Assignment Organizational Behavior Assignment A case analysis of the Organizational Behavior of Malaysian Airlines (MAS) and its Impact. 1.0 Introduction Ever since its inception as an independent airline in 1987, Malaysia Airline System Berhad is doing business as Malaysia Airlines. Proudly running as the national-flag carrier of Malaysia, it operates flights from its main home base of Kuala Lumpur International Airport (KLIA) with secondary hubs at Kuching and Kota Kinabalu on the second island of the Malaysian state. With a concentration of network on both regional as well as international sectors, MAS has come to be known as a world renowned airline as well as a local favorite along with its subsidiary, MAS Wings, credit being given to its staff hospitality and its marketing campaigns. After conducting an analysis on a local and international level it has been understood that there are various issues and opportunities that are being faced or available by and to MAS. Some of these are an overstaffing problem involving a workforce of more than twenty- thousand employees all over the world. Another one, being
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Assignment Organizational Behavior
Assignment
A case analysis of the Organizational Behavior of Malaysian Airlines (MAS) and its Impact.
1.0 Introduction
Ever since its inception as an independent airline in 1987, Malaysia Airline System Berhad is
doing business as Malaysia Airlines. Proudly running as the national-flag carrier of Malaysia, it
operates flights from its main home base of Kuala Lumpur International Airport (KLIA) with
secondary hubs at Kuching and Kota Kinabalu on the second island of the Malaysian state. With
a concentration of network on both regional as well as international sectors, MAS has come to be
known as a world renowned airline as well as a local favorite along with its subsidiary, MAS
Wings, credit being given to its staff hospitality and its marketing campaigns. After conducting
an analysis on a local and international level it has been understood that there are various issues
and opportunities that are being faced or available by and to MAS. Some of these are an
overstaffing problem involving a workforce of more than twenty-thousand employees all over
the world. Another one, being incurred net losses of RM 479 million by the third quarter of 2011.
By the end of the fourth quarter the airline had incurred a loss of RM 2524 million, indicating a
substantial decrease from a profit of RM 234 million in the previous year. However the airline
had remained profitable in the previous fiscal year of 2010.
This report will analyze the organizational behavior of Malaysia airline which talks about four
parts: business efficiencies, customer relationship and marketing efficiencies, human resource
and knowledge efficiencies, differential efficiencies. It also involves a SWOT analysis on the
airline as well. Finally, MAS has the vision in the next 3-5 years to become a 5-star value carrier
through a strategic medium term plan which has been devised that might prove beneficial for the
airline.
1.1 Company overview and problem occurs in MAS
Malaysia Airlines is letting go of 6,000 of it’s 20,000 employees, only days after admitting that
almost 200 cabin crew members had quit recently. In addition to crew members leaving the
airline, MAS has suffered a $97.6 million loss for the second quarter and $140.8 million loss in
the first quarter following the disappearance of MH370 and crash of MH17.
In a desperate attempt to revive the airline, a major revamp of the system is completely
necessary. This is especially true considering the negative connotations that seems to come along
with it’s name.
Malaysian airlines have several problems issued arise not only in operating and financial
problems but also they have several issued in management. However, Malaysia Airlines had its
modest start in the golden age of travel. A cooperative plan of the Ocean Steamship Company of
Liverpool, the Straits Steamship of Singapore and Imperial Airways led to a proposal to the
government of the Colonial Straits agreement to run an air service. The outcome was the
integration of Malayan Airways Limited (MAL) on 12 October 1937. On 2 April 1947, MAL
took to the skies with its first marketable flight as the national airline. The existence of BOAC
also facilitated MAL's entry as a member of IATA. After the Independence of Malaya in 1957
and with the contribution of BOAC, QANTAS, the government of the Federation of Malaya,
Singapore and the Territory of North Borneo, MAL was launched as an unrestricted limited
company. Fuelled by a young along with dynamic team of visionaries, the domestic carrier
turned into a global airline in less than a decade. With the creation of Malaysia in 1963, the
airline changed its name to Malaysian Airlines Limited. In 1965, with the severance of Singapore
from Malaysia, MAL became a bi-national airline and was renamed Malaysia-Singapore Airlines
(MSA). In 1966, the Governments of Malaysia and Singapore became the majority shareholders
in the national carrier and Malaysia-Singapore Airlines (MSA). In 1971, the partnership
involving Malaysia and Singapore was dissolved, and Malaysia Airlines Berhad was
incorporated. With an authorized capital of RM100 million, the company made a final revision to
its name in November 1971, and Malaysian Airline System Berhad (MAS) was launch in new
name. However, the year 2005 Malaysia Airlines faced one of its most challenging times.
Operating against a challenging global economic climate, increasing competition and rising
operational costs, Malaysia Airlines was forced to broadly restructure operations
Virgin Atlantic and many more. Malaysia Airlines also includes a frequent flyer program for
students above 12 years old which is knows as GRADS. It offers discounted airfares, great
packages and other special deals.
2.2.3 CRM –Customer Interface
CRM basically means continuous interaction with customers in order to enhance relationship and
to develop long term loyalty thereby earning profit. MAS have adopted many methods to keep
their customers satisfied. MAS’s customers are their top priority. There are various channels
which include call centers, sales offices, agents, airports counters and town center kiosk for the
convenience of walk-in customers.
Malaysia Airlines internet booking system was launched in august 2004. The internet booking
system not only enhanced customer relationship and experience but also allowed MAS to reduce
airlines distribution cost significantly over the years. The website allows customer faster access
to information to their travelling needs and to look through its products and services offered.
Also the use of this internet booking allows customer access to MAS inventory worldwide with
ease.
2.2.3.1 CRM in Social Media
One of the most comprehensive testaments of MAS innovation in social media is the
introduction of MHbuddy to Malaysia Airlines Facebook page in March 2011, it is an
application that allows users to book and check-in for flight, and share details of their trip with
their Facebook friends. This application is considered to be the most comprehensive for an
airline on the Facebook platform. This innovative strategy developed by MAS is an interesting
approach to leverage Facebook to book a flight.
MAS have a key presence on both Twitter and Facebook as mentioned earlier. Separate “tweets”
and pages for specific markets such as students, the expatriate community and several foreign
localities in their native language have been formed in order to make it easy for customers to
access and use. An approach to develop customer relationship management. These channels
complement Malaysia Airlines’ existing consumer platforms, such as the sales offices and call
centers, and allow the Company to interact with a different segment of the market and to engage
them in a different way.
As analyzed from the above information we can come to a conclusion that MAS’s current
marketing efforts have been predominantly focused on tactical sales promotion rather than brand
building. In spite of this approach they have been able to generate low yields insufficient to cover
an increasingly uncompetitive cost structure. In order to win back its customers MAS should
improve customer satisfaction at every touch point which is pre flight, in-flight and post flight. It
should focus on building its brand making sure it delivers on its brand promise consistently.
Measures MAS needs to focus on are to refresh Enrich Loyalty Programme, competitive product
roll out, enhanced advertising and promotion development and finally to focus on branding
revamp. The below figure depicts Malaysia Airlines recovery plan for Branded Customer
Experience.
3.0 Reccomendation
3.1 Literature Reviews
Following the appointment of a new CEO, Malaysia Airlines (MAS) has announced initiatives to track and boost performance of employees.
In a quarterly progress update, the airline reported “sustained progress amidst a backdrop of external macro-economic fluctuations.”
Group chief executive officer of Malaysia Airlines, Christoph Mueller said “We have seen a challenging quarter but I am pleased to see continued progress made in all key areas such as on-time performance and costs. Malaysia Airlines has been operating for six months now and although we have a long way to go and areas for improvement, we are making steady progress in the restructuring.”
“We are focused on building momentum with our restructuring in 2016. Diligent execution on efficiency and tighter cost controls has already produced results which have seen us emerging leaner and more focused. There is still plenty to be done but the group is working hard to ensure that Malaysia Airlines succeeds and prospers for the years to come,” added Mueller.
Part of these initiatives to boost profits involve strengthening the firm’s talent pipeline and enhancing skills of employees.
MAS emphasised people development and succession planning remained an integral part for the organisation’s sustained success, remains a key focus in 2016.
To this end, the quarter saw the introduction of the revamped performance management system, which aims to boost productivity by providing clear targets as well as a clearer path for career progression.
“The system will enable us to spot skills gaps and escalate retraining programmes,” MAS stated.
To address skills gaps, the airline will also be exploring joint ventures with established international organisations to provide training and specific skillsets.
Whilst being beneficial for the airline, the firm added this venture is also very much in line with the Government’s Economic Transformation Programme.
“The airline has been working hard in closing the skills gap via the Malaysia Airlines Academy which will be based in KLIA, providing a centre of aviation skills for Malaysia. The newly revamped academy will ensure future generations of leaders for the airline will be groomed entirely from within,” the report stated.
To this end, MAS confirmed it has successfully recruited 20 management trainees towards building a talent pipeline as well as growing the aviation skillsets in Malaysia.
The trainees will be assigned and rotated across the various divisions in Malaysia Airlines to ensure exposure across all functions of the organisation and to inspire passion for the industry.
“The quarter saw further strengthening of the leadership team with the announcement of a new Head of Revenue Management and Head of Engineering. The new team is an important strategy of having world class and diverse talent to reflect the company’s global business and operations,” the report concluded.
3.2 Organization Leadership Theories
Leadership, as explained by successful businessman Alan Keith, is "ultimately about creating a
way for people to contribute to making something extraordinary happen." Good leaders move
their followers to action and help them realize their potential to accomplish a greater objective.
While larger companies actively mine the work force for great leaders, for small businesses,
owners often need to fill this role themselves. Understanding the theories of organizational
leadership helps you grow and develop leadership skills and identify potential leaders during the
hiring process.
Trait Theory
The idea that great leadership derives from a person's individual characteristics or traits is known
as trait theory. Research identifies six personal traits that strongly relate to leadership:
intelligence, adjustment, extraversion, conscientiousness, openness to new experiences and self-
efficacy. According to trait theory, individuals with these characteristics emerge as leaders
regardless of the situation.
Behavioral & Style Theory
This theory describes leadership not as a set of traits but a set of behaviors and styles. Theorists
studied three main leadership styles: authoritarian, where the leader dictates what followers must
do; democratic, where the leader presides over a collective decision process; and laissez-faire,
where the leader does not participate in the decision process. The results of the studies indicate
that followers preferred the democratic approach to leadership and that performance increased
when leaders used positive reinforcement.
Functional Theory
Functional theory argues that leaders' primary responsibility is to assess what their followers
need and ensure that those needs are met. A range of studies indicate that leaders must perform
five primary functions: monitor the environment, organize subordinate activities, train and coach
subordinates, motivate followers, and participate in the group's work.
Transactional Theory
Transactional theory argues that leadership arises from an individual's ability to reward or punish
subordinates based on their performance. Leaders must be given a goal, must possess the ability
to train and evaluate subordinate's performance towards that goal and must be given the authority
to reward subordinates when goals are met.
Transformational Theory
Transformational leaders focus on the big picture and use communication to motivate followers
to effectively and efficiently execute their vision. Transformational leadership theory calls for
leaders to be visible and accessible, and to actively seek out new ideas to realize objectives.
Environmental Theory
The environmental theory of leadership argues that leaders use psychology and self-awareness to
foster self-sustaining environments where group members bring out the best in one another. The
leader creates a culture that motivates and excites members to complete required tasks not
because they are required to but for the benefit of the group. Instead of carrying the group,
environmental leaders create a setting in which group members want to carry one another and are
empowered to do so.
Situational & Contingency Theories
These theories argue that the desired traits and behaviors exhibited by a leader depend largely on
the situation, and that there is no best way to lead. Based on this theory, the authoritarian
leadership style is effective during times of crisis but not for everyday operations, the democratic
leadership style is more effective when a consensus needs to be built, and the laissez-faire
leadership style is effective when subordinates are trained and experienced individuals who
appreciate the freedom it provides.
Malaysia Airlines Acquired By Khazanah
Malaysia Airlines will be owned completely by the Malaysian government from now on. Or
more specifically, the state investment company Khazanah Nasional, which used to own 69%
stake will now be taking 100% ownership by buying out other shareholders.
Khazanah’s Managing Director, Tan Sri Azman Mokhtar stated that Khazanah will be buying
out the remaining equity from the shareholders at 27 sen a share. The airline will also be delisted
and a new company will be established to take over the airline’s business. MAS is to be
completely delisted from Bursa Malaysia by the end of this year.
Malaysia Airlines will also restructure it’s routes, which does not come as a surprise to many,
considering the high numbers of empty seats on many of its planes. In fact, Malaysia Airlines has
not made any annual profit since 2010. According to the MAS Recovery Plan, “it has seen
RM8.4 billion in cumulative net losses from 2001 to June 2013.”
3.3 Strategic plan to handle on Manpower Excessive issues
3.3.1 Job design Theories
Job design follows job analysis i.e. it is the next step after job analysis. It aims at outlining and
organising tasks, duties and responsibilities into a single unit of work for the achievement of
certain objectives. It also outlines the methods and relationships that are essential for the success
of a certain job. In simpler terms it refers to the what, how much, how many and the order of the
tasks for a job/s.
Job design essentially involves integrating job responsibilities or content and certain
qualifications that are required to perform the same. It outlines the job responsibilities very
clearly and also helps in attracting the right candidates to the right job. Further it also makes the
job look interesting and specialised.
There are various steps involved in job design that follow a logical sequence, those that
were mentioned earlier on. The sequence is as follows:
1. What tasks are required to e done or what tasks is part of the job?
2. How are the tasks performed?
3. What amount are tasks are required to be done?
4. What is the sequence of performing these tasks?
All these questions are aimed at arriving upon a clear definition of a specific job and thereby
make it less risky for the one performing the same. A well defined job encourages feeling of
achievement among the employees and a sense of high self esteem.
The whole process of job design is aimed to address various problems within the organisational
setup, those that pertain to ones description of a job and the associated relationships. More
specifically the following areas are fine tuned:
Checking the work overload.
Checking upon the work under load.
Ensuring tasks are not repetitive in nature.
Ensuring that employees don not remain isolated.
Defining working hours clearly.
Defining the work processes clearly.
The above mentioned are factors that if not taken care of result into building stress within the
employees.
Benefits of Job Design
The following are the benefits of a good job design:
1. Employee Input: A good job design enables a good job feedback. Employees have the
option to vary tasks as per their personal and social needs, habits and circumstances in the
workplace.
2. Employee Training: Training is an integral part of job design. Contrary to the
philosophy of “leave them alone’ job design lays due emphasis on training people so that
are well aware of what their job demands and how it is to be done.
3. Work / Rest Schedules: Job design offers good work and rest schedule by clearly
defining the number of hours an individual has to spend in his/her job.
4. Adjustments: A good job designs allows for adjustments for physically demanding jobs
by minimising the energy spent doing the job and by aligning the manpower
requirements for the same.
Job design is a continuous and ever evolving process that is aimed at helping employees make
adjustments with the changes in the workplace. The end goal is reducing dissatisfaction,
enhancing motivation and employee engagement at the workplace
3.3.2 Job Characteristic Model
Hackman and Oldham job characteristics model
The job characteristics model, designed by Hackman and Oldham, is based on the idea that the
task itself is key to employee motivation. Specifically, a boring and monotonous job stifles
motivation to perform well, whereas a challenging job enhances motivation. Variety, autonomy
and decision authority are three ways of adding challenge to a job. Job enrichment and job
rotation are the two ways of adding variety and challenge.
It states that there are five core job characteristics (skill variety, task identity, task significance,
autonomy, and feedback) which impact three critical psychological states (experienced
meaningfulness, experienced responsibility for outcomes, and knowledge of the actual results),
in turn influencing work outcomes (job satisfaction, absenteeism, work motivation, etc.). The
five core job characteristics can be combined to form a motivating potential score (MPS) for a
job, which can be used as an index of how likely a job is to affect an employee's attitudes and
behaviors.
Hackman and Oldham’s job characteristics theory proposes that high motivation is related to
experiencing three psychological states whilst working:
1. Meaningfulness of work
That labour has meaning to you, something that you can relate to, and does not occur just
as a set of movements to be repeated. This is fundamental to intrinsic motivation, i.e. that
work is motivating in an of itself (as opposed to motivating only as a means to an end).
2. Responsibility
That you have been given the opportunity to be a success or failure at your job because
sufficient freedom of action has given you. This would include the ability to make
changes and incorporate the learning you gain whilst doing the job.
3. Knowledge of outcomes
This is important for two reasons. Firstly to provide the person knowledge on how
successful their work has been, which in turn enables them to learn from mistakes. The
second is to connect them emotionally to the customer of their outputs, thus giving
further purpose to the work (e.g. I may only work on a production line, but I know that
the food rations I produce are used to help people in disaster areas, saving many lives).
In turn, each of these critical states are derived from certain characteristics of the job:
1. Meaningfulness of work
The work must be experienced as meaningful (his/her contribution significantly affects
the overall effectiveness of the organization). This is derived from:
o Skill variety
Using an appropriate variety of your skills and talents: too many might be
overwhelming, too few, boring.
o Task Identity
Being able to identify with the work at hand as more whole and complete, and
hence enabling more pride to be taken in the outcome of that work (e.g. if you just
add one nut to one bolt in the same spot every time a washing machine goes past
it is much less motivating than being the person responsible for the drum
attachment and associated work area (even as part of a group).
o Task Significance
Being able to identify the task as contributing to something wider, to society or a
group over and beyond the self. For example, the theory suggests that I will be
more motivated if I am contributing to the whole firm’s bonus this year, looking
after someone or making something that will benefit someone else. Conversely I
will be less motivated if I am only making a faceless owner wealthier, or am
making some pointless item (e.g. corporate give-away gifts).
2. Responsibility
Responsibility is derived from autonomy, as in the job provides substantial freedom,
independence and discretion to the individual in scheduling the work and in determining
the procedures to be used in carrying it out)
3. Knowledge of outcomes
This comes from feedback. It implies an employee awareness of how effective he/she is
converting his/her effort into performance. This can be anything from production figures
through to customer satisfaction scores. The point is that the feedback offers information
that once you know, you can use to do things differently if you wish. Feedback can come
from other people or the job itself.
Knowing these critical job characteristics, the theory goes, it is then possible to derive the key
components of the design of a job and redesign it:
1. Varying work to enable skill variety
2. Assigning work to groups to increase the wholeness of the product produced and give a
group to enhance significance
3. Delegate tasks to their lowest possible level to create autonomy and hence responsibility
4. Connect people to the outcomes of their work and the customers that receive them so as
to provide feedback for learning
Reccomendation for decision making approach and solutions
Proposed decision making approach and solution:
After reviewing several problems from various angles it is clearly seen that MAS managements
are delaying to delivers their decision which have taken or somehow management taking wrong
approaches to take appropriate decision for the organization. However, in decision making
process there have two ways to make decision which is may the management of MAS can take
Logical approach or Magical Approach. However, for a big organization like Malaysian airlines
should be implement logical approaches rather than magical approaches. The problems which
arise in MAS management organizations need to be analyze their internal as well as external
factors very carefully. Through logical approach identify the problems in systemic ways and take
necessary action step-by-step. Once accomplish one problem than would be taking another step
for next. Moreover, management must be acknowledging that, each stage fully covered through
intelligence and care. ASK SIR L model, which is one of the most effective component in logical
approach decision making model.
Through this model organization will be identify the most important problems which is exist in.
For example, from the scenario of MAS customer service problem which state, customers trying
to change their flight through online service and getting trouble to fixed it. After that, they called
to administrator and did not get any feedback, later on send an email but no response at all.
However, again they called to the service department and explain overall scenario to the
management over the phone and get replied back “I am not the one responsible for this and I not
in charge to resolve this issue and there is no one else to talk to this issue”. However, this issue
gave a negative indication of MAS customer service.
What decision can take MAS organization through ASK SIR L model? Firstly, they need to find
out what are the causes existing thus the problem arise. Once specify next step will be find out a
possible solution to overcome from this. However, before implement the possible solution which
decision taken by the groups than forward it to the top management to review the decision. Once,
top management appreciates overall decision then will start to work for implementation.
Decision making through STEP analysis: As earlier mention, problem-solving frequently contains of decision-making, and decision-
making is specifically vital role for management and leadership. There are procedures and
methods to recover decision-making and the quality of pronouncements. After reviewing the
overall problems of Malaysia airline management can be take further decision through STEP
analysis to overcome from their existing problems.
Sociocultural
Malaysia is self-possessed of three main races where Islam is the official religion. Its fruitfulness
in cultural variety and could be used as the attracting factor for the tourists to travel to Malaysia,
and indirectly helped MAS to progress its operation to contain more foreign destinations.
Economic
The Asian economic crisis in the late 90s which has affected the South East Asian region was
also a causative factor that caused MAS to suffer 5 consecutive losses. These circumstances got
degenerates as the Malaysian Ringgit currency was undervalued, which in turn led to high
interest on foreign trade. Investments made by MAS to expand its business by purchasing more
aircraft were highly affected by this. The devaluation of RM had also led to low spending power,
which caused lesser people to travel by air. The tragedy of September 11 has also contributed to
the reported losses by MAS. Since then, the world economy was on its downturn and the world
masses were getting „phobia‟ to travel by air. MAS have to bear the losses as its main operation
is based on the international network.
Politics and Legal
Due to the actual bad economic recession, Malaysian Government through Bank Negara had to
reread the foreign and monetary policies. As such, Ringgit Malaysia (RM) was attached to RM
3.80 to 1 US dollar. The Government had to impose stricter and tighter policies for Malaysian to
travel abroad to avoid currency outflow, which indirectly caused low rates of travelers for MAS.
The situation worsens, when the regional economic recession was coupled with the instability in
the political arena in Malaysia in 1998. As a result, the investors lost their confidence, being
more cautious and prefer the attitude of „look and see‟ and some of them have ceased their
operations in Malaysia, resulting in more layoffs.
Technology
MAS has also invested in IT and telecommunications advancement to increase the efficiency of
its operation. More people can have access to the MAS services just through the Internet where
people can book and buy their ticket online. Besides that, more promotions and advertisements
can be done through the Internet, which can attract more and more people to travel with MAS.
The growing demand in cargo services has resulted in more airlines opting to convert their
passenger aircraft into cargo aircraft. This new trend provides an alternative for MAS to reduce
some money on purchasing new cargo aircraft and perhaps enter into other possible profitable
operations.
CONCLUSION
Malaysian airline still holding their reputation in aviation industry. Hence, there have several
factors which they need to be overcome to reduce their further loss in nearest future. However,
management should take decision to improve their internal factors through implement logical
decision approach rather than magical approach. The companies like aviation industry, by made
a decision management require thinking analytically to resolve their problem. However,
management need to reflect some decisions and challenges which are difficult because probably
they don‟t have the necessary knowledge or experience, in which case they need first to decide if
the decision which made by them or challenge is actually suitable and necessary for at this stage.
There have few decisions which have to be made whether managements are ready or not, others
might not be as pressing as they imagine. Moreover, it also wouldn‟t be considerable to change-
based decision if having considered the implications carefully to decide that it is not the best
thing to do. Management should take decision in right way as in right time so they can be
avoiding their nearest problem.
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