Notes

The Hay Group Singapore: People management

In the aviation business, each airline has a different definition of talent in “Knowledgeable talent” and “Good-minded talent” perspective. This is why each airline has different characteristics and structure. Starting from the definition of its “Talent” for Low Cost Carriers (LCCs) and Full Service Carriers (FSCs), I will explain how it is different.

Historically, FSCs started doing business by focusing on reliability in delivering products and services, based on rare technological skills. Compared to today, the overall external suppliers in the market at that time were not strong enough to support some piece in value chain of operations, thus the organization and job structures were functionally designed under the concept that all jobs had to be built in-house. The older organizations, the more jobs are tinily separated especially for each individual, without using any human resource management tools such as job evaluation to define job level properly. This results in a silo structure where organizations need to assemble many employees for just a single project because everyone have their own tiny piece of accountability. When there, however, are many people involved but no one has mighty decision-making authority, it results frequent number of meetings series which often unable to achieve consensus, leading to red tape operations cause uncompetitive business. This symptom happens not only in Thailand but also all over the world, especially in countries where airlines had operated as a monopoly.

While the newly set-up LCCs are also focusing on reliability, but different on customer perspective rather technological skills. Because LCCs were established in times of high competitiveness and external suppliers in the market today are capable enough to support more services in non-core works, thus the organizations are structured to be process-base and matrix management so as to be more agile and flexible with faster decision-making, which leads to increased competitiveness.

Due to the different organization structure design, the definition of Talent of “Knowledgeable talent” and “Good-minded talent” for these two carriers will be different. At FSCs owned the silo structure requires knowledgeable talent to possess specific skills and in-depth understanding in their jobs. The more the job is separated, the smaller the job scope. The structure shows common symptom when decisions cannot be easily made in meetings or either the employee who accountable for the required information is absence. In this structure, each job is obviously designed separating from others. In the matrix structure, however, LCCs’s knowledgeable talent are multi-skilled made the organization structure flatter and slimmer impacting to ease of job rotation for future career. In another hand, good minded talent in the silo structures are employees who strictly accept and follow rules and regulations, while good-minded talent for the matrix structures tend to be employees who are able to operate within the boundaries of the rules and regulations.

Due to the different demand of knowledgeable and good minded talent lead to different practice in each HR value chain. Starting from observation in cabin crew recruitment, airlines find different characteristics of their right seeds. For example, Thai Airways seem recruits cabin crews who behave in the traditional Thai manner, while Thai AirAsia seem differently recruits cabin crews who are confident and charming, and in different way, ThaiSmile seem recruits crews who are chic and cheerful. Each airline tries to select the best cabin crews to fit the type of service they offer. Making us difficult to imagine traditional Thai mannered crew to sing and sell products to passengers onboard or to imagine chic confident cabin crews to inconveniently serve passengers in a very traditional Thai. Selecting the right people is a fundamental factor in driving organization efficiency.

Work-related pay in logistic industry including aviation business is designed to be much higher in work-related pay compared to other industries. For example, at some regional airlines, while cabin crew normally receive total pay around 40 – 50,000 Baht a month, the monthly salary is only fewer higher than 10,000 Baht. The remainder comprises flight allowance and other pay, which the crew will not receive if they are not working on flights. The flight allowance is calculated differently in each airline, for FSCs, which have cross–continents flights, flight allowances are conventionally paid as per diem rate or daily allowance. This kind of allowance is complex to calculate. LCCs which have regional flights normally pay as block hours, which is calculated based on flight duration in flight schedule. The block hours are easier to calculate compared to per diem as of it straightforward. For other pays, another main differentiator between FSCs and LCCs is the share that the crew receive for selling products on the airplane. FSCs do not focus that much on sale of products, while the LCCs give significant attractive pay for this. Some airlines also include sale commission in severance package when the employment contract ends while some don’t.

When differentiating between businesses, some may think in terms of equipment or pay level. Actually, job design and people manage are the critical differentiating factors. As observed in the aviation business, while airlines have the same Boeing or Airbus aircrafts, they are performing differently in their business concepts with different job design and people management, leading to different positioning of each airlines. Every concept has their own strengths and weaknesses depending on the airlines’ focus. Organizations need to find their own differentiator and align it with their job and people structure to create a competitive advantage in today’s complex business landscape.