This paper will discuss human resources strategies that will be adopted by a joint venture between Emirates Airlines and British Airlines. Primarily, the operations of the joint venture will be based in the UK. Generally, human resource is an important asset that drives an organisation forward. Therefore, proper strategies in relation to recruitment, training and development, appraisal, and performance management should be well documented and implemented to ensure maximum productivity and performance towards the attainment of goals and objectives.
The UK airline market has potential for growth due to an enabling business environment facilitated by economic stability, social integration, minimum political interference, and advanced technology. Despite some challenges in terms of cultural differences, the joint venture is likely to succeed. However, due to an ageing population, recruitment would need to be sourced from the UAE or from other member countries of the European Union, and only a small number of employees would be recruited from the UK in order to help other employees adapt to the local culture.
Emirates Airlines has decided to enter into a joint venture with British Airways. This will trigger the recruitment of new staff members from the UAE and in the United Kingdom to oversee the realisation of the objectives of this joint venture. It is also necessary to relocate some expatriate staff from within the Emirates Airline to manage the new venture alongside those from e the British Airlines.
There is a broad agreement that a strategic approach to the human resource management (HRM) involves designing and implementing a set of internally consistent policies and practices ensuring that a firm’s human capital (employees’ collective knowledge, skills, and abilities) contributes to the achievement of business objectives (Salaman, Storey & Billsberry, 2005). In implementing this joint venture, we should work towards ensuring that human capital from both sides contributes to the realisation of the objectives of this joint venture.
This report will demonstrate how recruitment and selection, training and development, reward management, performance management and employee involvement are to be achieved in order to enhance the growth of the new joint venture in this competitive airline industry. In a collaborative dialogue with the human resource department of the British Airways, it was established that they were also in the process of coming up with similar report based on the memorandum of understanding between the two airline companies. This will bring a coherent and unified policy in the recruitment of human resource for the benefit of the joint venture in the long run.
Emirates Airlines Company Profile, aims and international strategy
Emirates Airlines, commonly referred to as just Emirates, is an airline company based in Dubai, the United Arab Emirates (UAE). The company mainly provides commercial air transportation within the United Arab Emirates (UAE), the Middle East region and several other routes in the global market. It offers passenger, cargo, courier, and postal carriage services. The airline is part of the larger Emirates Group.
Nevertheless, the Emirates Company has more than 130 airbus jets and Boeing, in addition to 10 cargo freighters. The airline is also one of the most successful airlines in the civil aviation industry, thanks to its commitment to investing in talent development and high-quality service delivery to its customers. Emirates Airlines aims at being a global leader in air travel and transport business. In order to achieve this aim or goal, the airline has identified an internationalisation strategy involving a joint venture with British Airlines as the most convenient.
This international intention has been motivated by the fact that British Airlines has managed to penetrate the UK market as well as most the EU markets, and that the experience it has will be vital in moving the joint venture forward. Moreover, given the high degree of competition in the airlines market, it would be viable to engage a local firm when venturing into the UK market. Here, the firm would need to move expatriates from the UAE to the new joint venture in order to enhance continuity of corporate culture and at the same time, recruit some employees from the UK in order to help in assimilation to the local market and culture.
Economic Profile of the United Kingdom (UK)
The UK, also known as Britain, is economically divided into prosperous South and declining North by the North-South divide (OECD, 2011). It has increasingly specialised in high technology manufacturing industries such as aerospace and pharmaceuticals. Globally, the United Kingdom stands at 28th in the ranking of 189 economies on the ease of starting a business (OECD, 2011). Importantly, technological changes, including rapid advances in information and communication technology (ICT), have implications for both business and service delivery in the whole economy (Roberts, 2002).
Despite being one of the most developed countries in the world, the UK’s international competitiveness measured by relative consumer prices or by unit labour costs is seen to have declined by over 20% in the three years preceding 1998 and the trend seemed to persist a few years later (Martin, 2010). By 2000, the private sector was running a “financial deficit worth nearly 4% of the economy’s gross domestic product”, thus raising the question about the economic viability of the UK’s business environment (Martin 2010). Nevertheless, there is a significant improvement in the state of the economy in recent years, with the GDP improving and investments taking a surge.
In 2011, the real net national income per capita for the UK was estimated to be £20,556 and currently, the UK public sector debt stands at 75.4% of Gross Domestic Product while inflation rate as measured by the Consumer Price Index, stands at 2.8%. Moreover, the UK has performed significantly well in terms of investment, with London continuing to be a magnet for foreign capital inflows as evidenced by 57% of total the UK investment volume in 2012 (Burt & Sparks, 2003). At the moment, the financial sector has stabilised, following government intervention and increased supervision in the wake of the financial crisis, with banks having agreed to increase lending to businesses (OECD, 2011).
Retailing is one of the major economic sectors in the UK, with “retail sales of £221 billion employing around 3 million people and operating over 300,000 shops”; the leading retailers are huge multinational organisations, which have many units in various cities and selling all types of merchandise (Burt & Sparks, 2003). However, there are small convenience stores operating in the UK market as well.
PESTEL analysis of the UK
The word PESTEL is an acronym for political, economic, social, technical, environmental, and legislative aspects of the business. In the context of the UK business environment or market, the PESTEL analysis provides the following information.
Political Analysis of the UK
United Kingdom is a constitutional monarchy with Elizabeth II, Queen of Great Britain, as head of state (Yi-Ting, n.d). The government of the UK supports emigrant workers who contribute significantly to the development of business operations in the country. Pest analysis of the Unison conducted in 2007 established that “migrants make a net contribution to the exchequer when tax receipts are compared with expenditure” (Pest analysis at Unison, 2010). This shows that the government plays an important political role that creates a smooth path for foreign investors to enter the UK market.
Economic Analysis of the UK
The UK is a member of the European Union, which is a political and economic integration body for most European countries. Although the EU zone uses the Euro as a common currency, the UK and Denmark through the Maastricht Treaty were allowed to continue using their monetary units and only use the Euro when they wished to. The UK has massively developed. This attracts emigrant workers from economically less developed countries. The emigrant workers help in replacing the ageing workforce. The above-average wages that they get as compared to their home countries makes them enjoy high standards of living.
Social Analysis of the UK
The UK has an ageing population, which means that the young population is by far smaller than the older population. This is due to the low birth rate and death rate in the country. Therefore, in order to replenish the workforce of the country, emigration is necessary for the UK. There are also some sectors with the scarcity of skilled native workers like the health sector, which depend on outsourced workers from other countries to come and work in the UK.
However, the environment is not always smooth for the immigrant workers, as they face various challenges, including a language barrier, that negatively affect them. Due to most emigrants’ inability to communicate in English, their basic rights might be abused; for example, they may be overworked and paid low wages below the minimum wage level (Pest Analysis at Unison, 2010).
Technical Analysis of the UK
The UK is very advanced in terms of technology. There are advanced technologies in information processing, money transfer, telecommunication, and the internet, which enables online shopping in the economy as well as enhancing convenience and real-time business transactions. This technological innovation would be very vital for the airline industry in the near future.
Environmental Analysis of the UK
Being in the northern hemisphere, the UK experiences four seasons in a year, including autumn, winter, spring and summer, all of which have a significant influence in the conduct of business and behaviour of customers. By November/December, it is very cold due to winter, influencing a significant number of residents to travel too much warmer countries, especially in Africa and Asia. This is normally a booming period for the airline business, especially considering that it coincides with the festive season; many airlines tend to generate high revenues and profits during this period, although there might be some delays in flights due to bad weather.
One important environmental aspect that any foreign investor has to take into consideration when setting operations in the UK is that the UK is highly concerned about environmental conservation, especially in this era of increased global warming; thus, every investor should practise good corporate governance and corporate social responsibility.
Legislative Analysis of the UK
Migration legislation from the EU and the UK give members of the EU a right to move from one country to another without restrictions, and that is a bonus for those willing to work or live in the UK. In addition, the recent enactment of Age and Disabilities Discrimination Act, which prohibits discrimination on the basis of age or disabilities, has enabled people to gain employment regardless of their age or physical conditions. The Minimum Wage Act also plays a big role in protecting employers from exploitation by employees.
International Human Resource Management Strategies for the Joint Venture
There are two key drivers that govern the airline industry, which include a growing global concern for safety and ever-increasing consumer expectations of broad service choice and service excellence. According to Appelbaum (2003), “sub-optimisation, or poor quality in regards to management, decision-making, teamwork, employee motivation, or communication can translate into a loss of customers, loss of market share, loss of organisation assets, and above all, loss of life.” Therefore, it is necessary to select, recruit, train, develop, and retain employees who can effectively handle their roles well in this aviation industry.
Recruitment and selection
Since the UK has an ageing population and it mostly depends on the emigrant workers, it is advisable to consider recruiting employees for the joint venture from the United Arab Emirates (UAE) and then move them to the UK.
To effectively handle the joint venture, it is important that we should recruit more cabin crews, air hostess, pilots, and other subordinate staff. We should write an effective and exhaustive job description, which should most clearly describe the primary duties of the job, including all duties required for the successful performance of the job as well as clearly defined responsibilities that each employee would bear.
Here, the Human Resource Management FRAmework Model (HRM FRAM) would be ideal in order to ensure there are the right people for the right jobs. In addition, there would be clear channels of communication and span of control in order to ensure all employees understand their accountability as far as authority is concerned. Here, effective communication is very important, as it allows the organisation to eliminate any conflicts that may arise as well as enhance the flow of important information between roles. The job description will also clearly indicate the position, minimum qualifications required to perform the job and compensation package associated with each job (Mathis, R, & Jackson, 2010).
In selecting and recruiting, there are certain characteristics that we are supposed to look into as a prospective employer. Although there is no one person that can have all of those characteristics at once, at least they should be well balanced in an employee. The right candidate should be one who deals well with people and handles pressure well, works well with minimum supervision, and is careful and precise.
He should also communicate effectively, use common sense, be creative, decisive, with a cooperative attitude, dependable, able to delegate effectively, and learn with personal growth. Moreover, the candidate should be fast, flexible, and able to work well in a team as well as at the individual level. Moreover, he should be organised, loyal, patient, outgoing, persuasive, pleasant, have good planning ability, have the excellent problem-solving ability, persuasive, patient, results-oriented, punctual, and self-starter among other traits.
It is important to note that competition in the airline industry is very stiff, and this is made even worse by the need for sophisticated technology in order to attain a competitive advantage. As a result, organisations are building on “people, employees and customers, not products and machines per se, to be the arena of core competence” (Appelbaum, 2003).
The organisation would consider following the Munro-Fraser model in order to realise employees with innate abilities, acquired qualification, motivation to work, and with impact on others and easily adjustable to the business and culture of the joint venture.
Training and Development
With the ever-increasing competition in the airline industry, firms are refocusing their HR strategies on training and development in order to retain the most competent, competitive and skilled workforce. They have realised that, in order to compete effectively in the global market, they need to empower their employees with skills that will not only enhance the quality of products and services but also promote the image of the organisation.
Moreover, with technology advancing at a high rate in recent years, organisations are finding it convenient to invest highly in innovation in order to remain competitive (Vemic, 2007). This provides the basis as to why we should train and develop our employees after the recruitment process. They are our human capital that will realise the objectives of this joint venture in the short-term and long-term. Importantly, the CUPA-HR Learning Framework would be ideal in order to equip employees with the most valuable skills and competence.
For those employees who are going to be deployed into the UK, learning the basics of the English language is mandatory. This will enable them to effectively communicate with their counterparts in the UK as well as the target market. Moreover, they would need to be guided and inculcated into the culture of the UK in order to enhance integration and smooth business relationships.
Employees must be compensated for their work, as this is what will motivate them to work with more zeal towards delivering the aims of the organisation and the joint venture. This is in the form of the pay base, bonuses and incentives, pension and other benefits. Moreover, the joint venture will have to comply with the British laws and legislation of the minimum wages.
An employee reward system can be differentiated into intrinsic and extrinsic. Here, the organisation compensates employees based on their performance towards meeting the goals and objectives of the organisation, and in most cases, such compensations are in the form of money. In the event of excellent performance, the organisation may decide to reward employees with special benefits or even promotion. Another form of reward involves creating a conducive working environment coupled with good leadership, making employees work with motivation and enthusiasm (Perkins 2011).
Perkins (2011) gives an example as follows: “I may replace my $2000 a week engineers with ones that earn $500, but my costs may skyrocket because the new lower-paid employees are inexperienced, slow, and less capable; in that case, I would have increased my costs by cutting my rates” (Perkins 2011). This example gives an insight into how costly it can be in the long run by keeping inexperienced and unskilled personnel in the payroll; however, low their pay might be. Therefore, employees with proven experienced and unmatched skills should be well compensated, motivated and rewarded in order to enhance their loyalty and retention in the company. It is important that we identify our most skilled and experienced employees, and reward them with good salaries, bonuses, and attractive pension schemes and above all, an enabling environment to work.
Generally, performance management involves the evaluation and appraisal of employees in order to establish whether they are moving in the right direction in pursuit of goals of the organisation. Here, managers tend to engage in performance measurement and feedback evaluation, and them marching the outcomes with employees’ self-assessments in order to establish the true performance position of the workforce. Importantly, appraisal information generated from the evaluation process is used in the reward and compensation system as well as in establishing skill gaps that require training and development (Pulakos, 2004).
For effective performance management, several principles should be followed including service excellence, quality improvement and safety, value for employees, financial responsibility for each employee, and all-inclusive system for the overall growth of the organisation. The employees should also demonstrate the following competencies: excellence interaction or communication skills, results-oriented and resourceful, responsible and accountable for their own work, ability to create an environment for service excellence, and ability to show expertise in their work by embracing continuous learning. These principles and key employee competencies should be reviewed at least annually to maintain a competitive edge in the ever-dynamic aviation industry (Armstrong, 2007).
As Kuye and Sulaimon (2011) state, “Employee involvement in decision making, sometimes referred to as participative decision-making (PDM) is concerned with shared decision making in the work situation.” Generally, a special form of delegation allows subordinates to gain greater control and greater freedom of choice with respect to bridging the communication gap between the management and the workers (Kuye & Sulaimon 2011).
In order for an employee involvement process to be effective, three things need to be present, which include employees’ need of authority to participate in substantive decisions, employees’ need of training or experience with appropriate decision-making skills, and incentives to participate (either implicit or explicit) in decision making (Biagi,2002). Moreover, Len (2011) quotes Ramsey as saying:
Managements have been attracted to the idea of participation when their control over labour has been perceived to be under pressure in some way. This perception has coincided with the experience of a growing challenge from labour to the legitimacy of capital and its agents. In Britain, these challenges have coincided with the impact and aftermath of two world wars, and with the rise of shop-floor union organisation at the same time as squeezed profit margins in the 1960s and 1970s. In each case, mounting pressure, including demands for ‘industrial democracy’ from sections of the labour movement, helped to precipitate management response (Len 2001).
Thus, the importance of employee involvement (EI) can only be understood if it is viewed as being central to the organisation and not necessarily prominent. For example, a joint consultative committee may achieve a central position in an organisation over time, although the most prominent new measure may be team briefings (Len 2001).
A more diverse, potentially less secure workforce also raises questions of equality of treatment and rights at work, with the danger that minority or vulnerable groups will lack the resources to participate effectively in workplace affairs, thereby reinforcing their peripheral status. While these have been global trends, it is in the UK that these shifts have been especially marked.
Organisational, National and Cultural issues
The joint venture is likely to face organisational issues related to technology and competition in the airline industry. In this case, the recruitment of highly competent employees in the latest information technology, airline services and customer service will be a priority. Indeed, the competitiveness in the industry influences labours mobility and turnover due to low switching costs for employees from one company to another.
The company is unlikely to face restrictive national issues, especially with the recent weakening of union membership (Budhwar and Debrah, 2013); however, the company would need to employ an environmental analysis framework in order to identify HR requirements and policies in the UK. In addition, securing work permits for workers recruited from the UAE would be a major national issue. On cultural issues, the UK is predominantly Christian as opposed to the United Arab Emirates that is Muslim. This results in different resting days; for example, Christians worship on Sunday and Saturday whiles Muslims worship on Friday.
This poses a challenge in deciding the working days. In addition, the dressing’s code is completely different in both counties, with the UAE being more conservative due to religious implications and the UK tending to embrace modernity in dressing. In order to cope with the problem of cultural diversity, the workforce must be drawn from diverse cultures.
It is advisable to hire employees from the United Arab Emirates and globally as opposed to from the UK, mainly because the UK’s labour market consists of a high number of the ageing population. To avoid the legislation hurdles, it is recommended to mostly hire employees from the European Union Zone, as they are legally accepted to live and work in the UK. In addition, residents of the EU Zone are well suited to the climatic conditions of the UK.
However, due to the need for continuity and maintenance of corporate and business culture, it shall be advisable to deploy expatriate workers from within the Emirates airlines to the UK. This will minimise the search for skills and experience from outside and maximise on the work output of the joint venture. The non-UK selected employers will also need to be trained on English basics communication in order to break the language barrier; however, some employees from British Airline will be brought on board in order to help other employees adapt to the British culture.
The joint venture between Emirates Airlines and British Airlines is likely to be successful not only due to economic strength of the two airlines but also due to potentially sustainable growth in the airline industry from a global perspective. Therefore, human resources policies, standards, and procedures will be of great importance in ensuring that the joint venture harnesses the best and most dedicated talent to achieve the goals and objectives of the venture.
The criteria of employee selection must be identified earlier as recommended above, they are trained on the necessary skills and tactics of work and basics of English language communication and then be deployed. In order to speed up the process of integration of employees from both sides, thorough and frequent communication between Emirates Airlines and British Airways would be necessary. Importantly, key business indicators in the UK portray a picture of potential growth and ease of doing business facilitated by accommodative political involvement, permissive regulations, strong economic prospects, adoptive social climate, and modern technology. All in all, with sound human resources strategies, the joint venture would penetrate the UK market successfully, with a workforce that would be dedicated to achieving their common goals and objectives.
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