High Employee Turnover Rate at Singapore Airline’s Dhaka Station:Feasible Measures for Prevention

Internship Report on:

High Employee Turnover Rate at Singapore Airline’s Dhaka Station:Feasible Measures for Prevention

Submitted to: Office of Placement and Alumni

In Fulfillment of the Requirement for the Completion of Internship Program

Prepared and Submitted By:

Rahman Mohammad Arafat

04-04558-1

Prepared For:

Mr. Samiul Parvez Ahmed

Coordinator: Office of Placement and Alumni

Honorable Member of Faculty: School of Business

Submitted On:

August 18, 2007

American International University –Bangladesh

August 18, 2007

To, Mr. Samiul Parvez AhmedCoordinator,Office of Placement and Alumni,American International University – Bangladesh

Re: Submission of Internship Report Titled “High Employee Turnover Rate at Singapore Airline’s Dhaka Station: Feasible Measures for Prevention”

Dear Sir,

I Have the Pleasure to Express my Gratitude towards the Office of Placement and Alumni, American International University - Bangladesh for facilitating me in availing the precious opportunity of accomplishing my Internship Program at Singapore Airlines. For the fulfillment of the requirements of the program, I was had to conduct a business research on any business issue of Singapore Airlines, the subject for which I had the freedom to choose.

As par the requirements, I submitted you a proposal on a Business Research topic titled “High Employee Turnover Rate at Singapore Airline’s Dhaka Station: Feasible Measures for Prevention” on July 11, 2007. According to the Proposal, I have carried out the Study and prepared the report based on it, which was a challenging task to accomplish and I am highly optimistic on the outcomes of the study to the organization.

I, hereby, have the pleasure of submitting you a copy the report, a written presentation of the outcomes of the thought provoking and challenging study, the topic of which has been an issue provoking anxiety to the Management of Singapore Airlines as it is a problem they are experiencing globally.

I, hereby, am anxiously looking forward to your feedback on the process, outcomes and every detail of the study.

Yours truly,

_______________________

Rahman Mohammad Arafat

ID# 04-04558-1

Acknowledgement

My heartfelt thanks first of all to all the employees of Singapore Airlines

and other respondents who have patiently cooperated with me in course of

the study, by their spontaneous response and rational thinking.

My special gratitude is highly due to Mr. Cheang Kok Ming, Honorable

General Manager of Dhaka Station of Singapore Airlines, for entrusting me

with confidential information of the organization.

I am also pleased to thank Mr. Yeameen Kabir, Country Sales Manager of

Singapore Airlines for Bangladesh, Mr. Rafiqul Islam, Head of Accounts,

SIA, and Mrs. Cheryl Gonsalves, Secretary to General Manager, SIA, for

their conceptual and technical support that opened up new dimensions for

the study which were not brought into consideration before.

Intense Gratitude from me is also due to Mr. Abdul Kader Nazmul,

Honorable Member of the Faculty and Coordinator, Office of Sports,

American International University – Bangladesh, and Mr. Ziaul Hoq,

Honorable Member of the Faculty, School of Business, American

International University- Bangladesh, for their guidelines and feedbacks on

the research procedure in course of the study.

Finally, I would like to Express Heartfelt Gratitude Mr. Samiul Parvez

Ahmed, Coordinator, Office of Placement and Alumni, American

International University – Bangladesh, for facilitating my access to

Singapore Airlines, the most respected travel brand in the world, the result

of which ended up as opening of the great opportunity of researching on a

sensitive issue of a global, premium brand, ranked as the world’s most

admirable company in the Global Aviation Industry.

Executive Summary

Singapore Airlines is considered the World’s most respectable travel brands. It has been

ranked as the most admirable Company in the Global Aviation Industry. It has a huge

segment of loyal customers scattered all round the world. However, the same degree of

loyalty has not been exhibited by its internal customers: its employees, for the last few

years or so. The employee turnover rate seems to be competing with its Air Carriers in

rising to heights in the blue yonder.

Various positive and normative statements have been made by many interested bodies

regarding the reasons behind the high turnover and possible solutions. However, no

research has been done to identify the main problems behind the situation.

This study has attempted to explore for the roots, only the bitter fruit of which is the high

turnover rate of employees, and has also attempted to forward possible solutions

appropriate for the situation.

TABLE OF CONTENTS

EXECUTIVE SUMMARY1.0 INTRODUCTION 2

1.1 Problem Statement 21.2 Objectives of the Study 41.3 Scope of the Study 41.4 The Research Methodology 51.5 Sources of Information 61.6 Sampling 71.7 Limitations of the study 9

2.0 ORGANIZATION OVERVIEW 112.1 Singapore Airlines – History, Today and Tomorrow 112.2 Fleet Information 142.3 Aircraft Models of Singapore Airlines 142.4 Subsidiaries of Singapore Airlines 192.5 Corporate Responsibilities 202.6 Stock and Share Holding Information 232.7 Financial Statistics 252.8 Operations 252.9 Partners and Benefits 33

3.0 TOPIC ANALYSIS AND DESCRIPTION 373.1 Employee Turnover Rate 373.2 Feasible Measures 383.3 MacClelland’s Theory of Needs 393.4 SWOT Analysis 41

4.0 FINDINGS 444.1 Strengths of Singapore Airlines 444.2 Weaknesses of Singapore Airlines 464.3 Opportunities for Singapore Airlines 494.4 Threats for Singapore Airlines 50

5.0 RECOMMENDATIONS 535.1 Recommendations Based on SWOT Matrix Analysis 535.2 Drawbacks of the Recommendations 54

6.0 CONCLUSION 57APPENDIX 1 Questionnaire for Interviewing Long Retained Employees 58

APPENDIX 2 Questionnaire and Interview Guide for About to Switch Employees59

APPENDIX 3 Focused Group Discussion Guide 60APPENDIX 4 Guide for Interviewing Top Management 61APPENDIX 5 The SWOT Matrix 62BIBLIOGRAPHY 63

Chapter 1:Introduction

1.0 Introduction

1.1 Problem Statement

High Employee Turnover Rate at Singapore Airline’s Dhaka Station: Feasible Measures

for Prevention

Human Resource is one of the most important assets of a company; regardless to what it

produces is labor intensive or technology intensive. Although in this modern era of

automation, many companies prefer automated processes as a substitute for labor, which

lets them to operate at a higher level of efficiency and enjoy higher operating leverages;

they can never deny the need for human resource, without which the automated processes

could not be installed, without which it could not be maintained and there would have

been no one to keep the operations and production going when the automated processes

start malfunctioning, and even more, no one to fix them up. Moreover, human brain is

more reliable in decision making when encountered by unstructured problems. Bearing

this in mind, management bodies of all organizations need to recruit, develop, delegate,

lead, appraise performance and compensate employees to make sure that all works are

handled by the competent personnel, who will remain satisfied by the offered

compensation and scope for growth, and are likely to continuously improve their service

quality, for a significantly long period of time. Just as a lot of companies nowadays focus

and put their efforts more on retaining their existing customers than acquiring new

customers, most find it equally important to retain their best performing employees as

well. The rationale behind this employee retention strategy is backed by the fact that it

costs a lot to recruit new employees and providing them proper training in order to

develop them, a process which also takes a lot of time, and moreover, there is no

certainty that the newly recruited employee will exhibit performance as compatible as the

one who is leaving the organization. Some even consider it a threat if the employee is

switching to another organization in the same industry, in case of which, there remains

the possibility of disclosure of confidential information to competing firms. Besides,

research has shown that it costs less to retain an existing employee than acquiring and

developing a new employee to match the required performance compatibility.

At present, the economy of Bangladesh is at a stage of growth. A lot of new companies

are starting with their operations at different industries, thus contributing to the nations

GDP, as well as partially offering a solution to the problem of high unemployment rate,

by creating job opportunities in their organizations, thus, pulling down the rate of

unemployment close to the natural rate of unemployment. However, some of the

companies, such as those in the telecom industry, are raising the expectation of the

potential employees to splendid heights by offering the most attractive compensation

packages to their employees. Unfortunately, not all new companies in various industries

can afford to pay as high for various reasons, which include, but are not limited to the

factors such as very small amount of their capital, small extent of operation and low rate

of growth and profitability of the industry itself. Employees of these organizations, as a

result of dissatisfaction, tend to switch to organizations paying higher.

There is little awareness in the Human Resource Market about the attractiveness of the

operators in the Aviation Industry as high paying employers. Operators in the aviation

industry do not offer much of a professional growth or career development opportunity to

its employees in Bangladesh. However, with some exceptions, this drawback is highly

offset by the very attractive compensation packages they offer. The Middle Eastern

Companies are the most renowned among these.

Singapore Airlines is one of the operators in the aviation industry which is globally

renowned as an airline offering service of premium value to its external customers, the

passengers. Flight records show that despite the high amount of price charged for its

tickets, a huge number of frequently traveling passengers almost always prefer to fly with

Singapore Airlines, i.e. it has a huge segment of loyal customers, retained for long time.

However, the case is not similar with most of its internal customers, the employees,

which is apparent from the fact that it is experiencing a high rate of employee turnover

and a low retention rate almost all over the globe. As for its Dhaka Station, it has been

found that employees are mainly switching to other airline operators, mostly to the

Middle Eastern airlines such as Qatar Airlines and Emirates Airways.

The rationale of this study is to identify the reasons behind the high turnover rate of the

employees, find possible solutions in order to lower the turnover rate and assess the

feasibility and effectiveness of the solutions.

1.2 Objectives of the Study

This study, titled as “High Employee Turnover Rate at Singapore Airline’s Dhaka

Station: Feasible Measures for Prevention” is aimed at fulfilling a set of Specific

Objectives, the summation of which is stated as its Broad Objective.

1.2.1 Broad Objective

The Broad Objective of the Study is to identify a set of actions to be employed by

Singapore Airlines in order to increase its employee retention rate and achieve longer

employee retention periods.

1.2.2 Specific Objectives

A set of Specific Objectives have been identified as essential to be accomplished in order

to fulfill the Broad Objective. These Objectives are as follows:

Identifying external factors driving employees’ decision towards switching job

Identifying internal factors driving employees’ decision towards switching job

Identifying external factors retaining some employees for a significantly long time

Identifying internal factors retaining some employees for a significantly long time

Formulating Strategies utilizing the favorable internal factors to take advantage of the

favorable external factors

Formulating Strategies utilizing the favorable internal factors to minimize or avoid

the effects of the unfavorable external factors

Formulating Strategies to recover from the unfavorable internal factors by taking

advantage of the favorable external factors

Formulating Strategies to recover from the unfavorable internal factors and avoid or

minimize the effects of the external factors

1.3 Scope of the Study

The study encircles identifying reasons behind the high rate of employee turnover from

Singapore Airlines, Suggesting Measures to be taken for Retaining Current Employees,

Identifying the Factors that are Satisfying some Long Retained Employees, Measuring

the intensity of needs for Affiliation, Achievement and Power of the long retained

employees and those who have notified of their resignation within the current year, taking

feedback of the switching employees on how they evaluate their jobs or position in the

Organization, Introducing new measures to Identify Retainable Employees in the

Recruitment process, Identifying Sources and Segments of Retainable Future Employees

and Qualitative Analysis for the Feasibility of the Recommendations put forward.

1.4 The Research Methodology

1.4.1 Data Collection Methods

Verbal Interview: Verbal Interview was conducted with the top management employees

of Singapore Airlines in Bangladesh. Appendix 4 illustrate interview guide used as

research tool while interviewing the top management.

Observation: The city office of Singapore Airlines Dhaka Station at Gulshan – 2 and

the Air Traffic office in the Zia International Airport were subjected to observation in

order to assess the environment of the offices in terms of the sociability and solidarity.

Focused Group Discussion: Sessions of Focused Group Discussions were organized

with undergraduate students on their final year of undergraduate program, studying in

different public and private universities and colleges. Appendix 3 illustrates FGD guide

used while moderating the focused group discussion.

Questionnaires: Questionnaires designed to measure levels of Needs for Affiliation,

Power and Achievement, were provided to the long retained employees and employees

who have notified of their voluntary resignation within the current year. The

questionnaires are illustrated by appendices 1 and 2.

Secondary Information: Secondary Information consists of company information

which has been collected from the company’s official website and a few facts and

figures obtained from the top management.

1.5 Sources of Information

1.5.1 Primary Information

Populations: Five bodies were identified as essential to be subjected to survey for the

study. These bodies, the populations, serving as the source of Primary Information, from

which the samples have been selected, are:

Employees from the Management Body

Long Retained Employees of Officer status who have been working in Singapore

Airlines for more than eight years

Current employees who have already notified of their resignation

Public and private colleges and universities

Undergraduate students of private and public universities or college, on the final

year of their undergraduate program and shall soon be looking for jobs

Offices maintained by Singapore Airlines

1.5.2 Secondary Information

Internet: General Company Information such as company background, success stories,

etc has been collected from the internet. Also, for some of the theoretical concepts, the

internet has been used as a source of knowledge

Database: Historical data and certain pieces of quantitative facts about the company and

industry were provided by the management body, which claims that these sets of data are

in accordance to the company’s database or are the findings of some previous research.

Top Management: Certain pieces of information which were available neither in the

website nor in company databases, were obtained by interviewing the top management

employees, who recalled these information from their memories.

1.6 Sampling

1.6.1 Sampling Units

The following bodies were considered as sampling units for the study:

Group of Managerial level Employees

Group of Employees Retained for more than eight years

Group of Employees who have notified of their resignation

The offices maintained by the organization in Dhaka

Group of education institutions whose graduates are likely to be future employees

Group of students on the final year of their undergraduate education program of

the selected institutions

1.6.2 Sampling Procedures

Managerial Employees: A judgmental sampling procedure was used in selecting

employees from the management body, backed up by the rationale of collecting the most

accurate, appropriate and detailed information.

Long Retained Employees: A convenience sampling method was applied while selecting

employees for interview, who are working in Singapore Airlines for eight years or more.

Shortly Leaving Employees: As the size of this population is only four, census has been

done, therefore, no sampling technique applied.

Offices maintained by Singapore Airlines: For observing to assess the environment, a

population study was intended as the population size is only three. However, yet again,

the convenience sampling method had to be applied due to restriction of access, imposed

by the Civil Aviation Authority of Bangladesh, to the office of Cargo Handling. Only the

offices those were conveniently accessible were subjected to observation and assessment.

Sources of Potential Employees: A blend of Purposive, Judgmental and Convenience

Sampling approach was taken in selecting the education institutions which are likely to

be sources of future employees. From those in the most convenient locations, a pool of

institutions were judgmentally selected in such a blend that the lifestyle, cultural

reference and socioeconomic background of the students are likely to vary largely, and

thus their possible responses to the questions are likely to vary as well. The purpose was

to have an increased likelihood of difference of opinions.

Undergraduate Students of Final Year: A blend of Convenience and Snowball

Sampling techniques was employed. Initially, respondents most conveniently available

were selected, who then suggested names of specific others to be included.

1.6.3 Sample Sizes

Offices: Since the Population size is small, census was intended to be carried out.

However, due to access restrictions, only two out of the three offices could be subjected

to observation.

Managerial Employees: Four Employees from the Managerial Level were required to be

interviewed for certain facts and figures.

Long Retained Employees: Five out of Twenty-Five Employees who have been working

in Singapore Airlines for more than eight years were interviewed.

Employees About to Quit: Census has been conducted on the population with a size of

four members only in the set.

Education Institutions: The number of education institutions selected as sample for the

study was six. These institutions were North South University, American International

University – Bangladesh, Stamford University, Eastern University, Dhaka City College

and Titumir College.

Students of the Institutions: For the ease of control of the moderator, the number of

students chosen for each session of focused group discussion was kept limited to five.

1.7 Limitations of the Study

The topic selected could open up a splendid opportunity for research and data analysis.

Singapore Airlines is not only experiencing high employee turnover rate at its Dhaka

Station, but in the global arena as well. However, due to constraints of time and monetary

resources, the point of focus had to be kept on its Dhaka station only.

Former employees could not be contacted and therefore have not been subjected to

interview. Since Singapore Airlines do not formally conduct any exit interview, no

feedback from the former employees were available. However, some information

regarding their reasons behind quitting the job has been retrieved from the General

Manager, who says that these information were obtained from informal communication.

Due to access restrictions imposed by the Civil Aviation Authority of Bangladesh, the

office of the Cargo handling Department could not be subjected to observation in order to

evaluate its work environment. Therefore, regarding its work environment, information

provided by the employees of the cargo handling department had to be relied upon.

Lack of knowledge of finance and accounting was another major drawback that

restrained this report from being enriched with detailed cost accounting and financial

forecasting, which are essential tasks to be carried out by every organization before the

implementation of any new plan.

Chapter 2:

Organization Overview

2.0 Singapore Airlines - Organization Overview

Singapore Airlines has evolved into one of the most respected travel brands around the

world. It has one of the world's youngest fleet in the air, a network spanning five

continents, and the Singapore Girl as the symbol of quality customer care and service.

Customers, investors, partners, and staff — everyone expects excellence of it. And so, in

its lounges, its conferences, working relationships, and in the smallest details of flight, it

rises to each occasion and delivers the Singapore Airlines experience.

2.1 Singapore Airlines – History, Today and Tomorrow

2.1.1 SIA Story - The Creation of Singapore Airlines

From a single plane to an internationally respected brand, almost 60 years of innovation

and service has propelled the growth of Singapore Airlines to become one of the world's

leading carriers with an advanced fleet. It began with three flights per week, and today its

route network spans 100 destinations in 41 countries. Years ago, Singapore Airlines was

the first to offer free drinks and complimentary headsets. More recently, it pioneered in-

flight telecommunications services and unparalleled in-flight luxury. This year 2007,

Singapore Airlines celebrates its 60th Anniversary and soon, it will be the first to put

Airbus A380-800, the world’s largest plane into service.

2.1.2 Progress and Expansion

The history of Singapore Airlines dates back to 1 May 1947, when a Malayan Airways

Limited Airspeed Consul took off from Singapore's Kallang Airport on the first of three

scheduled flights a week to Kuala Lumpur, Ipoh and Penang.

Over the next two decades, the Airline steadily acquired more planes. There were

additions of the DC-4 Skymaster, Vickers Viscount, Lockheed Super Constellation,

Bristol Britannia, Comet IV, and the Fokker F27.

On 16 September 1963, the Federation of Malaysia was born and the Airline became

known as Malaysian Airways Limited. In May 1966, it became Malaysia-Singapore

Airlines.

Later, the new look of the Airline evolved further with its first Boeings - three B707s,

then a fleet of B737s.

In 1972, Malaysia-Singapore Airlines split up to become two entities - Singapore Airlines

and Malaysian Airline System.

This change was used to launch a new, more modern service approach on the airline. To

house a special fleet of B747s, B7272s, and DC-10s, the new Singapore Airlines also

boasted a new airfreight terminal and a B747 hangar.

2.1.3 The Singapore Girl is Born

In 1968, the Sarong Kebaya uniform designed by French couturier Pierre Balmain was

introduced and the internationally recognized image of the Singapore Girl debuted.

2.1.4 A Reputation for In-Flight Firsts

The 1980s brought a number of firsts. The Singapore Airlines fleet continued to grow, in

impressive and historic ways. It had the first A300 Superbus, the B747-300 Big Top, the

B757 and the A310-200. It is also the first airline in the world to operate an international

commercial flight across the Pacific Ocean with the 747-400 Megatop.

In the 1990s, Singapore Airlines revolutionized in-flight communications and

entertainment through the KrisFone - the first global sky telephone service - and Kris

World offerings. At the same time, it sought to further improve its unparalleled fleet,

placing a US$10.3-billion order for 22 B747-400s and 30 A340-300s in 1994, a US$12.7-

billion order for 77 B777s in 1995, and a US$2.2-billion order for 10 A340-500s in 1998.

The company was also the first to involve a comprehensive panel of world-renowned

chefs, the International Culinary Panel, in developing in-flight meals in 1998.

In 2000, the Airline placed 19 A380s on firm order and a US$4 billion order for 20 more

B777-200s in 2001. In 2004, Singapore Airlines was the first to operate the world’s

longest non-stop commercial flight between Singapore and Los Angeles in February on

the A340-500, and then surpassing the record (in terms of distance) later that year with

the non-stop service to New York (Newark) in June. The A380, the world's largest

commercial plane will soon enter service with Singapore Airlines, making it another

world’s first.

2.1.5 The Highest Service Today

Singapore Airlines today is built solidly on its history, from the designer bone china

flatware to the Bulgari cologne for First Class passengers, to its advanced fleet of aircraft

and motivated employees.

Today, its in-flight service is of the highest order. The Singapore Airlines World

Gourmet Cuisine boasts a selection of exclusive and tantalizing signature dishes,

specially designed by a panel of nine internationally renowned chefs, and a wine list

selected by three of the world's most discerning wine consultants.

KrisWorld, Singapore Airlines' award-winning and ever-expanding in-flight

entertainment system, offers customers a wide range of entertainment options. Customers

can choose from a variety of movies, TV programs, music CDs and channels. There is

also an extensive selection of video games and interactive applications including Berlitz

Word Traveler, a fully interactive learning program.

Singapore Airlines became a full member of the global Star Alliance in 2000 and with it

came "seamless" worldwide air travel. With the extensive network of partner airlines,

connecting flights, frequent flyer points, and baggage clearance are now a breeze.

Singapore Airlines’ route network reaches out to over 100 destinations in 41 countries.

2.1.6 A Future of Firsts

Singapore Airlines will make Aviation history when the Airline will become the first

Airline to operate the world's largest aircraft, the Airbus A380-800.

The future promises to bring more firsts like these, as Singapore Airlines continually

strives to drive quality service through innovation.

2.2 Fleet Information

From the beginning, Singapore Airlines learned that investing in the future means being

the safest, youngest, most advanced, and fuel-efficient planes in the skies. (The average

age of its passenger fleet is about 6 years. This excludes the A310-300s and surplus

B747-400s that have been decommissioned.) That tradition continues today with the

addition of evermore advanced aircrafts.

At present, Singapore Airlines is Operating a total of ninety-two planes of six different

types when another twenty-nine are on the process of manufacture as par the orders of

Singapore Airlines. Nineteen of these happen to be the Airbus A380-800, the world’s

largest plane which will be used for the first time in the Aviation Industry by Singapore

Airlines. The other ten pieces of planes on order are the B777 – 300ERs.

2.3 Aircraft Models of Singapore Airlines

At present, Singapore Airlines has six different models of planes flying around to many

destinations. The number of models will reach seven as it shall for the first time in the

aviation industry, shall launch the Airbus A380-800 Model, the largest Aircraft in the sky

till today’s history of the Aviation Industry all round the world. Brief information with

pictorial illustrations of these planes has been presented in this report.

2.3.1 The Airbus A380-800

Singapore Airlines will be the first in the global aviation industry to launch the Airbus

A380-800, which will be the largest aircraft till today’s history of the aviation industry.

Powered by its Engine of the Rolls Royce Trent 900 type, there are already nineteen

pieces of this model under construction and are expected to be ready fly from the October

of the current year, 2007. Figure 2.1 shows the outlook of the model.

2.3.2 The Boeing B777-300R

Figure 2.2 is a pictorial illustration of the Boeing B777-300ER model, a total of nine of

which is already being used by Singapore Airlines and another ten pieces are under

construction for Singapore Airlines. It uses an engine of the GE90-115B type.

Figure 2.1: The Airbus A380-800

Figure 2.2: The Boeing B777-300R

2.3.3 The Airbus A340-500

The Airbus A340-500 is powered by Rolls Royce Trent 553 Type of Engine. Figure 2.3

illustrates one of its five on fleet.

Figure 2.3: The Airbus A340-500

2.3.4 The Boeing B777-200ER

All the fifteen planes of the model Boeing B777-200ER use Rolls Royce Trent 892 Type

of Engine. Figure 2.4 shows one plane of this luxurious model, all seats of which can be

converted to beds.

2.3.5 The Boeing B777-300

Singapore Airlines is using twelve planes of the Boeing B777-300 model, which are

powered by Rolls Royce Trent 892 Type of Engine, an outlook of which carrier is

illustrated by Figure 2.5.

Figure 2.4: The Boeing B777-200ER

Figure 2.5: The Boeing B777-300

2.3.6 The Boeing B777-200

Illustrated by Figure 2.6, the thirty-one planes of the Boeing B777-200 model are

powered by Rolls Royce Trent 884 Type of Engine.

Figure 2.6: The Boeing B777-200

2.3.7 The Boeing B747-400

Figure 2.7 illustrates the outlook of the Boeing B747-400 model of carrier, which is

powered by an engine of the PW4056 Type. Singapore Airlines owns and is using twenty

planes of this model.

Figure 2.7: The Boeing B747-400

2.4 Subsidiaries of Singapore Airlines

Singapore Airlines proudly introduces its subsidiaries, SilkAir, Tradewinds Tour and

Travel, SIA Engineering Company, SIA Cargo, and SATS. These businesses add much to

the offerings of Singapore Airlines, allowing travelers to experience exotic Asian

destinations. Its corporate consumer offerings are complemented by its more industrial

ones too. With aircraft engineering for over 85 airlines, along with a suite of ground

services and cargo distribution to over 39 countries globally - SIA can take you there and

make sure you get there in style and strength.

2.4.1 Silk Air

Silk Air flies to Asia's most exotic locations, offering flights to 26 fascinating

destinations, each offering a unique 'unwinding experience' through its natural and man

made wonders, local cultures and customs.

2.4.2 Tradewinds

Tradewinds offers a wide range of tours, special deals and travel packages to many

destinations around the world.

2.4.3 SIA Engineering

SIA Engineering Company has been providing engineering services to more than 85

international air carriers from the United States, Europe, Middle East, and Asia Pacific.

2.4.4 SATS

SATS, the ground-handling subsidiary of Singapore Airlines, provides services including

catering, passenger, baggage, cargo and ramp handling, aircraft interior cleaning, aircraft

security, and aircraft linen laundry.

2.4.5 SIA Cargo

SIA Cargo operates to over 75 destinations around the world with its large fleet and most

technologically advanced commercial freighters - the B747-400 Mega Ark. With a wide

range of products, it provides flexibility to meet all types of needs to get cargo to

anywhere in the world, anytime.

2.5 Corporate Responsibilities

Singapore Airlines recognizes the importance of building strong relationships, not only

with its customers and business partners, but also with the many communities it serves. It

practices good corporate citizenship actively through the support of the arts, sports and

educational initiatives, both locally and abroad. It is also committed to helping the less

privileged, sponsoring programs for the needy, involving handicapped children as well as

senior citizens, and protecting the environment.

2.5.1 SIA for the Environment

Singapore Airlines takes a long-term view in the development of its air transportation and

related businesses. This includes broader responsibilities to the worldwide communities it

serves, and recognition that its operations take into account the preservation of the

environment.

2.5.2 SIA to Make Art Flourish

Singapore Airlines began supporting the arts in the 1980s, with the launch of the

Singapore Airlines Great Performers Series when it first brought world-class talent to

Singapore. Today, it remains a keen supporter of the Arts, by contributing in cash or in

kind, to various arts groups and events in Singapore which include the following:

2.5.2.1 The Singapore Symphony Orchestra

The Singapore Symphony Orchestra aims to enrich the local cultural scene, serving as a

bridge between the musical traditions of Asia and the West. Since its inception in 1979,

the orchestra has amassed many achievements that have brought credit to Singapore. The

orchestra comprises 98 professional musicians, most of whom are Singaporean.

2.5.2.2 Singapore Dance Theatre

Singapore Dance Theatre is the leading dance company and one of the flagship arts

institutions in Singapore. As an arts ambassador for Singapore, the Singapore Dance

Theatre has achieved international recognition in dance festivals in Europe and Asia.

2.5.2.3 Singapore Lyric Opera

The Singapore Lyric Opera was formed in 1990 with the objectives of presenting operas

and music theatre to Singapore audiences and offering opportunities to Singaporean

artistes to practice their art in opera productions of international standards.

2.5.2.4 Singapore Chinese Orchestra

The Singapore Chinese Orchestra is Singapore's only national Chinese orchestra.

Retaining traditional roots while exploring new musical frontiers, the orchestra aspires to

introduce Chinese orchestral music to an ever-broadening audience.

2.5.2.5 Singapore Airlines – National Arts Council (SIA NAC) Travel Scheme

Under the scheme, Singapore Airlines provides free and rebated tickets for young local

performers to travel overseas for further education or performances. The National Arts

Council set up as a Statutory Board in 1991, spearheads the development of the arts in

Singapore. Its mission is to nurture the arts and make it an integral part of the lives of the

people of Singapore.

2.5.3 SIA Supporting Education

As part of its support to the community, Singapore Airlines contributes to numerous

educational programs and events. These programs provide students with the opportunities

to achieve their full academic potentials.

Some of its many contributions include:

Donations to the Lee Kuan Yew School of Public Policy at the National

University of Singapore

Sponsorships to the Community Education Program in Indonesia which aims to

help over 2,500 underprivileged primary school and university students achieve their

full potentials

Donations to the Yong Siew Toh Conservatory of Music in Singapore

Sponsorship of the Singapore Airlines Aeronautical Engineering Gold Medal

awarded to the graduating student with the most outstanding academic performance at

the Aeronautical Engineering Course in Singapore Polytechnic

Sponsorship of the annual Singapore Airlines Award of Excellence given to the

most outstanding graduating student of the SIA-LaSalle College of the Arts

Educational assistance to communities through scholarship programs such as the

Singapore Airlines Untuk Pendidikan in Indonesia, the Smiling Together project in

Thailand and the Singapore Airlines Bantay Edkasyon Project in the Philippines

2.5.4 SIA Supporting National Events

As part of its contributions to the community, Singapore Airlines is also committed to

supporting significant national events.

For example, Singapore Airlines annually assist the National Day Parade organizing

committees in their preparations by providing air travel to various countries.

Other events include the nation’s efforts in its first attempt to scale Mount Everest in

1999 as well as the Antarctica 2000 and Everest 2001 expeditions.

For its contributions to the community, Singapore Airlines has received the "Outstanding

Corporate Citizen" award from the Singapore Council of Social Services, the SHARE

Program Platinum award from the Community Chest of Singapore, and the

"Distinguished Patron of the Arts" award on several occasions.

2.5.5 SIA Supporting Sports

As an ardent supporter of sports in the community, Singapore Airlines helps to nurture

young athletes by offering rebated air tickets to the newly established Singapore Sports

School and provide opportunities for young talents to gain exposure through active

participation in international competitions. As part of efforts to help strengthen

Singapore's image as a world-class cultural and sporting event city, the Singapore

Airlines International Cup horse race was established in 2000. With an annual

sponsorship of US$3 million, the event draws participation of top horses and renowned

jockeys from all over the world.

2.5.6 Welfare

As an international corporate citizen, Singapore Airlines recognizes the importance of

contributing to the communities it serves. Through corporate donations, sponsorships and

other forms of support, Singapore Airlines provides backing to a wide range of local and

overseas community groups and charity organizations.

2.5.6.1 Community Chest of Singapore

Since the early 1980s, Singapore Airlines has contributed $150,000 annually to the

Community Chest of Singapore. The Community Chest of Singapore was founded in

1983 to tap the generosity of individuals, companies and institutions to fund voluntary

welfare programs intended to help disadvantaged people in Singapore.

2.5.6.2 National Kidney Foundation

In 1987, the Airline helped set up Singapore's first kidney dialysis centre, with a donation

of S$233,000 to the National Kidney Foundation. The National Kidney Foundation is a

major voluntary health organization, seeking to prevent kidney and urinary tract diseases,

improve the health and well being of individuals and families affected by these diseases,

and increase the availability of all organs for transplantation.

2.5.6.3 Movement for the Intellectually Disabled of Singapore

As part of its 50th anniversary celebrations, the Airline contributed S$4 million to the

Movement for the Intellectually Disabled of Singapore (MINDS), to help fund the

construction of a new headquarters and sheltered workshop which provides employment

for up to 400 intellectually disabled members. The facility was completed in 2000, and

officially opened by the President of Singapore, Mr. S R Nathan.

2.5.6.4 The 5Cs

The Cabin Crew Club for Community Care or 5Cs, founded in May 2001, annually

organizes various activities and outings for residents of the Asian Women's Welfare

Association (AWWA) Community Home and students of Chao Yang Special School on a

regular basis. Made up of volunteers from our cabin crew and ground staff, the club

initiated a six-month program to feed as well as to improve the learning and teaching

conditions in two schools in Bohol in the Philippines in June 2005.

Today, the Airline continues to contribute to charities, community development

programs, philanthropic and promotional events aimed at supporting those causes, both

inside and outside Singapore.

2.6 Stocks and Shareholding Information of Singapore Airlines

2.6.1 Stocks and Shares

Singapore Airlines is listed as a company in the Singapore Stock Exchange where its

Stocks and Shares are transacted. Information of its stocks and shares as reported at the

end of July 2007 has been summarized in Table 2.1.

Stock Symbol SIA

Listed and Traded: Singapore Stock Exchange

Share Price (SGD) : for 12 months ending 31 July 2007

High Low Closing

19.60 12.70 19.40

on 13 July 07 on 02 Aug 06 on 31 Jul 07

No. of shares issued: as at 30 June 2007

1,253,879,647

 Table 2.1: Summary of Stock and Share Information of SIA as at the end of July 2007

2.6.2 Share Holders of Singapore Airlines

2.6.2.1 Major Share Holders

91.56% of the share of Singapore Airlines is held by various corporate bodies. Table 2.2

illustrates a list of these corporate bodies, which together form the group of major

shareholders of Singapore Airlines.

Major Shareholders (as at 30 Jun 2007)

Number of shares %

1 Temasek Holdings (Pte) Ltd 691,451,172  55.14 

2 DBS Nominees (Pte) Ltd 198,569,578  15.84 

3 HSBC (Singapore) Noms Pte Ltd 87,977,411  7.02 

4 Citibank Nominees (Singapore) Pte Ltd 55,647,999  4.44 

5 DBSN Services Pte Ltd 49,843,405  3.98 

6 Raffles Nominees Pte Ltd 36,188,720  2.89 

7 United Overseas Bank Nominees  16,292,676  1.30 

8 Morgan Stanley Asia (Singapore)  5,266,387  0.42 

9 Chang Shyh Jin 4,221,000  0.34 

10 DB Nominees (S) Pte Ltd 2,357,076  0.19 

Total 1,147,815,424 91.56%

Table 2.2: List of Major Share Holders of Singapore Airlines

2.6.2.2 Share Held by the Public

A total of 106,064,223 shares of Singapore Airlines are held by the general people. These

shares form 8.44% of the total number of shares of Singapore Airlines.

2.7 Financial Statistics

The Fiscal Year of Singapore Airlines starts from April 1, and ends at March 31 of the

following calendar year. Table 2.3 illustrates financial statistics of Singapore Airlines for

the year 2006-2007 in comparison with 2005-2006.

2.8 Operations

2.8.1 Operating Statistics

Table 4 illustrates the operational statistics of Singapore Airlines of the fiscal year 2006-

2007 in comparison with 2005-2006.

FINANCIAL STATISTICS 2006-07 2005-06

% Change––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

GroupFinancial Results ($ million)Total revenue 14,494.4 13,341.1 + 8.6

Total expenditure 13,180.0 12,127.8 + 8.7

Operating profit 1,314.4 1,213.3

+ 8.3

Profit before taxation 2,284.6 1,662.1

+ 37.5

Profit attributable to equity holders of the Company 2,128.8 1,240.7

+ 71.6

Share capital 1,494.9 1,202.6

+ 24.3

ReservesCapital reserve 44.9 40.8 + 10.0

Foreign currency translation reserve (59.5) (30.5) + 95.1

Share-based compensation reserve 97.3 81.8 + 18.9

Fair value reserve (45.5) 163.6 n.m.

General reserve 13,567.9 12,012.3

+ 13.0

Equity attributable to equity holders of the Company 15,100.0 13,470.6

+ 12.1

Return on equity holders’ funds (%) 14.9 9.6

+ 5.3

Total assets 25,992.0 23,369.5 + 11.2

Total debt 1,879.4 2,305.6

– 18.5

Total debt equity ratio (times) 0.12 0.17 – 0.05

Value added 6,510.1 5,534.0

+ 17.6

Per Share DataEarnings before tax (cents) 185.2 136.3 + 35.9

Earnings after tax (cents) – basic 172.6 101.7

+ 69.7

Earnings after tax (cents) – diluted 170.8 101.3

+ 68.6

Net asset value ($) 12.11 11.00 + 10.1

DividendsInterim dividend (cents per share) 15.0 10.0

+ 5.0

Proposed final dividend (cents per share) 35.0 35.0

–

Proposed special dividend (cents per share) 50.0 –

+ 50.0

Dividend cover (times) 1.7 2.3 – 0.6

CompanyFinancial Results ($ million)Total revenue 11,343.9 10,302.8 + 10.1

Total expenditure 10,316.9 9,651.8

+ 6.9

Operating profit 1,027.0 651.0

+ 57.8

Profit before taxation 2,291.1 940.8

+ 143.5

Profit after taxation 2,213.2 746.0

+ 196.7

Value added 5,107.2 3,553.2

+ 43.7

Table 2.3: Financial Statistics of Singapore Airlines of the Fiscal Year April-March

2006-2007 in comparison with 2005-2006

OPERATING STATISTICS 2006-07 2005-06

% Change

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Singapore Airlines

Passengers carried (thousand) 18,346 16,995 + 7.9

Revenue passenger-km (million) 89,148.8 82,741.7 + 7.7

Available seat-km (million) 112,543.8 109,483.7 + 2.8

Passenger load factor (%) 79.2 75.6 + 3.6

points

Passenger yield (cents/pkm) 10.9 10.6 + 2.8

Passenger unit cost (cents/ask) 7.9 7.5 + 5.3

Passenger breakeven load factor (%) 72.5 70.8 + 1.7 points

SIA Cargo

Cargo and mail carried (million kg) 1,284.9 1,248.5

+ 2.9

Cargo load (million tonne-km) 7,995.6 7,874.4

+ 1.5

Gross capacity (million tonne-km) 12,889.8 12,378.9 + 4.1

Cargo load factor (%) 62.0 63.6 – 1.6 points

Cargo yield (cents/ltk) 38.4 38.6 – 0.2

Cargo unit cost (cents/ctk) 24.5 23.5 + 4.3

Cargo breakeven load factor (%) 63.8 60.9 + 2.9

points

Singapore Airlines and SIA Cargo

Overall load (million tonne-km) 16,486.8 15,806.8 + 4.3

Overall capacity (million tonne-km) 24,009.7 23,208.0 + 3.5

Overall load factor (%) 68.7 68.1 + 0.6 point

Overall yield (cents/ltk) 77.5 74.6 + 3.9

Overall unit cost (cents/ctk) 50.0 47.7 + 4.8

Overall breakeven load factor (%) 64.5 63.9 + 0.6

point

Employee Productivity (Average) – Company

Average number of employees 13,847 13,729 + 0.9

Seat capacity per employee (seat-km) 8,127,667 7,974,630 + 1.9

Passenger load per employee (tonne-km) 613,211 577,784

+ 6.1

Revenue per employee ($) 819,232 750,441

+ 9.2

Value added per employee ($) 368,831 258,810

+ 42.5

Employee Productivity (Average) – Group

Average number of employees 29,125 28,558 + 2.0

Revenue per employee ($) 497,662 467,158

+ 6.5

Value added per employee ($) 223,523 193,781

+ 15.3

Table 2.4: Operating Statistics of Singapore Airlines of the Fiscal Year April-March

2006-2007 in comparison with 2005-2006

2.8.2 Operating Review

The year in review also marked a significant milestone in the Airline’s history with the

launch of its new generation cabin products, raising industry standards for premium air

travel.

As a drive to become a more productive and cost effective organization, the Airline

divested its interests in some non-core assets and continued to review business processes

to ensure that functions are provided in the most efficient and effective way.

2.8.2.1 Network

The Airline expanded its network to Europe by adding a three-times-weekly service to

Milan and Barcelona in July 2006.

As part of South African network restructuring, the Airline began a non-stop three-times-

weekly service between Singapore and Cape Town in February 2007.

In March 2007, the Airline’s three weekly Singapore-Dubai-Cairo services were replaced

with direct flights to

Cairo three times a week. Singapore Airlines continues to operate 10 times weekly to

Dubai.

Capacity was boosted on routes to key destinations to meet increasing global demand for

air travel:

Destination Weekly Service

Male, Maldives 7 up from 5

Ho Chi Minh City, Vietnam 17 up from 13

Bangalore, India 7 up from 5

Seoul, Korea 24 up from 22

Hong Kong 42 up from 38

As at 31 March 2007, the Airline operated 764 weekly flights to 65 destinations in 35

countries.

Taking into account code share services with Star Alliance and partner airlines, the route

network grew to 144 destinations in 43 countries.

2.8.2.2 Fleet

Following the conclusion of a comprehensive evaluation of proposals from Boeing and

Airbus, Singapore Airlines placed orders with both manufacturers to cater for fleet

renewal and growth in future years.

During the year in review, nine new Boeing 777-300ER aircraft joined the operating

fleet. These deliveries raised the number of Boeing 777 aircraft in the Airline to 67,

reaffirming its position as the world’s largest operator of the Boeing 777 family. Five

Boeing 747-400s left the operating fleet. The Airline placed a firm order for 20 new

Boeing 787-9s, (with purchase rights for another 20), for delivery between 2011 and

2013. The -9 variant of the popular B787 features a longer range and larger cabin than

other models. These aircraft will be used mainly on medium range routes. In addition, an

order was placed for 20 Airbus A350 XWB-900s, (with options for a further 20), for

delivery from 2013. The Airline also increased its order for the Airbus A380 jumbo, from

10 to 19 aircraft, with options for a further six.

To cater for capacity growth before the new B787-9s and A350 XWB-900s are available,

the Airline will lease 19 A330-300s from Airbus, with deliveries between 2009 and 2011.

At list prices, the orders, excluding options, represent commitments of over US$12

billion, and position Singapore Airlines as a leading customer for new aircraft types being

developed and offered by Airbus and Boeing.

Delays to the initial deliveries of the A380s constrained capacity growth during the year

in review. The scheduled delivery of the first A380 in December 2006 did not occur, and

is delayed to October 2007, with subsequent deliveries similarly late. Singapore Airlines

held discussions with Airbus on the impact of these delays on the Airline’s growth plans,

and in December 2006, agreed on the terms of compensation with Airbus over the delays.

The terms of the settlement are confidential between the parties.

The passenger fleet operated by the Airline, as at 31 March 2007, comprised 94 aircraft,

with an average age of six years and three months.

The freighter fleet of Singapore Airlines Cargo, as at 31 March 2007, comprised 14

B747-400 Freighters, with an average age of six years and four months.

SilkAir’s fleet, as at 31 March 2007, consisted of eight Airbus A320 and five Airbus

A319, with an average age of five years.

2.8.2.3 Product and Services

The Airline unveiled its new cabin products to the world in October 2006. The products

are featured in the new Boeing 777-300ER aircraft which, by the end of the year in

review, were flying to Paris, Milan, Barcelona, Zurich, Frankfurt, San Francisco via

Seoul, and Hong Kong.

More routes will progressively be added in the upcoming years.

The New First Class

The new First Class offers the most exclusive comforts in the sky. With just eight stately

seats in the B777-300ER, customers are guaranteed personal attention as they relax,

work, or dine in utmost privacy.

The new First Class offers an individual 58-cm LCD screen and an all-in-one business

panel with laptop power supply and USB ports. The 89-cm wide seat is the largest in the

industry, and converts from a seat to the largest full-fl at bed in seconds. Cleverly hidden

compartments and the absence of overhead stowage bins create a more spacious cabin

environment.

The New KrisWorld

The Airline’s new KrisWorld is powered by the latest eX2 in-flight entertainment system

from Panasonic Avionics. It offers more than 1000 on-demand options. Customers can

choose from an extensive selection of movies, TV programs, interactive games, audio

CDs and learning applications. For the first time, office applications are offered,

providing customers the option to work onboard without a laptop.

High-resolution screens, sleek, compact handsets with intuitive controls and external

USB ports adorn all three classes. The specially designed anti-noise Phitek headphones

are another welcome feature for premium customers.

The New Business Class

All Business Class customers now have direct aisle access, thanks to the forward-facing

1-2-1-cabin configuration. The 76-cm wide Business Class seat has a fixed back shell and

comes with well-positioned reading lights, in-seat laptop power supply, and USB ports. A

suite of office applications on KrisWorld, viewed on the 39-cm screen, gives the

customer his or her very own office in the sky.

Work aside, the seat gives customers the flexibility to relax in their preferred seating and

lounging positions, or converts into a fully-fl at bed within seconds.

The New Economy Class

The Airline’s new Economy Class product provides new levels of comfort in the main

cabin. The seat is ergonomically designed to enhance comfort. The seat design ensures

that space is maximized, so customers enjoy greater legroom where it matters: around the

knees.

Finishes are elegant and features are smart, thanks to the use of advanced technology.

Every customer has an individual USB port, and a new LCD monitor to enjoy the

Airline’s renowned in-flight entertainment system, KrisWorld. Discreet reading lights

allow customers to enjoy reading without intruding on the person next to them.

2.8.2.4 Ground Services

Singapore Airlines customers continue to enjoy convenient check-in facilities at their

fingertips, as the Airline rolled out a series of technology-driven initiatives.

2.8.2.5 Internet Check-in

Customers can now check-in online, choose their preferred seats and print their personal

bar-coded boarding pass. Singapore Airlines is the first Asian carrier to have the self-

print bar-code boarding pass facility for most of its international flights.

2.8.2.6 Automated Check-in Machines

Automated Check-in Machines were installed at Changi Airport’s Terminal 2. The

system, which is similar to a bank ATM, allows customers to check themselves in,

choose their seats and collect their boarding pass at the same time. This user-friendly

process greatly reduces waiting time for customers.

2.8.2.7 Interline e-tickets

Singapore Airlines is on track to achieving IATA’s global goal of 100 percent e-ticketing

by mid 2008. As of March 2007, 94 percent of all tickets issued from e-ticket enabled

stations were e-tickets, up from 70 percent in April 2006. More carriers partnered

Singapore Airlines in its drive to promote interline e-tickets. Singapore Airlines

customers whose journeys involve connections with American Airlines, Air France,

British Airways, Continental Airlines, Delta Airlines and Virgin Atlantic Airways, need

only one interline e-ticket for the entire trip.

2.8.2.8 Loyalty Marketing

KrisFlyer

New Star Alliance members, SWISS International Airlines and South African Airways,

were added to KrisFlyer’s list of partner carriers. Collaboration with these partners give

members of Singapore Airlines’ frequent flyer program more ways to earn KrisFlyer

miles. Other new partners include HSBC (India and Philippines), HSBC Philippines

Wealth Management, OCBC (Singapore and Malaysia), Diners Club Australia, ICICI

Bank, American Express (USA) and New Otani Hotels.

The PPS Club

The Airline announced changes to its PPS Club in March, to come into effect in

September 2007. The changes are designed to maintain the exclusivity of the PPS Club

for the Airline’s premium customers, and to provide a more equitable criterion for

qualification and renewal of membership. The new criterion moves from a sector and

mileage-based scheme to one which recognizes value of travel in Business and First

Class. In future, qualifying members will need to accrue $25,000 of travel in First or

Business Class on Singapore Airlines and SilkAir services within a year.

Designer Touches

Furnishings in all classes are exclusively designed by Givenchy.

Meals are served to premium customers in fine restaurant-style, with full-table settings

and on Givenchy-created bone chinaware and glassware.

There is also a new range of specially selected in-flight amenities – Salvatore Ferragamo

lotions and perfumes for First Class customers and L’Occitane fragrance and aftershave

for Business Class travelers. These additions maintain the Airline’s commitment to well

recognized partnerships with leading global brands.

2.9 Partners and Benefits

SIA works with various Partner Airlines to offer improved network and service benefits

to our customers. The extra perks that its customers can look forward to include:

More connecting flights, particularly through code share arrangements

A more rewarding Frequent Flyer Program

Access to more passenger lounges at airports worldwide

Seamless travel experience up to final destinations

Availability of more combined fare products

Commitment to high service standards that come with the partners’ brand reputations

2.9.1 Code Share Partners

2.9.1.1 Silk Air

Silk Air is SIA's regional wing carrier serving 26 destinations in Asia offering a unique

'unwinding experience' through its natural and man-made wonders, local cultures and

customs.

2.9.1.2 Virgin Atlantic Airways

Virgin Atlantic Airways (VAA) is a London-based international carrier in which SIA has

49% stake. VAA offers innovative services that include in-flight massages and an

onboard bar for eating, drinking and meeting other travelers.

2.9.1.3 Star Alliance Member Airlines

The Star Alliance network covers 855 destinations and 155 countries.

As passengers of Singapore Airlines, one can look forward to seamless travel to many

more destinations through SIA's codeshare arrangements with the following 8 STAR

Alliance partners. In addition, one can enjoy a number of Star Alliance benefits when

traveling on any Star Alliance member:

Lufthansa Air New Zealand Air Canada Austrian ANA Asiana Airlines Lot Polish Airlines South African Airways 

2.9.1.4 SIA Code Share Destinations

Table 2.5 shows the SIA Code Share Destinations.

Codeshare Partners      

Destinations

SilkAir Phuket, Yangon, Chang Mai, Phnom Penh, Siem Reap, Medan, Manado, Trivandrum, Da Nang, Kuching, Kochi, Surabaya, Kota Kinabalu, Kunming, Xiamen, Chengdu, Chongqing, Shengzhen, Palembang, Solo City, Balikpapan, Langkawi, Mataram, Kaohsiung

Virgin Atlantic Airways Washington, Boston, Miami, Orlando, Los Angeles, San Francisco, Dubai

Lufthansa Frankfurt, Hannover, Bremen, Hamburg, Dresden, Dusseldorf, Leipzig, Stuttgart, Cologne, Nuremberg, Berlin, Muenster, Geneva, Brussels, Vienna, Prague, Nice, Lyon, Marseille, Toulouse, Stockholm, Copenhagen, Helsinki, Oslo, Barcelona, Bilbao, Madrid, Auckland, Christchurch, Milan, Paris, Budapest, Rome, Munich

Air Canada Toronto, Montreal, Vancouver, San Francisco

Air New Zealand Auckland, Christchurch, Wellington, New Plymouth, Dunedin, Queenstown, Sydney

ANA Tokyo

Asiana Airlines Seoul

LOT Polish Airlines Warsaw

Malaysian Airlines Kota Kinabalu, Kuching, Penang

Royal Brunei Airlines Bandar Seri Begawan

South African Airways Capetown, Durban, Port Elizabeth, East London

Table 2.5: SIA Code Share Destinations

2.9.2 Lounge Access

Apart from SIA’s own Silver Kris Lounges, its eligible passengers can also have a

relaxing time before flights at their partners’ airport lounges worldwide.

2.9.3 Loyalty Programs

KrisFlyer

KrisFlyer is the name of the Guest Reward Program or Frequent Flyer Program of

Singapore Airlines. It is a tool they use for the retention of its customers. It’s a mileage

account that keeps accounts of miles being traveled and redeemed by a member. It has

five levels of membership, which are The Base Member, Silver Member, Gold Member,

PPS Member and Solitaire PPS Member. Members of this frequent flyer program enjoy a

wide range of benefits and privileges depending upon their membership level.

Tie-ups of Singapore Airlines with other airline partners certainly make every trip taken

by its loyal KrisFlyer members and valued PPS Club members even more rewarding.

Members can earn KrisFlyer miles when traveling with its partners and enjoy the

flexibility of redeeming these miles on SIA or its partners' flights. There are many other

frequent flyer and recognition benefits that flyers can look forward to.

Chapter 3:

Topic AnalysisAnd

Description

3.0 Topic Analysis and Description

High Employee Turnover Rate at Singapore Airline’s Dhaka Station: Feasible Measures

for Prevention

The Topic chosen for the research, as stated above, has two broad issues that require

discussing. These two issues are the followings:

Employee Turnover Rate

Feasible Measures

3.1 Employee Turnover Rate

Employee Turnover Rate is defined as rate at which employees have voluntarily quit their

jobs from an organization over a certain period of time. Mathematically, it can be

expressed as N/t, where N = Number of employees resigning voluntarily and t = the

period of time through which these incidents of voluntary resignations took place.

Employee turnover can take place because of a set of various internal and external

factors, which may or may not be within the control of the organization. A set as such

includes external factors such as better opportunity for employees in other organizations

or industry, matrimonial problems, problems related to maternity, having to look after the

business owned by the family, geographical migration, etc. factors such as these are

usually not within any degree of control of the organization. However, there is a set of

certain internal factors or intra organizational factors which are to a great extent, within

the control of the organization might also be responsible for voluntary resignation. A set

as such may include but may not be limited to factors such as unattractive compensation

packages, inadequate growth opportunity, lack of organizational sociability, below

standard hygiene factors, lack of motivation, etc. These internal factors might cause the

arousal of job dissatisfaction in an employee, as a result of which, an employee might

quit the organization. Many organizations conduct exit interview with their outgoing

employees in order to determine whether the resignation was a function of the internal or

external factors, which comes to them as a feedback, based on which the management

assess what adjustments, if any, is required or possible to be implemented in the practice

of Human Resource Management of the organization.

A careful eye is always required to focus on the employee turnover rate of an

organization, the rationale behind which is supported by a pool of valid reasons. First of

all, if an employee who has worked for many years in an organization, quits job, it is very

difficult to find a proper replacement of the lost intellectual asset. A new employee

recruited or promoted to fill up the position may not be as competent as the predecessor.

Moreover, to develop someone to fill up the position will require the successor to go

through all the trainings that the former employee had received, i.e. the company will

incur repeated expenditure for the same purpose. Above all, when employee turnover rate

rises markedly above the industry average, the company might consider itself to be a few

steps away from failure, as its cost of recruitment, training and development will go high

and the newly hired employees will not be able to generate quick at the same time high

returns on the investments or costs of their procurement incurred to the company.

3.2 Feasible Measures

The third principle economics states that rational people think at margins. However, the

applicability of the principle is not just limited to the decision making of individuals, but

extends to organizational decision making as well. Every organization, before taking any

action to overcome or recover from a situation of crisis, or to exploit an opportunity

capitalizing on its strength, must account for the cost that would occur to implement the

action and estimate or forecast the returns that are likely to come to the organization as a

result of the action’s implementation, and should only proceed towards implementation

of the action if it is found that the returns shall exceed the costs of implementation.

Feasible Measures can be defined as a set of realistic and cost effective actions with high

certainty of effectiveness that a company can take for handling a crisis situation. In the

context of the study, feasible measures refer to those actions that Singapore Airlines may

take in order to reduce its employee turnover rate, without making the cost of these

actions exceed the quantitative returns as a result of the implementation of these actions.

Generally, return is defined as the revenue generated. However, in the context of the

situation of the research, return refers to how much cost will be saved. Thus, feasible

measures mean realistic measures with high certainty of effectiveness, that Singapore

Airlines might take, the expenditure for which in the present time, will save higher

amounts of expenditure that might have occurred in the future or the long run.

Other Theoretical Concepts

Besides the two main broad issues as discussed earlier, there are some other theoretical

concepts that have been used for the purpose of accomplishment of the objectives of the

study. It is felt that descriptions and/or explanations of these concepts need to be

discussed for the clarification of the reader and know their relevance to the study. The

following sub sub-headings are the names of the concepts, theories or techniques used

and are followed by detailed explanation of them.

3.3 McClelland’s Theory of Needs

David Clarence McClelland (1917 – March 27, 1998) was an American personality

psychologist, social psychologist, and an advocate of quantitative history. McClelland

proposed a content theory of motivation based on Henry Murray's (1938) theory of

personality, which sets out a comprehensive model of human needs and motivational

processes. In McClelland's book The achieving society (1961) he asserts that human

motivation comprises three dominant needs: the need for achievement (N-Ach), the need

for power (N-Pow) and the need for affiliation (N-Aff). The subjective importance of

each need varies from individual to individual and depends also on an individual's

cultural background.

In his acquired-needs theory, David McClelland proposed that an individual's specific

needs are acquired over time and are shaped by one's early life experiences. Most of these

needs can be classed as either achievement, affiliation, or power. A person's motivation

and effectiveness in certain job functions are influenced by these three needs.

McClelland's theory sometimes is referred to as the three need theory or as the learned

needs theory. Later work indicated that motives are actually quite stable over long

periods of time.

Achievement

People with a high need for achievement ([[nAch]]) seek to excel and thus tend to avoid

both low-risk and high-risk situations. Predominantly Achievement-motivated individuals

avoid low-risk situations because the easily attained success is not a genuine

achievement. In high-risk projects, the Achievement-motivated see the outcome as one of

chance rather than one's own effort. High nAch individuals prefer work that has a

moderate probability of success, ideally a 50% chance. Achievement-motivated

individuals need regular feedback in order to monitor the progress of their achievements.

They prefer either to work alone or with others like themselves.

Affiliation

Those with a high need for affiliation ([[nAffil]]) need harmonious relationships with

other people and need to feel accepted by other people. They tend to conform to the

norms of their work group. High nAff individuals prefer work that provides significant

personal interaction. They enjoy being part of groups and when not anxious make

excellent team members, though sometimes are distractible into social interaction. They

can perform well in customer service and client interaction situations.

Power

A person's need for power ([[nPow]]) can be one of two types - personal and institutional.

Those who need personal power want to direct others, and this need often is perceived as

undesirable. Persons who need institutional power (also known as social power) want to

organize the efforts of others to further the goals of the organization. Managers with a

high need for institutional power tend to be more effective than those with a high need for

personal power.

Relevance of the theory to the study

Studying the Human Resource Management Practice of the aviation industry, it has been

evident that employees in the aviation industry under GSA, regardless to which Airlines

they are dedicated to, have almost no scope of having their need for power fulfilled as

they shall never rise to the powerful positions such as Station Manager or General

Manager. However, people with high need for achievment might find it suitable as the

jobs are challenging and operators in the industry provide high salaries. As for Singapore

Airlines, which is paying a below industry average salary to its employees, the segment

of employees with high need for achievement should perhaps be counted off as well. It

was therefore assumed that only people with high need for affiliation are most likely to

enjoy working at Singapore Airlines and hence, part of the study was dedicated towards

verifying this assumption by conducting Need for Power, Affiliation and Achievment test

among employees who have been retained for long time in the organization. The purpose

of it was to identify any correlation between the need for affiliation, achievement, or

power with the retention period of employees, based on which, a certain level of the

positively correlated need might be looked for in applicants during recruitments in future,

for an increased likelihood of desirable retention periods of future recruits.

3.4 SWOT Analysis

SWOT Analysis, is a strategic planning tool used to evaluate the Strengths, Weaknesses,

Opportunities, and Threats involved in a project or in a business venture. It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective.

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective. SWOT analysis groups key pieces of information

into two main categories:

Internal factors – The strengths and weaknesses internal to the organization.

External factors – The opportunities and threats presented by the external environment.

The internal factors may be viewed as strengths or weaknesses depending upon their

impact on the organization's objectives. What may represent strengths with respect to one

objective may be weaknesses for another objective. The factors may include all of the

4P's; as well as personnel, finance, manufacturing capabilities, and so on. The external

factors may include macroeconomic matters, technological change, legislation, and socio-

cultural changes, as well as changes in the marketplace or competitive position. The

results are often presented in the form of a matrix.

SWOT analysis is just one method of categorization and has its own weaknesses. For

example, it may tend to persuade companies to compile lists rather than think about what

is really important in achieving objectives. It also presents the resulting lists uncritically

and without clear prioritization so that, for example, weak opportunities may appear to

balance strong threats.

It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of

individual SWOTs will be revealed by the value of the strategies it generates. A SWOT

item that produces valuable strategies is important. A SWOT item that generates no

strategies is not important.

Relevance to the Study

The SWOT Analysis Approach has been used in analysing the situation of high

employee turnover in the Dhaka Station of Singapore Airlines. The Internal Factors have

been combined with the external factors to formulate possible strategic actions to be

evaluated for their feasibility and effectiveness in handling the situation.

Chapter 4:

Findings

4.0 Findings

Employee turnover is not a matter of huge concern to the Aviation Industry because it

hardly takes place. Therefore, no research has been done earlier on this issue in the

Aviation Industry and hence, no data was available to calculate the industry average rate

of employee turnover. However, the management of Singapore Airlines confessed that its

turnover rate is globally increasing over the last few years. Five employees have resigned

since January 2007 and another four employees have already notified of their resignation

within September, thus making a monthly average of one employee and a projected

annual average of twelve employees for the year 2007.

After the collection of data, followed by analysis of those relevant to the study, certain

problems have been identified which are the internal and external factors or the

weaknesses of and threats on Singapore Airlines that are acting as driving forces on

employees to quit the organization. However, some internal factors of the organization

and external factors in the Human Resource Market, or strengths and opportunities have

also been identified, of which Singapore Airlines can take advantage to recover from the

situation, i.e. reduce its employee turnover rate to a minimum acceptable level. Based on

these findings, a SWOT Analysis has been done in the context of HR Management.

4.1 Strengths of Singapore Airlines

Strength refers to the internal factors which are within the control of Singapore Airlines

and contribute in maximizing job satisfaction of employees. It also refers to the internal

factors that SIA might use in order to increase job satisfaction of its employees.

4.1.1 Sociable Work Environment

Observing the environment of the offices, it is apparent that Singapore Airlines provides

an excellent environment to and for its employees to work in. The degree of Sociability is

high in all three offices maintained by SIA in Dhaka.

4.1.2 Strong Brand Image of Singapore Airlines

Singapore Airlines is one of the most respectable travel brands in the global arena. Many

employees consider it an honor to be affiliated to this brand name.

4.1.3 High Financial Strength

Singapore Airlines, as a premium brand, earns huge profit every year. It has a huge

segment of loyal customer all round the world, despite the high amount of money it

charges for its tickets. In fact, Singapore Airlines charges the highest amount of money in

the whole industry for both passenger and cargo. Therefore, it enjoys the advantage of

high financial strength.

4.1.4 Best Training Programs to Develop a Pool of Efficient Employees

Employees of Singapore Airlines are renowned for their performance in the industry

which is a result of the most rigorous training they receive. They are considered the most

efficient of the Aviation Industry Professionals in the Dhaka Station because of their

consistent timeliness in making flight departure, when delay in flight departure regularly

takes place for Air Carriers of other operators.

4.1.5 High Degree of Loyalty of Employees with High Need for Affiliation

A good many number of employees have been found working for Singapore Airlines for

more than eight years. The sample of these employees scored high on the test for Need

for Affiliation but comparatively lower in the tests for Needs for Achievement and

Power. Figure 4.1 illustrates the difference in levels of needs of each employee of the

category interviewed.

Figure 4.1: Level of Needs of Long Retained Employees

0

5

10

15

20

25

Employees

Sc

ore

s o

f N

ee

ds

Need forAchievment Score

Need for AffiliationScore

Need for PowerScore

4.1.6 Maximum Job Security

Historical records show that at any station, under any situation that makes retrenchment

an essential step to be taken, Singapore Airlines never harbor on employee layoff. As a

matter of fact, to cut down costs during economic downturns or any adverse situation, it

at first lowers the rate of dividend to be paid to its shareholders. If the situation persists,

the next step it takes is lowering the salaries of the top management and slowly goes

down cutting salaries of mid-level managers, and then lowering salaries of the lower level

employees. Under the worst condition, it would identify some employees who are close

to their retirement age and request them for early voluntary retirement. The threat of

losing job at an early or middle stage of a career due to retrenchment is totally absent.

4.2 Weaknesses of Singapore Airlines

Weaknesses refer to the Internal Factors of Singapore Airlines that play a role in causing

dissatisfaction among employees, which results into their job switching.

4.2.1 Misperception of Management about Employees’ Expectation

Misperception of the top management about employees’ expectations is the root of all the

factors that are resulting to the high employee turnover, not only in its Dhaka Station but

also in the global arena, with the oriental countries in exception. The misperception is due

to cross cultural disparity of values. The board of directors is formed mostly of citizens of

Singapore. 42.5% of the citizens of Singapore are Buddhists and are the descendants of

the Chinese, Japanese and Korean ancestors who settled there earlier. The management of

Singapore Airlines perceives that employees should feel fulfilled by providing the best

service to the customers, with the intention and motivation of serving people with little

concern for material rewards, which is the theme of one of the key concepts of Buddhism

known as Karma1. Therefore the company attempts to motivate its employees more with

immaterial rewards such as empowerment, increased responsibility and words of

appreciation rather than with material ones such as huge amounts of money. A noble

perception that might hold true, and be an effective approach in employee motivation

within the oriental zone or hardcore followers of Buddhism, which is apparent from the

fact that the employee turnover rate is low in stations in the oriental zone, although it

would require extensive research to determine that there are no other micro and/or macro

economic factors behind the low turnover rate in order to establish the hypothesis.

However, for people in other regions with different cultural backgrounds, religions,

norms and values, this perception is not at all likely to be widely true. In case of the

Dhaka Station, it has been found that employees with high need for achievement and

power have completely different expectations, which are more focused on monetary

rewards. Also, Singapore Airline’s perception of employees’ preference of job security

over income and growth opportunity may be another judgmental heuristic as most of the

employees denied of any such preferences. Those who made any comment on the issue

prioritized income and growth potential over job security.

4.2.2 Poor Compensation Packages

Information on the industry average of salaries could not be obtained. However, from

word of mouth among the employees in the industry, it is known that most of the

operators in the industry such as the UK Based British Airways and almost all the Middle

Eastern companies pay salaries which are significantly higher than that paid by Singapore

Airlines. When an employee in the Air Traffic Operations of Qatar Airlines receives

23,000 BDT during probationary period, a Customer Service Assistant, the second

1 A Sanskrit Word that Literally Translates to Action in English. However, in the context of Philosophy of Buddhism, it refers to the cause or motivation behind the action rather than the action itself.

highest position holder in the Air Traffic Department of SIA, after serving for eight years

in the organization, receives only 20,000 BDT.

4.2.3 Limited Opportunity for Professional Growth of Employees

Employees switching industry have complained that the Aviation Industry in Bangladesh

does not offer much opportunity for professional growth of local employees. Therefore,

this is not only a weakness of Singapore Airlines but a weakness of the industry itself. It

requires mentioning that these employees were found to be high scorers in the need for

power test, low scorers in the need for affiliation test and moderate scorers in the need for

achievement test. Figure 4.2 illustrates their Needs for Power, Achievement and

Affiliation Scores.

Figure 4.2: Level of Needs of Quitting Employees

0

5

10

15

20

25

30

Employees

Ne

ed

s S

co

re Need forAchievment Score

Need for AffiliationScore

Need for PowerScore

4.2.4 Low Margin of Increment after Annual Performance Appraisal

The average increment of salaries of mid-level officers, followed by annual performance

appraisal has been found to be between 800 to 1000 BDT. For the Top Level officers of

the Local station, this increment amount ranges from 1000 to 1500 BDT.

4.2.5 No Exit Interview

Since no exit Interview is conducted, feedback of former employees is not retained.

4.2.6 No Test for Measuring Intensity of Needs in the Recruitment Process

Singapore Airlines does not conduct any psychological test in the recruitment process to

measure an applicant’s level of needs for affiliation, achievement and power. As a result,

if an applicant with low need for affiliation but high need for power and achievement is

recruited, is not retained for much long.

4.3 Opportunities for Singapore Airlines

Opportunity refers to those External Factors which Singapore Airlines can take the

advantage of, in order to reduce its employee turnover rate.

4.3.1 Potential Employees with Low Salary Expectations

From the survey conducted among students of public colleges, it was found that students

of these organizations have low expectation about salaries, since they are not in the hurry

of getting quick returns for high investments as their cost of acquiring education was not

as high as those who have studied in expensive private universities. The same holds true

about students from the less expensive private universities, just that their expectation is a

little higher than the students from public colleges.

4.3.2 Low Switching Tendency of Employees from Financially Stable Families

The Long Retained Employees were found to be from families with stable financial

conditions. These employees are doing their job just for a professional identity and are

not in need of a source of a big income in the form of profession. Most of them are

owners of houses by inheritance, from which they extract rents which is most often, two

to three times higher than their salaries.

4.3.3 Applicants with High Needs for Affiliation

There are certain people who have high need for affiliation rather than power. These

people usually become loyal customers of brands, tend to socialize highly and usually

turnout to be loyal employees retained for long time if the environment suits

4.4 Threats for Singapore Airlines

Threats are the External Factors are provoking the high rate of employee turnover and on

which Singapore Airlines has no control, but should take precautions to avoid or at least,

to minimize the effects of these threats on itself.

4.4.1 Disparity of Employees’ Expectation with Management’s Perception

Management’s Perception of higher effectiveness of immaterial rewards in motivating

employees than material rewards and employees’ preference of job security over income

and growth have been denied by most employees.

4.4.2 High Growth Opportunity in Other Industries

The Aviation Industry in Bangladesh does not offer a high opportunity for professional

growth to its local employees. Employees with high need for power therefore tend to

switch to local companies in other industries for the development of their career.

4.4.3 Increased Cost of Living

Bangladesh depends highly on imported goods. Every year, it is having a negative

balance of trade. However, the Bangladeshi Currency, the Taka, is depreciating every

year against the currency of its sources of import. Therefore, cost of imported goods in

taka is going high every year, as a result of which, the cost of living is increasing

continuously. Under this situation, employees of low paying organizations are looking for

jobs that will pay enough to maintain the standard of living they are used to with.

4.4.4 Increased Cost of Education

The cost education, especially that of tertiary education has raised highly throughout the

last one and half a decade as a result of Private Universities entering the education

Industry and charging high amounts of fees for tuition. Graduates of these universities

look forward to extract quick returns of investments made for education from their jobs

and do not therefore prefer to settle for low paying jobs.

4.4.5 Attractive Compensation Packages Offered by Competitors

Information on the industry average of salaries could not be obtained. However, from

word of mouth among the employees in the industry, it is known that most of the

operators in the industry such as the UK Based British Airways and almost all the Middle

Eastern companies pay salaries which are significantly higher than that paid by Singapore

Airlines. When an employee in the Air Traffic Operations of Qatar Airlines receives

23,000 BDT during probationary period, a Customer Service Assistant, the second

highest position holder in the Air Traffic Department of SIA, after serving for eight years

in the organization, receives only 20,000 BDT.

4.4.6 Demand for SIA Employees among others Airlines in the Industry

Competing Airlines often come proactively to the Singapore Airlines’ Operations

Employees with job offer in their company. This is because despite the low salary, SIA

employees, especially in the Operations department are renowned in the aviation industry

for their superb efficient performance. When delay of flight departure is occurring

regularly for the Air Carriers of almost all the operators, Singapore Airlines has the

reputation of regularly succeeding to make the flights depart right in time unless due to

adverse weather conditions.

4.4.7 Abundance of Switching Options for the Qualified Employees

A lot of new local or global companies are entering various industries of Bangladesh.

Also, a lot of existing companies are expanding the extent of their business in

Bangladesh. These factors are leaving a wide range of attractive switching options to the

employees with high degree of qualifications, an intensive to which employees with low

Need for Affiliation are responding.

Chapter 5:

Recommendations

5.0 Recommendations

5.1 Recommendations Based on SWOT Matrix Analysis

Based on the Findings being subjected to a SWOT Matrix Analysis as illustrated by

appendix 5, the following recommendations can be put forward, from which Singapore

Airlines should choose one or more strategies to overcome the situation.

5.1.1 Minimize Disparity of Perception and Reality

Singapore Airlines must have a perception of its employees’ expectation with a high

degree of accuracy. In order to achieve that accuracy, it must conduct job satisfaction

survey on its employees at regular intervals. It should also study the Human Resource

Market with respect to the cultural reference, norms and values, lifestyle and other

economic, social and behavioral aspects of the local people.

Also, it should conduct exit interview so that it retains feedback of former employees in

order to identify its points of ineffectiveness in providing job satisfaction.

5.1.2 Retain Existing Employees

Since Singapore Airlines has spent a lot of money in training and developing the pool of

highly competent existing employees, it should focus on retaining them. As employees

are switching to jobs providing better opportunity for income and/or growth, Singapore

Airlines should open up the scope to its employees by providing competitive salaries and

if possible, professional growth opportunity by promoting the qualified local employees

to management positions such as Station Manager and General Manager.

5.1.3 Identify and Screen Out Non-Retainable Applicants

If the strategy prescribed in 5.1.2 cannot be implemented, then it would not be possible to

retain employees with high need for achievement and power. Therefore, it should subject

applicants to the need for power, affiliation and achievement tests in the upcoming

recruitment processes. Those who will score high in the need for power and achievement

tests but low in the need for affiliation test will have to be screened out since it is very

obvious that these employees shall always be looking for better opportunities and shall

quit SIA as soon as one becomes available.

Also, SIA should try to avoid graduates from highly expensive private universities from

employing into the organization as their likelihood of being retained is very low because

they are likely to keep looking for high paying jobs even after joining SIA and shall

switch as soon as one is found.

5.1.4 Identify and Recruit the Retainable Applicants

By the virtue of its sociable work environment, Singapore Airlines has managed to retain

a number of its employees for a significantly long period of time. These are the

employees with high scores in the test for need for affiliation and low scores in need for

power and achievement. Also, these employees have received their tertiary education

from less expensive educational institutes or/and from families with strong or stable

financial conditions. Singapore Airlines should recruit those applicants, who are from

financially stable families, have high scores in the need for affiliation test and a low one

in the need for power test, and have studied in less expensive institutions for tertiary

education, who have been found to have low salary expectations, as they are more likely

to be satisfied by the work environment and not likely to be dissatisfied by the low salary

or absence of professional growth opportunity.

5.2 Drawbacks of the Recommendations

No solution can ever be an absolute solution to all problems. In fact, the solution to one

problem may stand as a problem itself to another solution. Therefore people, economies

and organizations are always in trade-offs. Rational individuals, policy makers,

organizational decision makers always focus on the marginal costs and benefits of every

possible solution before choosing one for implementation.

The recommendations forwarded in 5.1 are no exceptions from every other solution and

have certain drawbacks. Therefore, decision makers should be aware of the drawbacks

and evaluate the options for their feasibility and certainty of effectiveness.

5.2.1 Cost of Retention VS. Cost Saved by Retention

Increasing salary of employees shall result Singapore Airlines to incur additional costs,

the cost of retention. However, the rationale behind retention is to save cost of frequent

recruitments and re-expenditure of developing the replacement employee after spending a

lot of money in developing the predecessor who has quit after receiving the training.

Therefore, before deciding to increase salary, Singapore Airlines must account for the

cost of retention and make forecasts of cost likely to be saved by retention over different

periods of time.

5.2.2 Effectiveness VS Efficiency

Although the strategies prescribed in 5.1.3 and 5.1.4 are efficient solutions to the

problem, they suffer highly from uncertainty of effectiveness.

Human mind is one of the most unpredictable of everything on earth. So, it is impossible

to say that the recruited employees, who today have a high need for affiliation and low

need for power, will not be affected by external factors and suddenly recognize a high

need for power in the near future.

Chapter 6:

Conclusion

6.0 Conclusion

Employees are the internal customers of an organization. Just like any organization’s top

management needs to have a clear and accurate perception of its customers’ expectation,

needs either to fulfill it or take measures to change the expectations if they are unrealistic,

have to acquire new customers and focus on retaining them, the same set of normative

morale holds true for its employees. Without knowing the employees’ expectation from

the job, an employer can hardly ever meet the expectations. This might be one of the

biggest reasons that shall lead an organization to end-up with a pool of competent yet

dissatisfied employees. A dissatisfied employee can do more damage to an organization

than a dissatisfied customer can. Negative word of mouth from a customer might get

forgotten by others in course of time but the same from a dissatisfied employee will be

more readily accepted by people and will be perceived as highly credible. Keeping these

factors in mind, organizations need to focus on employee satisfaction and retention.

Singapore Airlines is perceived as one of the most respected travel brands in the world. It

has been positioned among the most admirable companies all round the world by its

customers. It has a huge segment of loyal customers all round the world. Now it is time

for Singapore Airlines to elevate itself to the same position in the perception of its

employees, a pool of people who have elevated it to its today’s position to its customers

through their diligence throughout the sixty years of its operation in Aviation Industry.

Appendix 1:

Questionnaire for Interviewing Long Retained Employees

Dear Respondent,You are requested to answer this set of questions to find out how you evaluate your job and your company from your experience and identifying the most satisfying attributes of the job, by the virtue of which Singapore Airlines enjoys the pleasure of retaining you and the benefit of your service for a long period of time. Your cooperation might highly contribute to fulfill the best interests of Singapore Airlines

Please mention:

1 The Year you joined Singapore Airlines: …………

2 Name of the Area of Dhaka City you live in: ……………………………………..........

3 Amount of house rent you Pay/Receive per month: ……………………………………

4 Highest level of education you have received: …………………………………………

5 Name of the institution you studied last: ………………………………………………

Please identify each of the following 15 statements according to how accurately it describes you. Place the numbers 1, 2, 3, 4 or 5 in the box after each statement to rate the statement as 1 = Doesn’t Describe Me at all, 2 = Describes Me Very Little, 3 = Describes Me but Not for All Time, 4 = Describes Me Very Well and 5 = Describes Me Perfectly 1 I enjoy working hard2 I enjoy competition and winning3 I want/have lots of friends4 I enjoy a difficult challenge5 I enjoy leading and being in charge6 I want to be liked by others7 I want to know how I am progressing as I complete tasks8 I confront people who do things I disagree with9 I enjoy frequent parties10 I enjoy setting and achieving realistic goals11 I enjoy influencing other people to get my way12 I enjoy belonging to lots of groups/organizations13 I enjoy the satisfaction of completing a difficult task14 In a leaderless situation I tend to take charge15 I enjoy working with others more than working alone

Thanks for Your Cooperation ! ! !

Appendix 2:

Questionnaire and Interview Guide for About to Switch Employees

Dear Respondent,This set of questions has been provided to you in order to measure your level of need for power, achievement and affiliation. Also, it is aimed at identifying any dissatisfaction that you might be having, which is driving you to switch your current job. Your cooperation will be highly appreciated and your feedback will be considered valuable.

Please mention:

1 The Year you joined Singapore Airlines: …………

2 Name of the Area of Dhaka City you live in: ……………………………………..........

3 Amount of house rent you Pay/Receive per month: ……………………………………

4 Highest level of education you have received: …………………………………………

5 Name of the institution you studied last: ………………………………………………

6 What was your expectation from Singapore Airlines as an employee?

7 What was the basis of such expectations of you from Singapore Airlines?

8 What expectations do you think Singapore Airlines failed to meet as an employer?

9 What factors of your next employer do you consider superior in comparison to SIA?

Please identify each of the following 15 statements according to how accurately it describes you. Place the numbers 1, 2, 3, 4 or 5 in the box after each statement to rate the statement as 1 = Doesn’t Describe Me at all, 2 = Describes Me Very Little, 3 = Describes Me but Not for All Time, 4 = Describes Me Very Well and 5 = Describes Me Perfectly 1 I enjoy working hard2 I enjoy competition and winning3 I want/have lots of friends4 I enjoy a difficult challenge5 I enjoy leading and being in charge6 I want to be liked by others7 I want to know how I am progressing as I complete tasks8 I confront people who do things I disagree with

9 I enjoy frequent parties10 I enjoy setting and achieving realistic goals11 I enjoy influencing other people to get my way12 I enjoy belonging to lots of groups/organizations13 I enjoy the satisfaction of completing a difficult task14 In a leaderless situation I tend to take charge15 I enjoy working with others more than working alone

Appendix 3:

Focused Group Discussion Guide

1 What is your objective behind educating yourself?

2 What do you think is most important of all in life – Money, Power or Respect?

3 What is your definition of a good career?

4 Where would you like your career to take you?

5 Which Industries in Bangladesh nowadays do you consider to be the most attractive

ones for employment? Why?

6 What is the minimum salary that you would like to start with on your first job?

7 What is the maximum salary do you think you will be eligible for as a fresh graduate?

8 Is it better to retire from career as the CEO of a small local firm or as a mid-level

manager of a global company?

9 What would you look for the most in your job: A Work Environment that Suits you

Best, A Salary that would let you live a luxurious life or Position that you let you

exercise Power over others?

10 Which organization from the two would you consider more attractive for employment,

one that provides high salary but little professional growth or one that provides fast

growth opportunity but not enough salary to live luxuriously?

Appendix 4:

Guide for Interviewing Top Management

1 How long have you been working for Singapore Airlines?

2 Did you start your career with Singapore Airlines?

3 Where did you work before?

4 Are you more satisfied working for Singapore Airlines than the previous

Organizations you worked for?

5 What are your factors of satisfaction/dissatisfaction in your job at Singapore Airlines?

6 How would you compare these factors with your previous jobs?

7 What is the perception of Singapore Airlines about the expectation of its existing and

potential employees?

8 Does Singapore Airlines take enough measures to meet the employees’ expectation?

9 What measures does it take to meet the expectations of its employees?

10 Does Singapore Airlines consider the measures it takes as enough to meet the

expectation of its employees?

Appendix 5:

The SWOT Matrix

Strengths

1 Sociable Work

Environment

2 Strong Brand Image

3 High Financial

Strength

4 Best Training Program

5 Loyalty of employees

with high Need for

Affiliation

6 Maximum Job

Security

Weaknesses

1 Management’s Misperception of

Employees’ Expectations

2 Poor Compensation Packages

3 Limited Growth Opportunity for

Employees

4 Low Margin of Annual Increment

5 No Exit Interview

6 No Measurement of Applicants’

Levels of Needs

Opportunities

1 Public College Students with Low Salary

Expectations

2 Low Switching tendency of Employees

from Financially Stable Families

3 Applicants with high need for affiliation

and low need for power and achievement

SO Strategies

1 Recruit people with

high need for affiliation

from financially stable

families and/or those

who have studied in

inexpensive education

institutes

(O1+O2+O3+S1+S5)

WO Strategies

1 Introduce Need for Affiliation test

in the recruitment process and

screen in the high scorers (W6+O3)

Threats

1 Disparity of employees’ expectation with

management’s perception of their expectation

2 High Opportunity for Professional Growth

in other Industries

3 Increased costs of Living

4 Increased Cost of Education

5 Attractive Salary Offered by Competitors

6 Demand for SIA Employees among the

other operators in the industry

ST Strategies

1 Increase Salary and

Benefits

(S3+T3+T4+T5)

WT Strategies

1 Regularly Collect employee

feedback to minimize disparity

(T1+W1+W5)

2 Introduce Need for Power Test in

the Recruitment Process and Screen

out the high Scorers (W6+T2+T5)

3 Promote Qualified Employees to

Respectable Positions

(T2+T6+T7+W3)

4 Increase Salary and Benefits

7 Abundance of Switching Options for

Qualified Employees

(W2+T3+T4+T5)

Bibliography:

Publications:

Singapore Airlines: Annual Report 2006-2007

Singapore Airlines: Operational Review 2006-2007

Wikipedia the Free Encyclopedia: David McClelland

Wikipedia the Free Encyclopedia: Balance of Payments

Wikipedia the Free Encyclopedia: Trade Surplus

Wikipedia the Free Encyclopedia: Religion in Singapore

Wikipedia the Free Encyclopedia: Karma in Buddhism

Wikipedia the Free Encyclopedia: SWOT Analysis

Websites:

http://www.singaporeair.com

http://www.utmem.edu/oed

http://en.wikipedia.org/wiki/David_McClelland

http://en.wikipedia.org/wiki/Balance_of_payments

http://en.wikipedia.org/wiki/Trade_surplus

http://en.wikipedia.org/wiki/Religion_in_Singapore

http://en.wikipedia.org/wiki/Karma_in_Buddhism

http://en.wikipedia.org/wiki/Swot_analysis