Introduction
The present paper is devoted to the study of the case of ‘Air Born’ Aircraft, which is an Australian company that produces aircraft. It also has subsidiaries in China and Vietnam, which produce major parts, and a subsidiary in Singapore which is predominantly occupied by design engineers. The company is experiencing a downturn in its organizational process; the situation is quite dire, and the CEO of ‘Air Born’ Adam O’Meara suspects the possibility of a takeover. Apart from that, certain human resource management (HRM) issues have been identified, including the problems in diversity management (DM) and training and development (TD). Also, international performance management (IPM) has flaws, and a negative organizational culture (OC) has developed in the company. Given the fact that the specifics of ‘Air Born’ make it especially dependent on its human resources (HR) and knowledge (Millar, Chen, & Waller, 2016; Ratkovic & Orlic, 2015), HRM issues are particularly dangerous for its survival in the current situation.
The problems were shown to influence the quality of production, which illustrates the fact that HRM has a direct impact on organizational performance (Cascio, 2015; Guest, 2017; Su, Wright, & Ulrich, 2015). Thus, the purpose of the present paper is to provide the evaluation of the case issues and recommendations for their resolution, which should help O’Meara to improve the return on investment and share price for the company. The text includes two evaluative parts, which are followed by a summary and recommendations that are informed by research
. The scope of the work embraces the topics of DM, OC, TD, IPM, and generally HRM. The natural limitations of the recommendations include the fact that it is outsider research, which is based on limited information about the company; apart from that, the personal experience and skills of the investigator can be regarded as a restriction. Despite these factors, the analysis of the available information suggests that the improvement of the issues is possible and that O’Meara plans appropriate measures, which can be enhanced through extensive research, training, and culturally sensitive standardization and adaptation of current HRM practices of the company.
Culture, Diversity Management, and Human Resource Management
OC, which is a “set of values, beliefs, attitudes, expectations, understandings, norms shared by members” of a company tends to have a significant impact on a company’s performance (Yildiz, 2014, p. 37; Hogan & Coote, 2014). The case of ‘Air Born’ appears to illustrate this fact; in particular, the company reports noticeable issues with its OC that have resulted in negative outcomes.
One of the major issues that are reported by the case is the loss of quality standards that used to be included in the company’s culture but seem to have been eluded when employees adopted a rather careless attitude to their work. The issue seems to be particularly acute in China and Vietnam. The significance of the quality of production for the return on investment performance is apparent, and the situation demonstrates that OC is important for various organizational outcomes, including financial ones (Jacobs et al., 2013; O’Reilly, Caldwell, Chatman, & Doerr, 2014).
Moreover, the case highlights the fact that the teams of the company have communication issues, which is also unlikely to lead to high-quality production. The communication is lacking between the teams and within them, which results in deficient instructions and cooperation. The lack of cohesion and effective communication in and between teams is likely to reduce the quality of the company’s performance (Backes-Gellner & Veen, 2012; Wei & Wu, 2013), which is exemplified in the case by the situation with the production mismanagement.
One of the employees also reports that teams tend to get in the way of each other and even suggest that there is resentment between them. The latter aspect can be regarded as particularly problematic: it demonstrates that the relationships between the teams lack positive factors like trust, which tends to be of importance for outcomes in their collaborative performance (Wei & Wu, 2013, p. 390). For headquarters and subsidiaries, the issue also seems to be acute with the communication being insufficient enough to cause numerous misunderstandings that O’Meara has had to settle.
The problem of communication appears to be related to the company’s DM practices. Technically, the company has a policy that demands equal treatment of people of different ethnicities, genders, ages, and other characteristics. However, the policy does not always seem to be effective. For example, the study indicates that the employees of senior generations tend to be intolerant towards younger workers, which may be connected to the problem of communication (Backes-Gellner & Veen, 2012). Indeed, the two issues are likely to coexist in a complex relationship, which results in them maintaining and worsening each other. A form of a vicious circle with detrimental effects is, therefore, formed. Also, the existence of negative DM practices is likely to have detrimental effects on the company’s performance and the employees’ wellbeing (Guest, 2017; Kunze, Boehm, & Bruch, 2013)
Moreover, the case study also indicates that the Chinese HR department discriminates against people with disabilities: the latter is highly unlikely to be recruited in the Chinese subsidiary. Apart from depriving the company of a talented and skillful workforce, such an approach is likely to result in legal action, which O’Meara already anticipates. The blatant discrimination is also not unlikely to harm the company’s reputation, which can negatively affect employees’ commitment (Backes-Gellner & Veen, 2012; Kunze et al., 2013). At the same time, no direct measures for the improvement of communication and diversity awareness among the staff are employed by the company’s HR departments.
DM is supposed to be aimed at helping the employees to realize their potential, which is beneficial for ‘Air Born’ (Chang, Chin, & Ye, 2014). As shown in modern studies, diversity can have a positive effect on the performance of a company if it is managed appropriately. Successful DM improves the reputation of the organization (Backes-Gellner & Veen, 2012; Kunze et al., 2013). Moreover, DM is instrumental in developing a distinctive, positive OC (Lee & Kramer, 2016). There are some diversity-specific outcomes as well; for example, age diversity tends to foster knowledge exchange and can act as an incentive by demonstrating that no discrimination can prevent younger or older people to achieve managerial positions (Backes-Gellner & Veen, 2012). If diversity is mismanaged, however, it tends to harm organizational performance, in particular, because of the discrimination issues that lower morale and foster communication difficulties (Kunze et al., 2013). As a result, the fact that the company’s DM practices are insufficient and often lacking severely limits the company’s ability to improve its performance.
International Performance Management and Training and Development
HRM in international companies is complicated by several challenges, including IPM (Kang & Shen, 2012; Ratkovic & Orlic, 2015). IPM is central for effective strategic management throughout the company’s subsidiaries (Kang & Shen, 2012, p. 45), which implies that the problems exhibited by ‘Air Born’ in the field need to be resolved. These issues result, among other things, in the decrease in the quality of production in China and Vietnam, but they appear to be rooted in deficient TD practices. Indeed, no international expatriate appraisal procedures or direct measures of performance management are employed by the company.
In Australia, certain reviews of performance are carried out, but the subsidiaries do not follow the example. Moreover, the headquarters also fail to coordinate the efforts of subsidiaries: in particular, the headquarters have been reported to remain unaware of the details of production at various company locations. This issue is likely to be related to communication issues that are described above.
Concerning TD, the practices of ‘Air Born’ seem to be deficient. In particular, the case reports insufficient expatriate training that does not take into account the varied needs of the employees and does not presuppose feedback-related activities. As a result, the period of adaptation for the employees can become more prolonged and stressful (Kang & Shen, 2012), which is exemplified in the case by the report of Alice Morgan. However, other training programs are also characterized as deficient due to the lack of a systematic approach to management development programs and the absence of clear career development plans. The effects of a negative culture, lack of communication, and deficient DM is also seen in the reluctance of senior managers to contribute to the development of junior ones to avoid the possibility of being substituted. As a result, the company has limited access to skillful, knowledgeable managers, and the employees tend to leave the company for other organizations that are more focused on career development. The significance of managerial personnel to the success of a company is apparent (Wei & Wu, 2013), and the importance of training them is similarly obvious (John & Björkman, 2015).
Apart from that, managers and leaders tend to be very important or the development of knowledge- and creativity-stimulating environments, which makes them central to a knowledge-intensive company (Millar et al., 2016). The lack and loss of talented managers and the IPM problems are very significant drawbacks that can be regarded as an outcome of HR practices, and that can be alleviated with the help of modified HR practices (Budhwar, Varma, & Patel, 2016).
Summary, Conclusion, and Recommendations
‘Air Born,’ especially its Singapore subsidiary, can be regarded as knowledge-intensive, which makes HRM particularly important for it. As stated by Millar et al. (2016), knowledge and people are the most significant resources for such companies, which makes its current HR policies particularly harmful. In particular, the information presented above demonstrates that ‘Air Born” exhibit the issue of discrimination (workplace and hiring-related) and lack of appropriate DM policies, the absence of standardized IPM measures, the lack of positive OC, deficient TD (including management and expatriate TD), and extensive communication issues. A summary of these problems is presented in Appendix A in Table 1. The fact that all these issues prevent ‘Air Born’ from being more successful is apparent (Hogan & Coote, 2014; Kunze et al., 2013; Lee 2015; Su et al., 2015; Yildiz, 2014).
Concerning IPM, O’Meara realizes the severity of the issue and intends to introduce culturally sensitive performance measures; apart from that, the CEO wants to improve coordination by having ‘someone’ to travel to the subsidiaries. This solution seems to be reasonable: the standardization of measurements is a significant requirement for their successful application (Su et al., 2015, p. 2). However, it should be pointed out that the issues of ‘Air Born’ are interconnected. For instance, the communication problem seems to interact with that of DM (Backes-Gellner & Veen, 2012). Moreover, it also results in IPM challenges and, possibly, roots from OC difficulties. As a result, complex measures maybe for ‘Air Born.’ They are presented in Appendix B, Table 2.
The primary activity that should be recommended to ‘Air Born’ is extensive research on the current situation, which, is carried out by O’Meara. In that research, it is important to focus on employee needs. Indeed, Lee (2015) emphasizes the fact that to be successful, TD has to be needs-based, which implies that the development of relevant training programs requires a purposeful investigation of employees in different subsidiaries. Similarly, the examination of employees’ needs is significant for DM (Chang et al., 2014), OC (Lee & Kramer, 2016), and TD (Lee, 2015). Given the fact that the current HRM activities of the company distinctly lack customization, this is a major and urgent change in its current practice.
TD is also connected to other mentioned issues. Indeed, training is a key factor not only in the skill-related areas for the employees; a variety of behavioral issues can also be modified with the help of training (Lee, 2015). Therefore, the modification of OC of ‘Air Born’ can, among other things, be fostered through relevant training. Moreover, successful TD is also bound to have an impact on the quality of the company’s performance and can have motivational features, resulting in improved employee retention (Gospel, 2015). Training is a key activity that is recommended for ‘Air Born’ situation improvement.
It is noteworthy that employee retention is dependent on multiple factors but organizational and team commitment and engagement tend to have a negative correlation with turnover intention (Millar et al., 2016). Thus, OC improvement is directly connected to the problem of employee poaching as well. Remarkably, OC tends to be transmitted from one generation of employees to another (Yildiz, 2014). Given the issues in intergenerational communications that are experienced by the company, it can be suggested that this transfer is not very active at the moment, which implies that eliminating negative OC will be facilitated with newly employed people. Thus, some of the current difficulties experienced by the company can be employed to improve the situation.
Apart from that, O’Meara mentions an important feature of the proposed changes: cultural sensitivity. Indeed, all upcoming changes need to be culturally sensitive and adapted to the needs of the headquarters and subsidiaries (Budhwar et al., 2016; Lee & Kramer, 2016). This fact is true even for standardized performance appraisal, which still might need to be adapted to maximize local performance (Ratkovic & Orlic, 2015, p. 108). Similarly, DM is affected by national cultures and local societal norms, which requires developing different DM strategies for subsidiaries in different countries (Lee & Kramer, 2016; Nkomo & Hoobler, 2014). Expatriate TD is naturally connected to cultural awareness (Kang & Shen, 2012), and OC needs to be developed by the local culture (Yildiz, 2014). As a result, cultural sensitivity is a must for every proposed change. This outcome can be achieved in multiple ways; for example, the dimensions of OC might be evaluated with the help of Hofstede’s theory (Yildiz, 2014). The results can be assessed and adjusted by the company’s HR professionals and used as a guide to enhancing the cultural appropriateness of the change. This strategy is feasible because HR practices are typically reliant on the local workforce, which makes them sensitive to the local culture (Ratkovic & Orlic, 2015).
Successful HRM practices result in multiple direct positive outcomes for employees and the company (Cascio, 2015; Guest, 2017; John & Björkman, 2015). Apart from that, the former results also lead to indirect positive outcomes for the company, which manifest, for example, in increased loyalty or decreased turnover intent (Backes-Gellner & Veen, 2012; Chang et al., 2014). Thus, through multiple interconnected changes, HRM practice of ‘Air Born’ can eliminate the weakness of the company and strengthen its performance, which should result in positive outcomes for the company and its employees, and eventually improve the return on investment and share price that O’Meara needs to ensure the survival of ‘Air Born.’
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