relationships for HR practices such as a heavy focus on training, high compensation, widespread participation, selectivity in hiring, internal promotion, flexitime, grievance procedures and employment security. Even more important a significantly stronger relationship is found for systems that are internally consistent or aligned than for individual practices.
In addition, at the micro-level meta-analyses suggest that important work outcomes come from being empowered and provided with job autonomy, job security, feeling that one is being treated fairly, perceiving support from the company and being affectively committed to the company – to name but a few!
You will present your analysis in report format (see guidelines below)
Section / Title Details / Guidance
Title page Title of your report. Address (to/from) and date the report.
Executive Summary 150 word maximum summary of your report, including key recommendations.
Contents Page Include page numbers.
Introduction Short (approximately 250 words) introduction to the report setting out what the aims and objectives of the report are, what the report will cover and why. You should also seek to explain why HPW is such a ‘hot topic’ in HR.
Analysis Using third party sources (e.g. academic literature or practitioner-orientated material) for support, analyse the theoretical concept underpinning high performance working in the context of the case study. What it is, to what extent is it thought to work or not and why it benefits (or not) an organisation. You should make reference to any relevant models, and frameworks and include critical viewpoints. (Approximately 700 words)
Conclusions This section should initially answer the report aim and objectives and draw together the main points from your analysis of literature. It summarises what has been learned from undertaking this analysis. No new information should be presented in the conclusions. (Approximately 200 words)
Recommendations The recommendations for action should be linked to creating and sustaining high performance, or to enhancing the existing level. In other words, your recommendations should cover conceivable contingencies for leading people in organisations. (Approximately 200 words)
Reference List A list of all sources cited directly in the text. Harvard style
Bibliography List The sources you consulted but which you do not cite.
Criteria Excellent (70% and above) Commendable (60-69%) Good (50-59%) Satisfactory (40-49%) Marginal Fail (35-39%) Fail (1-34%)
Introduction Provides a clear introduction that frames and highlights the main issues. Attempts to frame and highlight the main issues. Some valid and relevant issues and identified although not well framed. Few relevant issues are outlined although no real framing Fails to demonstrate adequate knowledge and understanding of key issues and concepts. Fails to consider any scenario or concepts relevant to leadership and management
Application of theory Applies theory to practice to demonstrate an excellent level of critical analysis of relevance to the effective and efficient management of people for optimum work performance. Applies appropriate theory (ies) using published sources introduced and with substantial evidence of independent reading. Applies theory to practice to demonstrate a very good level of critical analysis of relevance to the effective and efficient management of people for optimum work performance. Appropriate application of theory (ies) using published sources introduced and with some evidence of independent reading. Applies theory to practice to demonstrate a good level of critical analysis of relevance to the effective and efficient management of people for optimum work performance. . Appropriate application of theory (ies) using published sources introduced and with limited evidence of independent reading. Applies theory to practice to demonstrate an adequate level of critical analysis of relevance to the effective and efficient management of people for optimum work performance. . Appropriate application of theory (ies) using published sources introduced and with little evidence of independent reading. Weak application of appropriate theories and models. Fails to demonstrate detailed understanding. Very little use of published sources. Very little or no attempt to use published sources. No evidence of understanding key issues and concepts.
Analysis Demonstrates a comprehensive and excellent knowledge and understanding relating to people management theory in the context of modern work organisations. Critical analysis precisely explores in-depth implications of the issues highlighted. Demonstrates a comprehensive and very good knowledge and understanding relating to people management theory in the context of modern work organisations. Critical analysis clearly explores implications of the issues raised. Less in-depth than for an A grade. Demonstrate a comprehensive knowledge and understanding relating to people management theory in the context of modern work organisations. Analysis is limited but coherent. Demonstrate a comprehensive knowledge and understanding relating to people management theory in the context of modern work organisations.
Vague and discursive approach or overly descriptive at the expense of application and analysis. A random collection of statements with little attempt to use evidence to support the arguments. Little of value to the task. A random collection of statements with no attempt to use evidence to support the arguments. Nothing of value to the task.
Conclusions Conclusions are valid and clearly derived from in-depth critical analysis Conclusions derived from in-depth critical analysis. Largely convincing Conclusions are limited and not entirely convincing. Validity of conclusions is unconvincing. Conclusions do not follow from the evidence and argument presented. A random collection of statements based on the students own point of view with little or no attempt to draw analysis to conclusions.
Recommendations Clear and appropriate recommendations that meet precisely the demands of the task Clear and appropriate recommendations. Less comprehensive than for an A grade. Recommendations are reasonably clear and mostly realistic. Recommendations are vague. Doubtful feasibility. Recommendations are unclear or unrealistic. No attempt to identify appropriate recommendations.
Presentation and Referencing
Clearly and concisely structured in report format, sourced throughout and with a comprehensive bibliography. Clearly and concisely structured in report format, sourced throughout and with a good bibliography. Well structured in report format, sourced throughout and with an adequate bibliography.
Not in report format. Few citations and a passable bibliography.
Few citations and no bibliography. Not in report format. Poorly structured.
No citations and not in report format. Poorly structured