Theme 3: Labor Relations & Human Resources
Our research in the area of Labor Relations and Human Resources is now more relevant than ever, and the industry is very interested in participating in these efforts. The atmosphere in which airline labor and management negotiate union contracts had been deteriorating before 9/11. There are few indications that the current industry crisis has caused this atmosphere to improve. Airline management points to labor costs that are out of step with the current economic reality of the industry, a problem that is exacerbated by competitive cost pressures from growing low-cost carriers. In the bargaining process, a growing percentage of the contracts recommended for settlement are turned down by the membership. This reality calls for a movement towards early bargaining and a more explicit effort to improve communication between management and labor, as well as among union members before they vote. The main objective of our work is to assist the industry in achieving this goal, while contributing to the existing body of knowledge in this area. Examples of achievements to date and proposed follow-up work are summarized below:
Facilitation of Working Group on Labor Relations: The human resources group (Professors Gittell, Kochan and McKersie and their students) is facilitating an on-going working group of management and union representatives trying to identify ways to improve the industry's labor contract bargaining process. Activities include data collection to track trends in contract negotiations over time; a dinner meeting with labor and management leaders to discuss critical issues; an Internet discussion group focused on data documenting the length of contract negotiations; and a memo suggesting the need for an industry-wide workforce adjustment program. A consequence of this activity is that our Program is now serving as a neutral voice in the difficult arena of airline labor relations and is viewed as an honest broker in this area. Our goal is to present new ideas, explain their merits and encourage analysis and debate.
Key labor and human resource issues: Andrew van Nordenflycht (Ph.D. thesis, 2004) working with Professors Gittell and Kochan conducted a study of labor relations and firm performance using 15 years of longitudinal data for the major U.S. airlines. The analysis suggests that changing the structural elements of labor relations (union representation, shared governance and wages) does not promise relief for airlines, and that greater hopes lay in changing the non-structural elements (union-management conflict over negotiations, and workplace culture). Clearly these findings have important implications for the airlines in this period of restructuring.
Management practices at Southwest Airlines and other carriers: One of our accomplishments has been to document the Southwest Airlines' approach to human resource management and labor relations. Southwest has excelled by focusing management attention on building relationships with front-line employees, among front-line employees, and with external parties including suppliers and labor unions. We also show how Southwest's management approach has complemented their strategic choices regarding market niche (primarily short-haul flights) and method of service delivery (fast turnarounds at the gate). These findings appear in Professor Gittell's The Southwest Airlines Way: Using the Power of Relationships to Achieve High Performance (McGraw-Hill, 2003).
Tracking airline responses to September 11th, and some causes thereof: We found, as we observed the outcomes of the September 11th tragedy, that there were substantial differences among airlines not only in the extent of layoffs, but also in the way they were handled. We also found that the extent of airline layoffs in September and October of 2001 was significantly and negatively correlated with the degree of recovery of each airline's stock price and traffic by the following June, and was positively correlated with the debt load carried by the airlines prior to September 11th.
Links to the various themes: