Case Study; Skyline International
Introduction
Developing skills and knowledge on strategic human resource management is critical in managers’ quest to enhance the performance of their organization (Armstrong 2002). According to Mitchell, Obeidat, and Bray (2013), the management practices adopted by a firm influence its employees’ productivity and hence its performance. A firm’s productivity is critical in determining the employees’ wages and the return on capital that investors receive (Fabling & Grimes 2014). Fabling and Grimes (2014) emphasize that improving HRM practices can significantly enhance an organization’s productivity. This aspect indicates the existence of a correlation between the management practices adopted by a firm, the employee’s level of productivity, and the amount of wages and salaries that employees receive. Additionally, Mitchell, Obeidat, and Bray (2013) assert that the management practices adopted by a firm influence the quality of the work environment and subsequently the employee’s level of motivation.
One of the issues that managers should consider in the quest to develop an effective internal organizational environment entails fostering sufficient employee engagement (Alfes et al. 2013). This outcome can be achieved by entrenching the concept of the psychological contract, which entails the mutual relationship between the employer and the employee. In addition to the above elements, managers should integrate the concepts of communication, reward management, and employee appraisal as some of the fundamental HR concepts in the quest to enhance organizations’ long term sustainability. This paper entails a case study analysis of Skyline International. The case study focuses on a number of aspects, which include an evaluation of how Skyline International can integrate psychological contracts in improving the organization’s internal environment and the communication mechanism that the firm’s top management can integrate in order to improve the level of understanding and coordination between employees in the different levels of management and the subordinate employees. The analysis further examines how it can employ performance appraisal and reward systems in order to minimize the likelihood of encountering a high rate of employee turnover.
Application of psychological contract
Despite its past success in the airline industry, Skyline International has experienced a number of challenges over the past few years. One of the major challenges entails a decline in the firm’s profitability as a result of global economic changes. For example, the 2007/2008 global economic recession led to a decline in the airline’s operational capacity to between 30%-40% of its fleet. In response to the challenges faced, the Skyline International management team announced a decision to undertake significant changes to the airline’s operation. Some of the changes entailed entering into a merger and acquisition and establishing a low-cost model. Additionally, the firm has also been unable to pay its employees fully, with employees receiving only 25% of their basic pay. In response to the change in the working environment, the employees have issued a strike notice.
These issues indicate the existence of significant human resource management challenges that the firm should address. Failure of the management team to address the issues faced might lead to a decline in the firm’s competitiveness. For example, employees might develop turnover intention hence causing the firm to lose key human capital.
In spite of the challenges faced, it is possible for Skyline International management to succeed through the intended transition while at the same time maintaining employee commitment. To achieve this outcome, the firm’s management team should integrate the concept of the psychological contract. According to Pablos and Tennyson (2017), a psychological contract results in positive employee behavior. Therefore, integrating psychological contracts can enhance employees’ productivity. The rationale of the psychological contract is to establish a balance between the employees’ needs and the employers’ requirements.
One of the models of the psychological contract that the firm should consider entails the iceberg model, which emphasizes the importance of establishing a balance between the employees’ inputs and employer rewards. Additionally, the iceberg model recognizes the importance of adopting a holistic approach in nurturing an environment conducive to working. By integrating the iceberg model, Skyline International should not only focus on the basic components of employment contracts, viz. work and pay. Despite the fact that remuneration is an essential determinant of the employee’s level of satisfaction, the firm’s management team should take into consideration the different aspects that affect the work environment. Amongst the management issues that Skyline International’s management team should take into account in implementing psychological contracts entail training and development, provision of opportunities for employees to grow, integrating work-life balance, nurturing a high level of employee engagement, and creating a safe working environment.
The issuance of strike notice by the firm’s employees indicates the existence of a gap between the employees’ inputs and rewards. The employees’ decision to resort to industrial action has been motivated by the organization’s failure to offer employees an opportunity for promotion. To deal with this problem, the firm’s management team should take into account the employees’ needs for promotion and growth. This approach will play an essential role in increasing the level of loyalty, commitment, and employee identification with the firm. Lee (2000) asserts that the employees’ level of loyalty impacts their attitude toward the organization and hence their commitment. Thus, incorporating employee promotion will significantly reduce Skyline International employees’ intention to result in industrial action. On the contrary, the employees will be committed to assisting the organization’s progress through the transition that the firm is currently undergoing.
Skyline International can also integrate psychological contracts by ensuring that employees are adequately engaged in the organization’s operations. The case study indicates that Skyline International employees have over the past years been bombarded by negative feedback regarding the firm’s operations. This aspect might create uncertainty amongst employees regarding the future of their firm and hence their job security. To minimize such uncertainty, it is imperative for the Skyline International management team to consider nurturing a high level of employee engagement. The firm can achieve this goal by providing them an opportunity to share their ideas and opinion regarding the firm’s operations (Marrelli 2010). In its communication process, the firm should assure employees of their job security and lack of victimization in the process of implementing the intended changes. Mone and London (2014) emphasize that giving feedback to employees is a critical HR aspect because it influences their behavior. Considering the economic issues facing Skyline International, it is critical for the firm’s management team to ensure that employees are adequately engaged in the firm’s operations.
Harshitha (2015) asserts that employee engagement is a fundamental aspect of business success because it stimulates commitment and productivity among employees. In the process of providing feedback, it is essential for Skyline’s management team to ensure that employees are given an opportunity to respond to the feedback or communication on organizational issues that the organization intends to undertake. This move will significantly ensure that employees are adequately involved in making major organizational decisions. The outcome is that the organization will encourage a two-way street. Thus, the employees’ sense of well-being will be adequately improved. The extent to which employees are engaged in making in organizational decisions increases their level of motivation.
The firm’s management team should further consider integrating employee training and development. The rationale of undertaking employee training and development is not only to equip employees with the relevant skills and knowledge to execute their roles and responsibilities but also to provide them an opportunity to progress through their desired career path (Wellin 2016).
In the quest to nurture an environment conducive to working, the Skyline International management team should further integrate the concept of work-life balance, which entails providing employees an opportunity to establish a balance between competing work and personal demands (Clutterback 2003). Work-life balance will have a positive impact on the employees’ well-being and hence their productivity.
Types of communication mechanisms
Internal organization communication is an integral element in an organization’s effort to implement change and achieve high performance. To improve the effectiveness of internal communication in enhancing the implementation of organizational change, organizations managers must ensure that the right approaches are adopted (Ruck 2015). Loosemore, Dainty, and Lingard (2003) are of the view that ‘developing an effective communication system is vital in ensuring that an organization’s favored direction, approaches and objectives are translated by the workforce as intended and that employees contribute in a way which aligns their needs with that of the business’ (p. 166). Organizational managers should consider devising a communication strategy that successfully reinforces the message that it intends to communicate to their subordinates.
From the case study, it is evident that Skyline International is characterized by significant internal communication challenges. In spite of raising their concerns on work-related issues, the organization has not adequately responded to the issues. On the contrary, the organizations’ management team has largely responded that the issue will be addressed at ‘the right time’. Nevertheless, the organization has failed to take the employees’ concerns seriously.
To deal with the communication gap between the organization’s top-level managers and the lower-level employees, Skyline International should integrate the two-way communication mechanism. Employing the two-way communication approach will lead to the creation of an environment of employee involvement (Loosemore, Dainty & Lingard 2003). A two-way communication mechanism constitutes an open system, which is a fundamental approach to promoting organizational transformation. Thus, the two-way communication approach will be an effective mechanism that Skyline International can employ in implementing radical changes to the firm’s operations. Effective communication is critical in implementing radical organizational changes such as mergers and acquisitions (Hiatt & Creasey 2003).
There are two main mechanisms that Skyline International can adopt in implementing a two-way communication approach. These mechanisms include the two-way asymmetrical model and the two-way symmetrical model (Hajli 2015). Under the two-way asymmetrical model, an organization’s management team gathers feedback from the audience and adopts persuasive strategies to influence the audience to respond or behave as the organization intends (Dwyer 2012). On the other hand, the two-way symmetrical communication model entails engaging the audience in a two-way communication strategy (Dwyer 2012). However, in this case, an organization’s management team uses negotiation as a way of resolving conflict and promoting respect amongst the parties involved. The rationale of the two-way symmetrical communication model is to create an opportunity where all the parties involved in the communication process to understand each other’s point of view (Dwyer 2012).
One of the areas in which the firm can employ a two-way asymmetrical communication mechanism entails when gathering information from employees on work-related issues. For example, the firm’s management team should progressively undertake a survey aimed at determining the employees’ level of satisfaction on different work-related issues. By conducting the survey, the firm’s management team will be able to understand the employees’ opinions and attitude toward the firm. Subsequently, the firm will gain knowledge on the fundamental areas of strategic human resource management that should be adjusted.
Conversely, implementing the two-way symmetrical communication approach will enable Skyline International to establish and foster dialogue with its employees. Dwyer (2012) is of the view that ‘two-way symmetrical communication is based on using public relations, listening and dialogue to cultivate relationships and manage conflicts with different internal and external stakeholders’ (p. 285).
There are different strategies that the Skyline International management team can consider in implementing the two-way symmetrical communication mechanism. For example, the organization’s management team should consider organizing workshops, briefing sessions, and team meetings. The purpose of conducting the meetings, workshops, and briefing sessions is for the firm to convey critical information to employees (Loosemore, Dainty & Lingard 2003). During these sessions, the organization’s top management team should provide employees an opportunity to share their ideas and opinions regarding the changes that Skyline International intends to implement. Implementation of the two-way communication mechanism will thus provide the organization’s top management team an opportunity to explain policy decisions and the organization’s long-term plan to the lower-level employees. Additionally, the interactive sessions will provide the organization’s top management team an opportunity to explain to the lower-level employees the issues affecting the firm’s current performance. By implementing these communication mechanisms, the organization’s management will be able to foster a conducive working environment by promoting a culture of inclusivity and employee engagement in the organization’s operations.
Importance of conducting appraisal and rewarding employee performance
In addition to the above HR aspects, the Skyline International management team should also consider entrenching performance appraisal and reward systems as some of the strategic human resource management practices. Agbola and Abena (2011) assert that performance appraisal comprises a fundamental strategic technique that enables organizations to maximize the value of their human capital.
One of the fundamental aspects that should motivate Skyline International to undertake performance appraisal is that it will inform the firm’s management decision on issues relating to different HR functions such as employee training and development and reward system. Implementing an effective performance appraisal will provide the firm’s management team insight into the fundamental areas on which to train the employees. Subsequently, performance appraisal will play a remarkable role in enhancing the employees’ level of productivity and hence the organization’s overall performance (Bhattacharyya 2011). However, to ensure that performance appraisal positively contributes to improvement in the employees’ knowledge and skills, Skyline International should focus on adopting performance appraisal that focuses on understanding the skills and knowledge gap amongst the employees. On the basis of this approach, the firm will be able to implement need-based training based on the results of the performance appraisal. Thus, performance appraisal is a fundamental strategic HR tool that will not only contribute to improvement in the firm’s performance but also enhance the employees’ personal development.
Implementing performance appraisal will further play an essential role in the firm’s quest to nurture a culture of employee commitment. Qureshi and Hassan (2013) assert that performance appraisal should form the basis on which organizations develop a wider understanding of the employee’s needs. For example, undertaking a performance appraisal will provide the organization’s top management team insight into the extent to which employees’ commitment is aligned with the overall organization’s goal and mission.
From the findings of the performance appraisal on different work-related issues, the firm’s management team will be in a position to adjust its reward system accordingly hence promoting the employees’ level of motivation. Armstrong (2002) asserts that the reward system should be comprised of effective processes, practices, and structures. The reward system processes, practices, and procedures are based on the contribution and worth of the employees, skills, competencies, and contributions to an organization (Armstrong 2002). The processes entail the mechanisms that an organization adopts in measuring the value of the different job roles and the employees’ personal contributions to the jobs created. The performance appraisal mechanism will play an essential role in determining whether the employees are positively contributing to the firm’s performance. On the basis of this knowledge, the firm’s management team will be in a position to determine how to reward the employees. Therefore, the implementation of the employee performance appraisal system will play an essential role in adjusting the employees’ reward structure.
Implementing performance appraisal will also play a critical role in determining whether the reward mechanism that the firm has currently implemented is of value in improving the employees’ level of motivation and commitment (Armstrong 2002). This means that the performance appraisal system will play a critical role in promoting flexibility within the firm’s reward system From this knowledge, Skyline International will be able to make decisions on how to improve the reward system (Armstrong 2002). For example, the firm will be able to successfully incorporate monetary and non-monetary rewards. Incorporating non-monetary rewards such as recognizing and praising exemplary employee performance, and providing employees an opportunity for personal growth will play a fundamental role in stimulating the employees’ commitment to their job roles and the organization in general.
In addition to the above aspects, undertaking a performance appraisal will lead to the creation of knowledge on how to promote employee commitment. The firm should consider using performance appraisal as a tool for employee development as opposed to a tool for punishing employees. For example, employees will understand that their likelihood of promotion and progression through the desired career path in the organization will depend on their performance (Bhattacharyya 2011).
Undertaking performance appraisal will also play an essential role in the organization’s quest to foster equity and fairness in the firm’s reward system. However, to achieve this outcome, the firm should ensure that the performance appraisal is balanced and objective. This means that the adoption of performance appraisal as an approach to rewarding employees should not be biased. Through this approach, the firm will be able to reward employees on the basis of their performance results. For example, employees who depict a high level of performance will be rewarded accordingly. Therefore, by undertaking performance appraisal, Skyline International will be able to integrate equity and fairness in rewarding employees.
Conclusion
The case study underlines the importance of entrenching effective strategic human resource management practices in organizations’ quest to achieve sustainable operations. The case study affirms that organizations are subject to different internal and external market forces which might affect the internal organizational environment. For example, economic changes might adversely affect an organization’s capacity to pay employees hence the necessitating implementation of different changes in the organization’s operation. However, to ensure that the intended changes are optimally implemented, organizations’ managers should adopt the best HR practices. Amongst the fundamental aspects that the firm should take into account entail nurturing the development of an effective internal environment. This outcome can be achieved through the integration of a psychological contract, which ensures that the firm not only takes into account work and pay but also other aspects that contribute to employee motivation such as fostering employee engagement, employee training and development. The case study further underlines the importance of entrenching effective HR practices such as a two-way communication mechanism and integration of an effective employee performance appraisal and reward system. Through the integration of these HR aspects, Skyline International will be able to nurture an effective internal organizational environment. The outcome of implementing these HR practices is that the firm will be able to promote the organization’s performance and implement the required change initiatives such as mergers and acquisitions and the establishment of a low-cost model of operation.
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