Up In The Air: How Airlines Can Improve Performance by Engaging Their Employees

[Excerpt] In the chapters that follow, we explore the competitive strategies and employment-relations strategies found in the United States (chapter 2) and in a range of other countries (chapter 3), before and after deregulation. In chapter 4 we analyze recent trends in quality, productivity, and costs, as well as employee outcomes. In chapter 5 we look more closely at selected new-entrant airlines and find a wide range of competitive and employment-relations strategies being used in this segment of the industry. In chapter 6, we examine several legacy airlines and identify the distinct strategies they have adopted to respond to competitive pressures from new-entrant airlines. These chapters each focus on selected U.S. airlines and those based in some other countries. In chapter 7, we summarize the strategies of new-entrant and legacy airlines, and offer lessons about how airlines can and do change their strategies over time in their efforts to compete more effectively. We offer recommendations, using our historical and comparative analyses to discuss whether a path forward can be identified that can provide a better balance in stakeholder outcomes. We end on a positive note, arguing that if the parties learn from their experiences and from each other, in the United States and other countries, there is a path that deals with the pressures building up in the airline industry, offering hope for a better balance between investor, employee, customer, and societal interests. Key questions are whether and from where the leadership will come to get the industry moving down this path or whether the main parties might not take such action before there is a perfect storm

Professional Occupations, Knowledge-Driven Firms, And Entrepreneurship: A National And Regional Analysis

The worldwide dominance of Western nations in commercial knowledge-intensive services has declined between 1995 and 2010, but the slippage in revenue was only from 88 to 79 percent. The European Union and North America remain the two largest regions in consumption and in exporting. Four professional service sectors—accounting, law, engineering, and management consultancy—have shown stability or even growth in the past decade. Entry and expansion requirements in these fields, at home and abroad, constitute barriers for both individual professionals and companies. Entrepreneurship is evident in these sectors, as small and medium size enterprises have maintained their viability against large firms. Only accountancy shows a high degree of concentration, but competition in this sector, too, is expected from the emerging economies, especially China. Professional service firms of the West have forged strong linkages with both domestic and foreign clients via relationship marketing. Technology is an important factor via automation. Although each of the four sectors is facing both external and internal challenges, they continue to grow and appear to be meeting the challenges in part by more innovation and transparency

Governing the human capitalists : ownership and authority in the advertising and airline industries

Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, Operations Research Center, 2004.Includes bibliographical references.Theorists suggest the rising value of human capital will mean greater participation by employees in the ownership and governance of firms. This thesis explores aspects of these claims by analyzing the competitive effects of the allocation of ownership and authority in ad agencies and airlines. Essays 1 and 2 analyze the organizational history of the advertising industry to reconcile the stylized, theoretical views of professional service firms (PSFs) as unstable, small, private partnerships with the empirical reality of large public corporations in several professional service industries. Essay 1 uses a panel of advertising agencies and creativity awards from 1960-1980 to assess whether public ownership reduced PSF competitiveness, particularly whether it diluted employee incentives. Finding no difference in the survival, growth, and award rates of public and private ad agencies, this paper challenges the notion that allocating ownership exclusively to employees provides advantage in the PSF environment. Essay 2 draws on interviews and historical research to develop hypotheses about the structure and evolution of the industry. It proposes that agency size affects the ability to service large projects, hence the size distribution of agencies stems from heterogeneity in the units of demand. It also proposes that the industry's holding companies add value through financial intermediation. Together these essays suggest that the large public corporation is a feasible and perhaps advantaged governance form even in environments based predominantly on human capital.(cont.) They challenge several assumptions underlying the stylized view of PSFs, and offer the speculation that the rarity of public PSFs stems from institutional barriers, not economic disadvantages. Essay 3 stems from separate research on airline labor relations and analyzes the turnaround of Continental Airlines. A case study reveals Continental's improved employee relations stem from a fundamental change in its authority system, from a traditional hierarchy to a high-involvement system. The case also discusses likely facilitators of this transformation of Continental's authority system. Taken together the essays offer a broad conjecture for future research: that allocation of authority inside the firm may be a more important factor in employee incentives than allocation of ownership to employees.by Andrew Gustaf von Nordenflycht.Ph.D

Sources of Homogeneity and Heterogeneity across Professional Services

Research on Professional Service Firms (PSFs) has tended to treat them as homogeneous and to assume there are similarities in how they are organized and managed. This assumption has been challenged recently as scholars have drawn attention to organizational differences stemming from sources of heterogeneity. The authors argue that rigorous theorizing about the organization and management of PSFs requires an understanding of sources of both homogeneity and heterogeneity and their specific implications. They synthesize insights from the sociology of professions literature and the economics and organization theory literatures to distil key sources of homogeneity and heterogeneity. They also identify firm-level characteristics that drive heterogeneity within a particular professional service. The authors propose an overarching framework of sources of homogeneity and heterogeneity that helps interpret the generalizability of existing research and has the potential to better inform future empirical research on PSFs

Mutual Gains or Zero Sum? Labor Relations and Firm Performance in the Airline Industry

The authors examine competing theoretical arguments regarding whether union representation, shared governance, wage levels, and two features of the quality of labor relations—workplace culture and conflict in negotiations—lead to better or worse outcomes for airlines, and they test these interpretations using a mix of historical and quantitative data from major U.S. airlines. Both the qualitative and quantitative results suggest that relational factors—conflict and workplace culture—are more important determinants of performance than the structural factors of unionization, shared governance, and wages. The authors conclude that efforts to recover from the current crisis in the airline industry that depend primarily on reductions in wages or union power will at best bring only short-term relief from immediate financial pressures. Sustained improvement in service quality and financial performance will require more fundamental improvements in the quality of labor relations

25 Years since P2: Taking Stock and Charting the Future of Professional Firms

In this article, we introduce the theme of the special issue, reviewing and analyzing 25 years of the professional partnership, or P2, stream of research. We structure our analysis around the three dimensions of control that structured the original P2 paper strategic, operating, and financial control—and their underlying drivers: knowledge intensity, professionalized workforce, and low capital intensity. We then introduce the five papers selected for the special issue, positioning each relative to the conceptual scheme of the research field as a whole. We then identify a set of themes that are poised to dominate professional firm research for the next quarter century—namely internationalization, changing career and work–life preferences, de/re/regulation, and technology. These analyses lead us to a new set of PSF dimensions, which we present as an emerging picture of this dynamic field of research and practice

Out of the Ashes: Options for Rebuilding Airline Labor Relations

The crisis in the airline industry and its labor relations system creates a window of opportunity to introduce changes that are essential to successful industry recovery. This paper summarizes the results of our research on labor relations conducted as part of the MIT Global Airline Industry Project and proposes a set of improvement initiatives. We recommend that (1) companies negotiate a "recovery compact" with its employees that includes plans for improving the workplace culture and climate and for expediting and resolving collective bargaining contract negotiations, (2) government leaders specify a window of time for industry and labor leaders to agree on changes needed in the Railway Labor Act, (2) the National Mediation Board engage industry and labor leaders in a process of transforming the agency's role to support the changes needed in the industry, and (4) industry, labor, and government leaders create a forum to support mutual learning and improvement

Out of the Ashes: Options for Rebuilding Airline Labor Relations

The crisis in the airline industry and its labor relations system creates a window of opportunity to introduce changes that are essential to successful industry recovery. This paper summarizes the results of our research on labor relations conducted as part of the MIT Global Airline Industry Project and proposes a set of improvement initiatives. We recommend that (1) companies negotiate a "recovery compact" with its employees that includes plans for improving the workplace culture and climate and for expediting and resolving collective bargaining contract negotiations, (2) government leaders specify a window of time for industry and labor leaders to agree on changes needed in the Railway Labor Act, (2) the National Mediation Board engage industry and labor leaders in a process of transforming the agency's role to support the changes needed in the industry, and (4) industry, labor, and government leaders create a forum to support mutual learning and improvement.Labor Relations, U.S. Airline Industry,