FABO plc is a small low cost ‘budget’ airline, operating from their headquarters in the UK and serving several European and Asian destinations. They operate from a selection of second tier airports in and around London and the Midlands including Gatwick, Luton and East Midlands. These are selected because of their lower charges and easy availability of take-off and landing slots.
Due to fierce competition in the airline industry from airlines such as Ryanair, Easyjet and Flybe, there has been a shortage within the industry of pilots and other aircrew leading to difficulties in staffing. This has impacted on FABO particularly badly and restricted the growth plans of the company. In some cases this has led to flights being cancelled at short notice due to illness which seems to have become a growing problem for FABO, damaging their reputation and causing frustration amongst staff. This has necessitated the use of agency staff on occasion.
The Managing Director of FABO is M. Saleem who also owns 51% of the shares. He is a well known businessman and entrepreneur with various business interests, having made his sizeable fortune in financial investment. He started the company back in 2007 having identified a need for a well run, budget airline to serve the needs of business people, but has since expanded the operation to include holiday travel to a small selection of popular tourist destinations predominantly on the Asian subcontinent. He has bold expansion plans and has a reputation as a shrewd individual, taking swift action where he believes there to be any underperformance or laziness. Managing people is not his strength unfortunately, and consequently he has had a high turnover of staff, especially in his senior management team.
Robert Walker, their newly appointed Head of HR, has been recruited from arch rival Ryanair to help address the problems. He is faced with a formidable task, especially since he is aware that FABO has a poor reputation for managing its people, and has already experienced first hand low morale and problems with workforce planning. He knows he has a short time to identify the key issues and to come up with some solutions before he becomes the next one to be fired. He has particular concerns about their recruitment & selection processes, as there have been two recent tribunal cases where substantial damages were paid out due to discrimination and other irregularities. He also hopes to build in some contingency into the staffing model, so that staff can be re-deployed into different roles when shortages occur.
The airline has a flat structure with most key decisions being made by M SALEM himself. The aircrew are viewed as somewhat elite by the other employees, a view reinforced by internal communication driven from the top. It is semi-unionised with many aircrew being members of UNITE whereas pilots are largely represented by BALPA. Both these organisations have had industrial disputes with FABO in the past although recently relations have been improving.
There is no formalised wage structure and any rises have been made on an ‘ad-hoc’ basis either because there was a perceived need to reward loyalty or to prevent someone from leaving. There have been accusations of favouritism by some disgruntled employees towards SALEM’s inner circle, mainly family members who hold several top positions in the company as well as owning the majority of the remaining company shares. Support staff tend to get blamed if things go wrong and there is a ‘them and us’ culture.
SALEMS hopes to sell his shares on the open market in the next few years as another of his business ventures is in need of an injection of capital, and he sees a need to make his shares attractive to potential investors.
Prepare a report which critically evaluates the HR issues in the company, making recommendations for change. Justify any suggestions that you make, supporting your ideas with relevant theory and examples of best practice from the airline industry and other comparable sectors.
In preparing your report you should address the following:
1. Identify the main HR issues in the case study using relevant theory. â€¨
2. Recommend changes in light of your analysis to Recruitment & Selection processes. Evaluate the risks and rewards of what you propose. â€¨
3. Critically analyse the wider implications for employees relating to the management of people at FABO in light of the changes you have suggested. â€¨
Draw on complimentary or contrasting examples when responding and make sure that you justify your answers using relevant literature and theories. Take into account the different aims, demands and values of the parties in the case study.