Low employee satisfaction in Air Arabia

Air Arabia was launched in 2005 as one of the initiatives in low cost carriers segment in Middle East. Over the period of time it was able to build up a remarkable company name in the market along with a firm financial record of its own. After introducing problems related to Political, Social, Environmental and Technological (PEST) aspects of Air Arabia, this part concentrates on analyzing these problems with the help of basic organizational behavior theories. The report is divided in four sections, each one for Political, Social, Environmental and Technological aspects. In each section, OB concern of the problem followed by the problem from the case and the explanation is mentioned.

People:

Problem Statement: In previous section we discovered a problem that employees in Air Arabia were not satisfied with the low financial benefits provided against their high performance.

Problem Highlight: Performance based Incentives

Performance based incentives:

This is a problem of pay for performance scheme. In pay for performance or say performance based incentive system, employees are rewarded in accordance to their performance. Now the problem is that employees can never be satisfied with the outcome of this particular form of reward system. This can be understood by Equity theory. Equity theory states that employees use to compare their position (here rewards) with those of other employees. So even an organization remain transparent in distributing incentives, until unless the employees themselves become satisfied in light of equity theory, the problem like the incentive problem in pay for performance scheme in Air Arabia remain standing. [1] 

Problem Statement: One of the major problems associated with employees is that company is not able to provide them with long term commitment regarding their performance appraisal and work effectiveness bonus.

Problem Highlight: Performance Appraisal

Performance appraisal:

Performance appraisal is the measure of evaluating the performance of the employees. In air Arabia, the performance appraisal system presently in use incorporates the number of task and time limit of those task accomplished by the employees are recorded [2] . This forms the basis of the performance appraisal scheme in the company. (Performance-related pay, 2005) Now the problem in this scheme is that this does not count the quality and situation under which work is carried out. For example, in Air Arabia, the performance scheme is same for sales and administrative staff. Now administrative staff has clear work functions to follow whereas sales staff has to undergo filed work which is more challenging. The targets for sales staff are tougher to achieve than those of administrative staff. Thus the performance appraisal scheme in Air Arabia is not satisfactory and requires other schemes like 360 degree scheme etc [3] .

Problem Statement: The case shows that Air Arabia exhibits problem of workforce management due to workforce diversity.

Problem Highlight: Diversity

Diversity:

Leaders and managers in Air Arabia do not handle the workforce diversity effectively. In their effort to manage the diversity, they go with equal treatment strategy. In this strategy, each of the employees is treated equally irrespective of its cast, color, race and language they speak. This looks quite fair in first look but the approach is not helpful in country like Dubai. The country has people of different religion and cast, speaking different languages and has different educational schemes and mental aptitude [4] . Now the problem is some particular type of employees are always advantageous of this equality approach. For example, the work force of India is more fluent in English than the natives of UAE. UAE culture gives emphasis on Urdu and not English. Now because of low proficiency in English and the equality approach in diversity management, UAE natives are mostly under-rated than few foreign classes of employee. This introduces a sense of dissatisfaction and un-happiness towards the job.

Problem Statement: employees of Lufthansa Air went on strike to improve their working conditions.

Problem Highlight: Work Environment

Work environment:

Work environment is a major constituent of an effective organizational culture. The work environment not only constitutes the physical constituents of the location but also the culture of the work like senior-subordinate relations, type of communication etc [5] .

The situation here shows that the employees of Lufthansa Air are not satisfied with the work environment and went on strike. The actual reason for the dissatisfaction was company’s pressure to work more than the required 8 hours to answer the increasing competition in aviation industry. This decision was not welcomed by the staff as it resulted in more hastiness in job and thus resulted in improper work conditions in the company. (Listening, the Doorway to Employee Commitment, 2005)

Environment:

Problem statement: Air Arabia had to reduce some of its other expenses like HR expenditure and to make it possible it has reduced intake of employees that had increased work pressure over presently working employees tremendously.

Problem Highlight: Work Environment and Employee Shortage

Work environment and employee shortage:

The problem here is of bad work environment due to excessive work load because of lesser number of employees. The problem was resulted due to high oil prices which forced the company to shrink the workforce. This shrinkage resulted in high pressure on present work culture and thus decreased efficiency of work environment.

Problem Statement: High operational cost which is internal factor of employee malfunctioning causing external effect over organization.

Problem Highlight: Employee Inefficiency and Lack of Motivation

Employee inefficiency: Lack of motivation

The employees in Air Arabia were found to be less efficient and thus the company was compiled to increase its fare to sustain pressure of increasing oil prices [6] . The main cause of this problem can be lack of motivation in the employees towards the company’s growth. If the employees would have been more motivated, they could have been more efficient and thus the problem of price hike because of high operational cost could have been prevented. This is a clear case of less motivated work force. (Listening, the Doorway to Employee Commitment, 2005)

Problem Statement: Most of its employees have to work under pressure basically for the sustainability of the organization which has raised the level of employee dissatisfaction in the company

Problem Highlight: Employee Dissatisfaction

Employee dissatisfaction:

There are a number of competitors of Air Arabia in low cost aviation industry which forces employees to work harder with limited resources. This results in greater employee dissatisfaction towards the workplace and more employee turnover rate.

Technology:

Problem statement: But all these technical advancements have an upper limit beyond which it cannot be stretched, and at that point employee performance comes into picture and has to be taken to its best possible level.

Problem Highlight: Employee Training

Employee training:

The problem here is that when new technology is introduced in the company to cut operational expenses, the work and expectation from the employees also changes a lot. So there is a clear need to employee training. Employees are needed to be trained at new technology so that they are able to be a part of company’s cost cutting scheme. Employee training is a necessary part of any organization which needs to be happen periodically [7] .

Structure:

Problem Statement: as employee commitment is an important issue and it cannot be handled by the organization without proper structuring and it is also one of the important issues faced by Air Arabia

Problem Highlight: Leadership

Leadership:

In the case, we found that employees are not committed to the organization. This is the responsibility of the leader to keep the faith of the employees in the organization. Thus the company needs its leaders to take more active role. The leaders in the company need to motivate the employees and to maintain the commitment of the employees in the company. The structuring component in this problem is more of a requirement of a leader [8] .

Problem Statement: Upper management is facing a problem to retain its entire structure which is similar to the case of Lufthansa Airways. There may be a need for an improved format of organizational behavior needed in this regard that can be provided with the help of proper training

Problem Highlight: Training

Training:

The problem here is that due to the high instability of labor market in airline industry, the company is unable to maintain its talent pool which again is introducing instability in its organizational structure. This instability is supposed to be handled by reducing job turnover rate by more motivational training to its employees [9] .