Professional Documents
Culture Documents
Malaysia Airlines
In 2011 there was a heavy increase in competition, as firms (such as Air Asia and
Firefly) began operating at lower costs in similar areas.
Mismanagement of Employee relations had serious consequences
MAS unable to downsize
Poor employee-manager communication
These issues led to poor practices and disregard for safety regulations during
routine operations, losing the faith of the public and furthering the deficit cycle.
Timeline of Implementation
Privatization of the company should be carried out as soon as possible (under 2
years, before next federal election)
Essential to build a realistic timeline, this could potentially take months as the
backlash will most likely be quite strong
Government would favour a quick transition to avoid election repercussions from
the unions
Additional Recommendation of Alternative #3
Fairly easy to implement and a change in management will have a big payoff for the
company in the short run.
Publicly owned MAS, should be handed off to new management when it goes private
as to ensure separation
The Board of Governors should handle the transition to new management
Recruiting process can begin shortly so as to ensure the new CEO and additional
high level staff are adequately informed before taking leadership in the coming
months
Payoff Matrix
Low Payoff Alternative #2
High Payoff Alternative #3 Alternative #1
Easy to Implement Tough to Implement
- You can evaluate an effective solution through the Payoff matrix, it helps to
categorize solutions in terms of their potential impact and conceivability
Alternative
A new CEO adopts a different management style, one which better acknowledges
the needs of the employees
Recognizing the company needs employees who fit under the description of Theory
Y and manages accordingly
Need to give employees reason to self motivate themselves
Job enrichment, reward hard work instead of seniority
More thorough communication between management and workers; open and
transparent
Can open communication up by implementing weekly or bi-weekly meetings for
example
This type of management will build a team oriented environment, with an emphasis
on consensus building, participation and conflict resolution; and the effectiveness of
the company will come from commitment and cohesion of employees and
management
Alternative
Alternative
Malaysia Airlines privatizes the company
Sells off shares to help with the current financial downfalls
Employee Unions are eliminated
Downsizing is helping with financial costs but comes at the cost of thousands of jobs
With the financial benefits, the company is able to update their equipment and
technology
Management is better able to focus on those who remain, building this working
relationship
Create training opportunities and job enrichment (i.e. Mental health resources to
help with aftermath of crashes)
Emerging competition from low cost or budget airlines represents 60% of South-East
Asian travel market
To date cumulative losses of $1.7 Billion since 2011
Union Issues
MAEU holds a large voting block for the government
Since the government owns the airline, both parties have conflicting views about
potential privatization of the company
Khazanah Nasional wants to reduce the current 20,000 employee workforce by 30%
This would be in effort to return the airline to profitable status
Current Union regulations does not allow for such a large employee downsize
MAS Mismanagement
Precarious forms of employment such as:
Short term contracts
The use of the "contractor for labour" system
Hiring 3rd party contracts
ex. Outside cleaning company
Employee feedback:
Better communication with low level employees to have a greater understanding of
relevant issue's
Employee's feel loyalty towards the company for a generous benefits plan
Presently the company is following theory x style of management, where unions are
frowned upon and managers are seen in a generally bad light.
MAS has been talking about privatizing, which shows the distaste for unions.
Employee issues and the disconnect between upper management and base level
staff is clearly stated in employee surveys.
Also issues of poor talent management and lack of advancement opportunities
This does not reflect well on employers
Management style should move towards theory Y
Compassion for employees, motivation through self direction and innovation will
improve labour union relations
Theory X and Y
Power-Distance Theory
In this theory, distance is created between different levels of power in certain
cultures and it is less acceptable to present issues to higher levels of staff if your
position is lower than theirs.
Problems with equipment have repeatedly gone unreported due to this problem, as
this has been shown to apply to Malaysian Muslim cultural values.
Equity Theory
Job inputs are very low (ex. training, opportunities for advancement such as
promotions) and in return, employees have been responding with a similar amount
of effort (falling asleep at air traffic control, resignations, complaints, etc)
Employees do not feel their concerns are being heard. This has resulted in
equipment malfunction and can continuously increase risks for accidents.
When employees are cut after privatization, more inputs will be able to be put into
the work environment for remaining employees, which will cause them to respond
with higher levels of productivity.
Kolb, D., Osland, J., Rubin, I., & Turner, M. (2007). <i>Organizational behavior: An
experiential approach</i> (8th ed.). Englewood Cliffs, NJ: Prentice Hall.
http://www.malaysiaairlines.com/content/dam/malaysia-airlines/mas/PDF/Malaysia
%20Airlines%20Business%20Plan.pdf
http://www.glassdoor.com/Reviews/Malaysia-Airlines-Reviews-E7529.htm
CNN: http://money.cnn.com/2014/07/31/news/malaysia-airlines/
http://mario.gsia.cmu.edu/micro_2007/readings/Huseman_A%20new
%20perspective.pdf
BBC News: http://www.bbc.com/news/business-17216510
The New York Times:
http://www.nytimes.com/2014/08/30/business/international/malaysia-airlines-to-cut-
30-of-work-force.html