Mutual gains or mutual losses? Organisational fragmentation and employment relations outcomes at Qantas Group

Abstract

While previous studies indicate the commercial benefits for airlines from either ‘high road’ or ‘low road’ employment relations approaches, there is limited evidence of success among organisations utilising a ‘hybrid’ model involving differentiated arrangements with different workforce segments. In analysing the processes and outcomes associated with strategic change at Qantas Group, this article examines the reasons why organisations adopt hybrid employment relations arrangements and the outcomes associated with this approach. Drawing upon the strategic negotiations and employment subsystems frameworks, we find that hybrid strategies emerge under the influence of product market pressures and institutional forces. In the Qantas Group case, these factors combined to inhibit the capacity of management to pursue either low road or high road strategies, resulting in differentiated and fragmented arrangements. The case highlights the potential risks of hybrid employment relations strategies for worker commitment, workplace conflict and organisational performance, with implications for human resource management scholarship and practice.

An expanded conceptualization of line managers’ involvement in human resource management.

“…Although traditional empirical research on the differentiated HR architecture is lacking, a few case studies highlight the benefits and risks that may emerge when organizations put this logic into practice (e.g., Ahmad, Solnet, & Scott, 2010; Sarina & Wright, 2015). For instance, Sarina and Wright (2015) detailed the case of Qantas Group—the legacy airline of Australia—which, in response to deregulation and increased competition in the domestic airline market, adopted a “hybrid” HR model wherein the organization’s previously universal commitment-oriented HR system was maintained only among “core knowledge” employee groups such as pilots and aircraft engineers, whereas a “low road” or cost reduction HR system was implemented for “ancillary” segments of employees such as baggage handlers and ground staff. Such a differentiated approach enabled the company to increase efficiency gains, though at the same time it led to equity concerns and low commitment among employees (Sarina & Wright, 2015).…”

Sources of decline, turnaround strategy and HR strategies and practices: The case of Iberia Airlines

“…Escape is simply a withdrawal from the bargaining relationship by physically transferring operations elsewhere. Managerial discretion regarding employment relations strategy will also be constrained by the organisational structure of the workforce (Sarina and Wright, 2015) in large organisations, and thus management can apply different strategies in different workforce groups, depending on their contribution to an organisation’s core competencies (Hunter, 2006; Huselid and Becker, 2011). The ‘high road’ or commitment approach is most suitable for ‘core-knowledge’ employees; the ‘low road’ or low-investment approach is most indicated for ‘ancillary-knowledge’ workers (Gittel and Bamber, 2010; Sarina and Wright, 2015); and the hybrid approach identifies a variety of employment relations strategies among different work groups (Sarina and Wright, 2015).…”

“…Interviewees mentioned that ‘nowadays Iberia airport administrative employees do a variety of tasks, such as check-in, accompanying passengers to the boarding gate, luggage management, etc.’ (TU/IB/1 and 4). Also, as Hunter (2006) recommends, Iberia’s HR strategy differs between workforce groups (non-core or core employees), although the decline context did not leave much room for ‘high road’ HR practices, but called for a hybrid model (Sarina and Wright, 2015) that required a greater focus on airline business and less on handling or maintenance (Clark, 2015).…”

“…This relationship will also be affected by institutional forces such as strong unions, or regulations (Lange et al, 2015; Sarina and Wright, 2015) within the different national contexts (Wilkinson et al, 2014). Some national institutions reinforce the position of employee representatives and thus may influence the company’s strategies (Lange et al, 2015).…”

Unions and collective bargaining in Australia in 2015

“…Over the year, Qantas concluded agreements with catering operators, staff, Road Express and long-haul pilots, adding to a series of agreements which include an 18-month wage freeze, followed by a 3% wage increase. Qantas claims these wage freezes have been critical to its financial recovery over the last 12 months and have paved the way for investment in new aircraft (Sarina and Wright, 2015; Workplace Express, 2015e).…”