Current HR Management Practices: A Focus on Air New Zealand

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Introduction

Air New Zealand is both a domestic and international airline that flies passengers and goods inside New Zealand as well as to and from the United Kingdom, the South West Pacific, North America, Asia, and Australia (Rigby, Mueller, & Baker, 2011). Air New Zealand has functional departments that provide engineering as well as ground handling services. Booking systems, travel wholesale, and retailing services are all provided through subsidiaries.

Information about Client

Air New Zealand Limited is the national carrier airline of New Zealand. Based in Auckland, the company provides commercial scheduled flights to 20 domestic and 31 foreign destinations in 20 nations, principally throughout and within the Pacific Rim.

Current HR Management Practices in New Zealand

PART A: Identification and Evaluation of Present HR Practice and Processes

Compensation and Benefits programs

Many businesses, both locally and worldwide, are seeking to discover creative compensation solutions in a competitive business climate. It has a direct relation to increasing the overall performance of a company (Luo and Milne, 2014). Air New Zealand uses an effective compensation and benefits scheme that motivates employees.  The type of incentive pay has long been a standard part of employment contracts. Using incentive systems is not just a defensive strategy on the side of failing businesses; it is also, more often than not, a constructive move in acknowledgment of the strategic role that remuneration plays in achieving company objectives. Via the utilization of a rewards system, Air NZ has been able to work towards the fulfilment of company objectives. Workers seldom perform to their full capacity, according to several academics, and as a result, human resource utilization in firms is frequently below optimal levels (McCabe, 2021). As a result, the firm uses reward systems to elicit discretionary efforts from workers which often result in rewards that outweigh the costs. There are numerous different techniques to incentive compensation as used by Air NZ, including bonuses, stock purchase, profit sharing, and other forms of equity compensation. Compensation and perks are key aspects of human resource management since they assist to keep employees engaged. It assists in providing benefits to workers depending on their performance and activities, as well as bringing out the best in staff within an organisation.

Training and development

Training and development refer to the internal educational activities inside an organization designed to improve workers’ expertise, knowledge and abilities by giving information and guidance on the way to effectively execute certain jobs. Apart from better compensation, Air New Zealand has undertaken a number of training and development programs for its staff (Holtbrügge, Wilson, & Berg, 2006). Training and development are critical components in the airline sector because they have the potential to boost the efficiency and effectiveness of both people and organizations. It plays a unique role in the fulfilment of an organizational objective by taking into consideration the goals of the corporation and the personnel at large (Cumming, Wood, and Zahra, 2020). This HR function is necessary after recruitment and choosing the most qualified candidates for the appropriate position; employees must then be taught in the appropriate manner (Lai & Ishizaka, 2020). However, as Khan, Khan, & Khan, (2011) points out, there are disadvantages of training and development for organizations as they can be very expensive. Regardless of this fact, the author still maintains that the benefits of these programs outweigh the costs.

New employees are offered world-class pre-employment training that are aviation specific tailored to deliver high-quality hands-on aviation. It also participates in development, which are educational activities that are aimed to assist an individual person grow but are not restricted to a certain job or position (Eaton, 2017). Involvement in this kind of learning extends beyond the current employment and is more long-term in nature. Again, it educates personnel to stay up with the company as it evolves and expands, and it is for this reason that Air New Zealand is considered to be one of the greatest airlines operating in New Zealand (Ngo and Tsui, 2020). Both factors have an influence on the return on investment, and the success of the company is dependent on the performance of its employees since the human resource capital of the company is critical to the company’s development and success.

The Human Resources Department has worked hard to establish a strong brand for the company both inside and outside of the nation. In line with an argument presented by Ahammad (2017), such strategies will result in a shift in the organization’s overall operations and strategy. The firm, on the other hand, has to put more effort into building a more positive brand image around the globe. Human resource management must recruit the most qualified and talented employees (Brueckner et al., 2016). The recruitment of qualified personnel is very important and therefore ought to be accomplished by all means possible.  The CEO has built a leadership school, where a sum of 1400 employees participate each year to learn more about leadership (Air New Zealand Group, 2015). Strength in leadership may be reflected in the amount of revenue that the organization generates throughout the given accounting period (Harvey, 2007). The human resources department should guarantee that the airline generates the anticipated profit. By 2012, Air New Zealand has failed to generate the profits that were anticipated (Air New Zealand Group, 2015). For this specific aspect of development, expert assistance is required in order to save money. However, for maximum performance of the HR department, the organization ought to focus on talent identification and performance management systems in order to ensure that the best candidates are selected from the pool of individuals.

PART B: Strategic Congruence

Strategic management in the VUCA world

The degree to which the performance management system obtains work performance that is consistent with the organization’s goals, strategies, and culture is referred to as strategic congruence. For instance, if a corporation places a strong emphasis on innovation, the firm’s performance management system will evaluate how effectively the staff are incorporating new ideas into their goods and services. This criterion stresses that the firm’s performance management system offers assistance and training to staff in order for them to make a contribution to the organization’s accomplishments, which in turn suggests that the framework must be adaptable enough to be capable of dynamically changing in response to the firm’s evolving strategic posture, as demonstrated by the firm’s accomplishments. A balanced scorecard is a method of generating strategic congruence that has been popular in recent years. As a way of connecting long-term strategic plan to immediate actions, it also provides an opportunity for organizations to continue improving and gain knowledge. This can be accomplished by focusing attention on a variety of departments within the organization, like finance, internal operations, learning and innovation, and trying to translate the vision.

The topic of strategic management has for long been brought to the fore when it comes to debates and discourses, even in environments with the greatest levels of predictability and stability (Thorén & Vendel, 2018). In a VUCA (Volatile, Uncertain, Complex, Ambiguous) setting, the penalty of making a mistake might be very high, if not impossible to avoid. It is now imperative for companies to put up extra commitment in order to accomplish their goals. Organizations and individuals find themselves in VUCA settings, which are complicated and changing contexts in which they must operate (Millar, Groth, & Mahon, 2018). In current times, the concept of VUCA, which is widely used in political situations, has also established a strong association with several aspects of the commercial sector (Cousins, 2018). Unlike in the past, when businesses intended to address a great deal greater uncertainty, today, uncertainty has become an expected element of the business setting, and therefore must be handled in the appropriate manner (Kaivo-oja & Lauraeus, 2018). Managers and executives should develop an adaptive and proactive approach to ensure that the administration is carried out effectively and successfully. In order to avoid being reactive as much as possible, leaders and managers will take a proactive approach. The company has placed a strong emphasis on strategic planning, the adoption of new technology, the execution of excellent service, and the happiness of its customers all of which will lead to strategic congruence. For instance, automation has ensured continued performance for the organization. The decrease in operational costs is the most significant advantage that airline service providers get. Because computer systems execute the vast majority of the job, the operational costs are reduced to a great level as well. With computers taking care of the majority of the labour, starting with the flight’s direction and continuing through the airspeed management, flight becomes more economical and seamless for passengers. When a flight is performed efficiently, airline service providers make a substantial profit and steadily lower their operational costs, provided that they are using good flight management systems.

Company investment in the areas of training and development has been proven to be a potential source of competitive edge and to have the greatest potential to contribute positively to performance of the organization thereby leading in strategic congruence. Moreover, Rodriguez & Walters (2017) discovered that improving employee knowledge and competence as part of the human resource development process increases the likelihood that corporate goals will be achieved in the long run. As a result, human resource strategies may have an impact on a company’s overall performance, which will serve as a competitive edge. The programs offered by Air NZ are essential in providing the organization with a competitive advantage since the staff will be able to perform at their level best. A number of academics have concluded that human capital may be the most important factor in maintaining a competitive edge. Companies that want to succeed in the present global business environment must make appropriate human resource investments in order to attract and assemble employees who have acquired greater skills and abilities than their rivals. Air New Zealand must invest in the right development of their human resources. This theory of human capital development provides a rationale for embracing choices that firms have put together in terms of structuring personnel inside an organization.

Strengths Weakness

Successfully merges with other organizations

Automating of operations ensuring continuous performance

Effective training and learning initiatives resulting in a highly trained staff

Invests significant resources in the training and development of its personnel

High degree of satisfaction among its consumers

A high satisfaction rate among current customers due to customer relationship management

The firm consistently outperforms its competitors in new markets

Competence in expanding into new markets and achieving success in them

Diversification of its economic cycle risk across the markets where it operates

Returns on capital expenditure that are above average. Lost competitive opportunities

Significant rate of attrition in the labour force

Spend much more on training and developing its staff than its rivals

Little success in merging companies with diverse work cultures

Profitability ratio and Net Contribution percent are both below average

Opportunities Threats

The steady cash flow to invest in complementary product categories

The organization may invest in new technology and product sectors

The expansion of the market to strengthen its competitive edge 

New technology gives the option to implement a distinct pricing structure

Increased globalization offers opportunities of new markets A rise in rivalry, which has placed downward pressure on pricing

May see a reduction in income or potentially a loss of share within the airline market

Because of the rise in the price of gasoline, there has been a spike in input expenses

Rising fuel prices affecting other businesses that give inputs to this firm

Continuous technological advancements need the training of the personnel to stay up with these improvements

TOWS

The organization can leverage its cash flow strength to invest in new opportunities within the industry. For instance, the organization may opt to invest in new product categories and technologies. Given the fact that technology is a phenomenon that constantly change, that is, what might be new today may be obsolete tomorrow, the firm can use its strength of steady cash flow to keep up with the pace. The firm can also use its competence in the industry to ensure that it maintains its industry share through leveraging additional opportunities which will ensure an increase in competitive edge.

PART C: Recommendation

Talent Identification and Selection Strategies

Training and development ought to go hand in hand with talent identification. This is so because talent identification is an ongoing process and talent is measured by the degree of improvement in training. Traditional recruitment and hiring practices in the aviation sector include sourcing talent from higher education institutions, technical training companies, and the military (as well as, in certain situations, from rival firms), with the aim of fostering internal pipelines for advancement and growth (Golik, & Blanco, 2014). The industry often expresses dissatisfaction about a lack of sufficient talent, which it attributes to a combination of supply as well as rivalry. Companies have also expressed concern that conventional talent providers frequently generate excellent goods (human capital), however these prospective workers must be trained again once they enter the job market, and this results in a significant strain on available resources for the company (Jayaraman, Talib, & Khan, 2018). It becomes more and more complex to tap into talent pools, and statistics indicate that the number of conventional institutions creating talent is declining. This is presenting a significant challenge for not just the aviation sector, but also for several other businesses throughout the globe. Talent identification is indeed an important step in the selection process within an organization and Air New Zealand can leverage these opportunities to select the best talent available.

An integrated talent management system is built on the identification process, which is the building block of the system (Brooks, 2018). This strategic process is comprised of goal formulation, performance assessment, and development activities carried out within a cohesive coherent model with the purpose of aligning personal and teams’ objectives with those of the company. In spite of the fact that almost all talent management systems will include performance assessments, they only give information on previous performance (top performers) (Egerová, Eger, & Jirincova, 2013). As a matter of fact, they do not assess the staff’s prospects for advancement to more vital strategic positions (high potentials). Performance management is the first stage in the process of talent identification; nevertheless, a full talent identification procedure necessitates the identification of potential as well (d’Armagnac, Al Ariss, & N’Cho, 2021). A systematic procedure for deciding if people possess what it needed to move to positions of higher managerial responsibility or to jobs requiring increased technical expertise in the future.  Insight gained from a good assessment may be used to create development projects that will test leaders’ talents and suitably extend them into new leadership terrain while without jeopardizing the firm’s investment in them (Egerová, 2013). It is possible that development projects may fail to achieve their stated objectives if they do not have accurate information on their performance and potential.

When it comes to selection, human resources might use a variety of selection procedures. As part of the hiring procedure, a multistage selection approach incorporates a variety of different evaluation instruments (Wahyuningtyas, 2015). In the human resources department, it is their responsibility to validate each evaluation tool and ensure that it is properly linked to the criteria of the vacant post. Personality assessments, skills tests, interviews, and sample job performances are all illustrations of distinct phases in a multistage selection method. This method is used in conjunction with another strategy, either conjunctive or compensatory.

Conjunctive Selection Strategy

When the HR department employs a conjunctive model, it applies a number of different evaluation instruments in a sequence of phases throughout time (Kaufman, 2013). Candidates are excluded from consideration if they do badly on their first examination. When employing this method, the evaluation tools should always be properly organized so that an applicant is not excluded primarily on a less essential criterion than one that is reviewed later in the procedure (Ibrahim & Zayed, 2018). Despite this, the benefit of this technique is that it is less expensive than a compensating strategy since the subsequent evaluation instruments are provided to a smaller number of participants.

Compensatory Selection Strategy

One method of overcoming the disadvantages of the conjunctive optimization technique is using a compensatory selection method (Johnson, 2000).  All evaluation instruments are provided to candidates at the same time under this procedure — or, at the very least, all of them are offered prior to an applicant being eliminated or chosen (Al Aina & Atan, 2020). The results of all of the evaluation instruments are merged to provide a grade average for each candidate. The outcomes of one evaluation tool are less likely to result in a candidate being removed under this method, and contrasts may be made between the aggregate outcomes of all candidates.

Performance management systems

Performance management systems are crucial in ensuring that the present human resource management practices at the organization are efficient. In this case, performance management systems are essential to check whether the staff are working towards the attainment of organizational goals and whether the organization as a whole has areas that need improvements when compared to competitor’s HRM practices.

Balanced scorecard

In strategic management performance metrics, a balanced scorecard is a measure that enables organizations discover and enhance their internal processes in order to enhance their external results. A performance measurement system evaluates historical performance data and offers businesses with recommendations on how they can make better choices in the future. A balanced scorecard can help Air New Zealand to determine the key performance indicators that are critical to the achievement of their strategic objectives. Staff members who are involved in their job and have the right mentality are more likely to be successful in this setting, which includes having effective leadership and management (Bochenek, 2019). Furthermore, it also works in environments when there are mechanisms in place to review progress and motivate personnel to achieve the intended business outcomes. It has shown to be beneficial in tracking a wide variety of performance indicators, allowing the management teams to choose where they should concentrate their efforts the most. The scorecard is beneficial in turning plan into practice, as well as in helping the organization to achieve its vision and strategic objectives. Because of the balanced scorecard, employee’s performance and engagement are increased, and engaged workers are better able to concentrate both mentally and emotionally on their duties. In as much as the BSC is a useful framework for performance management, Salem, Hasnan, & Osman (2012) highlights some of its limitations such as the fact that it encourages internal focus while neglecting the critical changes in the external environment. They also assert that the BSC framework does not mention time explicitly during implementation as a management system. Nevertheless, because of the balanced scorecard, employee’s performance and engagement are increased, and engaged workers are better able to concentrate both mentally and emotionally on their duties.

Best Practice 

It entails identifying and implementing the most effective strategies for achieving the organization ’s goals and the strategic objectives. Air New Zealand has adopted best practices in order to stay abreast of the techniques employed by other successful companies in order to compete in their respective sectors. Aside from that, they are comparing their methods of operation to the methods employed by other executives. In addition to allowing the airline to be more competitive, keep increasing profits while also developing new travel lines, enhance the expertise of their staff, employ technologies much more efficiently, react appropriately and much more rapidly to advancing innovations and minimize waste from greenhouse gases, thereby improving the environmental quality, the best practice method has been beneficial.

Competitor benchmarking

Competitor benchmarking refers to the process through which organizations compare their operations with those of their competitors in a number of metrics. A human resource strategy that uses competitor benchmarking collects information on features of the systems, in additional to human resource management practices from other similar firms (Ahmad et al., 2021). It allows them to assess their own performance and highlight the areas where they need to make improvements as a result. On its overseas flights, Air New Zealand has competitive pressures from carriers such as American Airlines, China Eastern, and Air Asia among others. Via benchmarking, the corporation may compare its human resource performance parameters, like their overtime use, employee turnover, and customer satisfaction levels, with those of competitor airlines, providing additional context to the figures. When evaluating the airline’s human resources strategy, it is important to determine if the company is doing enough of the right things to attain competitive edge in terms of staff management. Competitor benchmarking may result in a better overview of the organization and the way it performs on district levels by the HR department and this may eventually aid in gaining competitive edge.

Performance Appraisal

Performance appraisals are carried out to assess the job performance of staff members. This procedure assesses the success of recruitment, selection and orientation. Competency by Objectives is among the approaches that can be employed in performance appraisal. The focus of Competency by Objectives is to predict the future through the development of long-term goals as well as strategic planning. This implies that the approach focuses on achieving results rather than the regular job activities that takes place at the organization.

D. Other HR metrics

This refers to the metrics that are employed to assess the success and value of human resource efforts in several areas, such as turnover, labour costs, training, the return on human capital, and general expenditures for each individual worker. In every given organization, the employees are the most precious resource available (Alola & Alafeshat, 2021). A critical aspect of human resource metrics is that they enable the company to establish a meaningful link between the results of its operations and the value of its human resource activities. It is vital for human resource officials to evaluate their own performance as well as provide the information that decision-making executives demand. The airline recognizes that their human resources department must make use of the data that they do have in order to comprehend the KPIs and how it may provide them with a competitive edge as an objectively improved strategic partner. Additionally, it will aid them in assisting the CEO and other executives in resolving the concerns of the individuals who are important to the company.

Conclusion

The organizations currently not performing poorly in the human resource management. However, there are some human resource management practices that can be incorporated in the HR department to ensure that it attaints it maximum performance while also improving the overall performance of the organization. The airline recognizes that their human resources department must make use of the data that they do have in order to comprehend the KPIs and how it may provide them with a competitive edge as an objectively improved strategic partner. Competitor benchmarking is recommended since the corporation may compare its human resource performance parameters, like their overtime use, employee turnover, and customer satisfaction levels, with those of competitor airlines, providing additional context to the figures.

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