case study assignment
Strategy and HRM at Delta Airlines
Ajay Moktan
Professor Tom S. Brown
STRATEGY AND HRM AT DELTA AIRLINES Moktan 1
STRATEGY AND HRM AT DELTA AIRLINES Moktan 1
03/02/2020
Issue Identification
Previously, Delta Airlines provided the best customer services due to the competency and experience of its employees. This enabled it to enjoy high profits and also maintain a good reputation in the society. However, as the time moved went by, the profitability of the company was lowered due to several reasons which included; increase in fuel prices, stiff competition from other companies which offered better discounts and the recession period of 1990. These market changes led to an increase in the costs of the factors of production used by the company. In turn, the company had to increase the charges for the services provided by the airline. Customer demand reduced as when the fare prices are high, people tend to travel less hence, and also people travel more when the prices of tickets decrease. As a result, the operating costs increased, leading to reduced profit margins as bigger revenue was used to cater for the expenses incurred (DiScipio,2017). Immediate action was therefore needed to solve the company's situation as it had started making continuous losses. Applying a 7.5 leadership strategy was good despite having a few challenges which affected the company negatively.
The employees of a company are one of the most essential assets regardless of whether the company is bigger or small. Hence, this means that the inexperience of employees and their level of motivation affects the way they deliver services to the customers. The employees in Delta had been demoralized by the fact that their demands for a pay rise and better working environment were not being responded to. Demoralized employees offer poor services hence making it difficult to satisfy customers.
Laying off of the employees by the company greatly affected the morale of the remaining employees(Roman, 2010). This is because the remaining few employees were not assured of their job security and had a fear of being fired at any time. However, the replacement of the most experienced employees with new ones who were less experience reduced the expenses incurred by the company but also led to the loss of customers. Customer satisfaction leads to loyalty to the company and, therefore, should be prioritized. When the customers are not satisfied, the impact on the reputation of the company through word of mouth hence leading to loss of current customers as well as potential customers. In Delta’s case, poor services offered to customers gave a chance for its competitors to thrive and snatch most of its customers, which led to a serious loss of profits. Instead of replacing all the experienced staff, Delta should have kept a manageable number of them for continuity purposes. This is because the experience of employees is a very vital aspect of service delivery as well as customer handling.
Issue Analysis
Despite the layoffs, Allen should have made provision of quality customer service a top priority agenda (Roman, 2010). This would at least have enabled it to maintain the existing customers even though it was difficult for the company to secure new customers at that time. Every successful business strives to improve customer service so as to keep customer complaints as low as possible or even zero. On the other hand, there were substantial daily complaints from customers due to poor handling by flight attendants, the poor hygiene of airplanes, among other reasons.
However, the CEO of Delta company overlooked the importance of complaint reviews in the determination of the employee’s effectiveness. Customer reviews and complaints show whether the company is meeting customer demands or not. On the other hand, the number of complaints kept on rising day by day. Poor service delivery by the company wasted its reputation and its ability to attract potential customers. It was even difficult to maintain the existing ones as they went to seek services from other firms.
Solution
The company should have met the demands of the labor organizations which had been formed by the pilots and mechanics to avoid the risks caused by hiring inexperienced staff. Since it is not possible to reverse the issue, the company is supposed to improve on customer service and the cleanliness of their airplanes. The issue can be addressed for several reasons.
Firstly, the airplanes ought to be washed after making any trip to maintain a clean environment. A clean environment will make customers comfortable during their flights. Additionally, the company should be responsible for cleaning the airplanes as well as waste disposal should be closely monitored. This will ensure that the hygiene level areas required, and the cleaning company is doing its duties as expected.
Thirdly, the human resource department should ensure that at least a quarter of its employees are experienced so as they can show the others how best to do their jobs. If all the employees are inexperienced, they will find a hard time trying to understand how best to handle customers and, in most cases, end up making serious mistakes at the expense of the company. Refresher training should also be conducted to often so as to give the employees with skills necessary to meet ever-changing customer demands.
On the other hand, Key performance indicators (KPIs) such as customer reviews score should be used to monitor closely. This will enable the employees to measure the performance of employees through the number of complaints or reviews (Roman, 2010). If the company fails to follow these recommendations, it would be risking a future company takeover or maybe bankruptcy.
Potential Limitation to Solutions
Conclusion
Previously, Delta Airlines used to make huge profits before the economic recession period of the 1990s. When faced with problems, it laid off most of its employees, which caused it more problems. As a solution to this, the company is advised to prioritize customer service and also hire more experienced employees. This can be achieved through maintaining high standard hygiene of the airplanes and immediate actions to respond to customer complines. This will enable the company to attract new customers and also keep the existing ones to avoid losing them to competitors. The company should also motivate its employees in various ways, such as performance-based rewards and also through remuneration.
References
DiScipio, T. (2017). Five worst side effects of bad customer service (and how to avoid them). Impact. Retrieved from https://www.impactbnd.com/blog/5-dangerous-side-effects-of-bad-customer-service
Roman, E. (2010). Voice of the customer metrics. New York, USA: McGraw-Hill Professional Publishing.