Compensation and Benefits Practices
by Steven H. Appelbaum and Brenda M. Fewster
The commercial airline is an extremely competitive, safety-sensitive, high technology service industry. People, employees and customers, not products and machines, must be the arena of an organisation’s core competence. The implications are vast and pervasive affecting no less than the organisation’s structure, strategy, culture, and numerous operational activities. Completed by 13 respondents (executives), this audit presents a series of select findings of a human resource management audit carried out in 2001-2 and contains extensive data on airlines from nine countries from around the globe.
The conclusion drawn from these three bodies of work is that, with the exception of a handful of high performing airlines, the industry as a whole continues to function as per a traditional, top-down, highly divisionalised, industrial model of operations and governance. This model is manifestly inappropriate in such a highly knowledge-based service market as the airline industry. HRM expertise in general and compensation and benefits in particular are required now, more than ever, to spearhead the strategic development of a customer-centric, learning-oriented workforce that is capable of adapting quickly to the strategic goals and change imperatives facing the airline industry.
Dr. Steven H. Appelbaum
holds the Concordia
Chair in Organizational
Molson School of
University, 1455 de
Maisonneuve Blvd. West,
Bureau GM 503-9,
Canada H3G 1M8.
Brenda M. Fewster, MA,
MBA, Webster Library,
1455 de Maisonneuve
Blvd. West Montreal,
Quebec, Canada H3G
Strategy in the aviation and airline industries is premised upon two fundamental drivers that have been evolving since deregulation of the US airline industry in 1978: one, a growing global concern for safety; and two, an ever-increasing consumer expectations of broad service choice and service excellence. Research has long shown that accidents and poor service quality are primarily rooted in socio-technical human factors, not technology per se. Sub-optimisation, or poor quality in regards to management, decisionmaking, teamwork, employee motivation, or communication can translate into loss of customers, loss of market share, loss of organisation assets, and above all, loss of life.
In such a safety-sensitive, customer service-centric environment, the traditional product-centred industrial model of corporate structures and industrial relations is inappropriate. Human resource management (HRM) expertise is required now, more than ever, to spearhead internal marketing
Volume 26 Number 7 2003
strategies in order to gain customer lock-on. The primary area of focus of strategy is the manner in which the HR department in general aligns general activities, policies and procedures with the compensation and benefits opportunity imperatives of the organisation. This relevant HRM compensation and benefits function is the focus of this article. Methodology
The original purpose of the review of the literature was to find other empirical studies of the airline industry regarding HRM practices from an applied perspective, with which to compare and contrast the results of the audit presented later in this article. None were found. This is consistent with the findings of other researchers. Thomas (1997) author of the book, A Portfolio Management Approach to Strategic Airline Planning, comments on the scarcity of research in the area of airline management. “In reviewing the literature on international aviation, it is clear that researchers tend to analyse the industry at a macro-level. Although it has gained much...