Root Cause Company Failure
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Q. How HR caused INDIAN AIRLINES to failure?
Indian Airlines (IA) – the name of India’s national carrier conjured up an image of a monopoly gone berserk with the absolute power it had over the market. Continual losses over the years, frequent human resource problems and gross mismanagement were just some of the few problems plagued the company. IA’s recurring human resource problems were attributed to its lack of proper manpower planning and underutilization of existing manpower. Rewards and recognition- In the late 1990s, in yet another effort to appease its employees, IA introduced the productivity-linked scheme. The idea of the productivity linked incentive (PLI) scheme was to persuade pilots to fly more in order to increase aircraft utilization. But the PLI scheme was grossly misused by large sections of the employees to earn more cash. Pilots were flying 75 hours a month, while they flew only 63 hours. Eventually, the PLI schemes raised an additional annual wage bill of Rs 1.8 billion for IA. Allowances such as out-of-pocket expenses, experience allowance, simulator allowances etc. were paid to those who were not strictly eligible for these. Hiring- IA’s recurring human resource problems were attributed to its lack of proper manpower planning and underutilization of existing manpower. The recruitment and creation of posts in IA was done without proper scientific analysis of the manpower requirements of the organization. Poor assessment of the manpower needs, need-based recruitment, optimum utilization of the recruited personnel and abolition of surplus and redundant posts. Identification of the qualifications appropriate to all the posts is a basic requirement of efficient human resource management, but was absent in case of IA. IA had the maximum number of employees per aircraft. The...
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