Malaysia Airlines System HRM Issues

HUMAN RESOURCE MANAGEMENT

ABB 10902

Malaysian Airline System Berhad (MAS) Human Capital Issues and Strategic Solution

Program:

Bachelor of Aviation Management, UniKL MIAT

By:

Muhammad Afiq Aqwa Md Mansor - 53276210188Bachelor of Aviation Management, UniKL Malaysian Institute of Aviation Technology

Muhamad Nazmi Mohd Ghazali - 53276210296Bachelor of Aviation Management, UniKL Malaysian Institute of Aviation Technology

Atikah Muhd Sahar - 53276210024Bachelor of Aviation Management, UniKL Malaysian Institute of Aviation Technology

Nur Fatin Che Soh - 53276210022Bachelor of Aviation Management, UniKL Malaysian Institute of Aviation Technology

Date submitted:

14 April 2011

Human Resources Management | Group No. 4

Abstract

The case deals with the problems faced by the Malaysian Airlines, the national

flag air carrier of Malaysia. While the company had many notable achievements,

since the 1970s, it began to face major financial trouble since late 1990’s. The

case examines the strategies pursued by MAS to overcome the challenges. The

case also describes a brief description of demands and challenges in the

international airline industry.

Purpose – This study seeks to investigate, through the Human Resources

Management practices in the context of several issues discussed, whether the

issues are manageable and gives an impact to the whole organization.

Design/methodology/approach – A discussion was held with the lecturer of

Human Resources Management and several experienced lecturers that have

been a managers in the industry itself at the specific department. The theories

are applied in this research and been transformed into a model. The model is

developed; we come out with additional theories. Our group has come with a

hypothesis that performance of a company tallies with the Human Resources

Management strategies and efficiency because the output of the individual

performance can affect the whole organization performance. We are required to

look for issues that are related to Human Resources Management in a particular

company and seek for solution to handle an issue. Then, a deeper exploratory

factor analysis is used from a conducted interview with the Human Resources

Management in the company itself focusing on the Engineering Department in

MAS.

Findings – The dominant issues in HRM practices in MAS were found to be:

Tangibles, Recovery, Responsiveness, and Knowledge.

Further results indicate that, although the direct effect of HRM practices is

important, the indirect effect with MAS handling the matters in the way of

practicing the human resources management theories that we have learnt is a

stronger driver for the organization to perform its best. Through our findings and


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methodology that is we sent a general questions to the interviewees that are

related to our research and we add new questions based on the interviewees’

reaction and answers.

Research limitations/implications – A notable limitation is that the present

study focuses only on the airline services and uses only one industry (Air

transportation industry) to illustrate the findings. Future research should

examine other aviation service categories.


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Introduction

The commercial airline is an extremely competitive, safety-sensitive, high

technology service industry. People, employees and customers, not products

and machines, must be the arena of an organisation’s core competence. The

implications are vast and pervasive affecting no less than the organisation’s

structure, strategy, culture, and numerous operational activities. Pertaining to

this, a lots of issues of Human Resources Management arises in retaining the

competencies. Strategic management seeks to coordinate and integrate the

activities of the various functional areas of a business in order to achieve long-

term organizational objectives. A balanced scorecard is often used to evaluate

the overall performance of the business and its progress towards objectives.

Human Resources Strategic management provides overall direction to the

enterprise and is closely related to the field of Organization Studies. Strategic

planning and management are more than a set of managerial tools. Train some

of the employees in the area of time management, material handling at work

etc. Retrenchment of surplus employees caused due to superior speed Pay for

performance Promotions based on efficiency High quality work environment at

the production place.These human resource issues are also known as functional

strategies of HRM. In many cases the response to the problem or opportunity

will require the continuous attention of senior management of the organization.

Be interconnected with other issues and developments. Sub-optimisation, or

poor quality in regards to management, decision making, teamwork, employee

motivation, or communication can translate into loss of customers, loss of

market share, loss of organisation assets, and above all, loss of life. In such a

safety-sensitive, customer service-centric environment, the traditional product-

centred industrial model of corporate structures and industrial relations is

inappropriate. Human resource management (HRM) expertise is required now,

more than ever, to spearhead internal marketing strategies in order to gain

customer lock-on. The primary area of focus of strategy is the manner in which

the HR department in MAS.


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Malaysian Airline System Berhad (MAS) Background

Malaysian Airline System Berhad (MYX:3786), DBA Malaysia

Airlines(abbreviated MAS), is the government-owned flag carrier of Malaysia.

Malaysia Airlines operates flights from its home base, Kuala Lumpur

International Airport, and its secondary hub in Bayan Lepas, Pulau Pinang. It has

its headquarters on the grounds of Sultan Abdul Aziz Shah Airport in Subang,

Selangor.

Organisational vision

“To be the largest, most successful and most respected airline in the world.”

The Beginning

Malaysia Airways Ltd. (MAL) was founded in 1947 by British Overseas Airways

Corporation (BOAC - now British Airways), Ocean Steamship Company of

Liverpool and the Straits Steamship Company of Singapore. By the end of 1947,

Malayan Airways engaged in an expansion exercise and MAL began providing

regional flight services. The presence of BOAC also facilitated MAL's entry as a

member of IATA. A year after the Independence of Malaya in 1957 and with the

participation of BOAC, QANTAS, the government of the Federation of Malaya,

Singapore and the Territory of North Borneo, MAL was launched as a public

limited company. MAL then entered the jet age with the purchase of Vickers

Viscount aircraft and by 1960 MAL propelled into other far-flung regions of Asia.

The acquisition of an 82-seater Briston Britania in 1960 made mass transport by

air a reality. This marked the first international non-stop service for MAL, which

operated directly between Kuala Lumpur and Hong Kong.


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http://en.wikipedia.org/wiki/Selangor

http://en.wikipedia.org/wiki/Subang,_Selangor

http://en.wikipedia.org/wiki/Sultan_Abdul_Aziz_Shah_Airport

http://en.wikipedia.org/wiki/Kota_Kinabalu_International_Airport

http://en.wikipedia.org/wiki/Kuala_Lumpur_International_Airport

http://en.wikipedia.org/wiki/Kuala_Lumpur_International_Airport

http://en.wikipedia.org/wiki/Malaysia

http://en.wikipedia.org/wiki/Flag_carrier

http://en.wikipedia.org/wiki/Doing_business_as

http://biz.thestar.com.my/marketwatch/s.asp?c=3786

http://en.wikipedia.org/wiki/Bursa_Malaysia

After the formation of Malaysia in 1963, the airline was renamed as Malaysian

Airlines Limited (MAL). The formation of a new nation saw the need for MAL to

be a national carrier to integrate and connect the far corners of Malaysia. Two

years later, Borneo Airways merged with MAL resulting in fleet and network

expansion. In 1966, the Governments of Malaysia and Singapore became the

majority shareholders in the national carrier and Malaysia-Singapore Airlines

(MSA) was formed. In 1971, the partnership between Malaysia and Singapore

was dissolved, and Malaysia Airlines Berhad was incorporated. With an

authorized capital of RM100 million1, the company made a final revision to its

name in November 1971, and Malaysian Airline System Berhad (MAS) was born.

By 1972, Malaysian Airline System was already servicing 34 domestic routes

and six international destinations.

Modernization

The year 1976 saw MAS enter the information age, when it computerized its

whole

operation. In the 1980s, MAS became the first major government agency to be

privatized

but a change of business practice did not change the company's focus on being

customer driven. As part of its modernization and expansion, MAS also invested

in a new maintenance hangar facility, as well as extending its catering facilities

in Subang, where the then international airport of Malaysia was located. As a

final part of the restructuring exercise, MAS moved into its new corporate

headquarters to a 36-storey building, which became the hub for the future

direction of the company.

Global reach

The year 1986 saw MAS offer the first flight service to the United States. By the

end of 1987, MAS had established itself as an international carrier of choice,


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offering 34 domestic routes and 27 international destinations. MAS changed its

corporate identity and became known as MAS, with the objectives to create a

greater awareness of Malaysia. As part of its fleet modernization program, MAS

invested RM9.6 billion to expand its fleet of aircrafts in 1991.As of March 2001;

MAS had a fleet of 95 aircrafts in its network serving over 114 destinations.

Achievements

MAS received international acclaim from many independent organizations for

various aspects of its services. Its top management team received an award

from the Asian Institute of Management and the World Executive Digest, for its

excellence in general management and success in positioning itself in the airline

industry. MAS received numerous awards in the airline industry, advertising

industry, world-class publications, NGOs, private institutions, and independent

research groups. Even during the economic downturn, some of its achievements

were notable.


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Arises Issues

Problem 1 - Push and pull factor for the employees

Issue - The push and pull factor is the common problem in any airline industry

whereby the pay for the job is demandable and varies according to the offer

that is made by the airlines especially for the License Aircraft Engineers (LAE).

From our interview, this situation is often happen in the engineering department

in MAS whereby the experienced LAEs that have worked for them for more than

10 years walk away to work with another airlines because of the pulling factor

made by the other airlines such as higher salary, more benefits for the

employees, exclusive and different working environment, opportunities to live

outside of Malaysia and many more pulling factors that are the cause of this

situation happens. Same goes to the pushing factor which is the internal factor

of the company that causes the employee to walk away from MAS.

Discussion - According to Mr. Abdul Rashid Sharif and his companion Mr.

Muhammad Hilmi Mokhtar, from the Human Resources Management in MAS

Aerospace Engineering (MAE) department the pulling factor from another airline

is normal to MAS where other airlines like in the Middle East such as Emirates

were expanding and they need ready-made engineers who have working

experiences and attitude in supporting their expansion. At the same time,

Emirates needed to employ massive numbers of experienced and new

employees as fast as possible. This is where the pulling factor is so strong.

Same goes to the national low cost carrier, Air Asia whereby a lot of young


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engineers who have work in MAS for only about 2 to 3 years are being offered

by Air Asia to work with them and they paid double or triple the salary that they

can get in MAS. Even the veteran who has worked in MAS for more than 15

years left to Air Asia.

Then, raise another question, “did MAS aware the pushing factor that cause so

many of their engineers left the company?” Pushing factor for MAS is where the

airline is bleeding money during in 2005 to 2007. MAS were having a financial

problem and the motivation of MAS workers at that time were at the lowest. As

for the employee who did not satisfy with their salary and they were afraid that

they will be terminated due to the financial crisis, the employee seeks for

another airlines that having more stable in terms of financial and employment

management and it was an opportunity for them to get higher salary and make

a better living. An information that we get from to our lecturer, Mr. Maulan

Bardai, who was once an employee and appointed Manager in the HR

Engineering Department in MAS said that if an employee who wants to leave

MAS will have to fill up a resignation from. In that form, the employee needs to

tell the reasons to leave the company. And by doing so, the company knows

what is the reasons that become the pushing factor that cause the employees to

leave MAS. So, the employees were leaving MAS for a strong push and pull

factor. It is a difficult time for MAS to minimize the pushing factor.

As a measure to deal with this problem, MAS have to hire expatriates of

engineers from other airlines such as Qantas, Lufthansa, SIA and many more

airlines trough out the world. Currently, there are more than 60 expatriates

engineers that work in MAS. MAS also had taken an action to minimize the

pushing factor by restructuring their corporate strategy. MAS Aerospace

Engineering (MAE) has rebranding their vision which is ‘to be the preferred

global MRO organization’ and their new mission is ‘to deliver excellent

aerospace engineering services, provide value to customers, maximize returns

to stakeholders and be the employer of choice’. By rebranding their new vision

and mission, MAS Aerospace Engineering comes with the values of safety and


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quality, passion for excellence, integrity, teamwork and business sense (serve

customer, make money, save money). As a result, MAS Aerospace Engineering

has been Awarded “Asia Pacific Airframes MRO Center of the Year” by Frost &

Sullivan and “Aviation Week’s Overhaul & Maintenance 2009 Best Asia-Pacific

Airline MRO Operation. This achievement has made MAS Aerospace Engineering

the preferred choice in Asia Pacific region and in the whole world. Further on,

MAS has successfully minimizing the pushing factor and this also has become

the strong pulling factors for the engineers to stay working in MAS.

Deepening into this problem, another issue that is very critical in MAS is the ‘job

design’ issue. Job design is the role that plays by a particular person in a

particular job. For example, the store man in MAS. The store man in MAS is not

wide and it is limited only to that role. According to Mr. Maulan opinion, job

design is a good solution to minimize pushing factor in a company. If the design

of the job is wide and variety, the capacity of earnings can be maximize and the

job scope of that particular employee has been enlarged. Furthermore, the

salary of the employee can be higher and thus this will lead to maximization of

job satisfaction to the employees. This can help to reduce the pushing factor in

one organization. In addition, Mr. Maulan stated that, he was doing his research

in 1992-1993 about MAS job design. He found that MAS job design is the just the

same from 1972, the year MAS was established until 2003 which is the year Mr.

Maulan resigned from MAS. However, until now, we still not sure whether the job

design in MAS has been revise to widen the scope of the job.

Opinion – In our opinion regarding the pull and push factors, the organization

have to minimize the pushing factors that causing employee to run-away from

the company and work with another company since the pulling factors are

cannot be controlled by the management. The organization needs to practice a

healthy and friendly working environment in order to minimize the pushing

factors and keep the employees motivation at peak. Besides that, the company

has to maintain the performance of the organization to avoid pushing factor and

be competitive.


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Problem 2 - Discriminations and diversity practices

Issue – Discrimination means unfair treatment of a person or group on the basis

of prejudice. In other words biasness or unfairness. Discrimination in this case

usually refers to gender discrimination between men and women where women

always being looks down by men, or where women have to compete in the men

world. On other hand, the "business case for diversity", theorizes that in a global

marketplace, a company that employs a diverse workforce (both men and

women, people of many generations, people from ethnically and racially diverse

in backgrounds and have different traits. In the aviation industry, diversity

practices are applied whereby, men and women work together, differs from

ethnicity, backgrounds and beliefs and also work with the people from all

around the world because aviation industry is a global industry. But there is a

gap between men and women capabilities where women cannot go for a higher

position or higher management job such as being appointed as a Managing

Director and Chief Executive Officer (C.E.O) and likewise. The term is called

‘glass ceiling’


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Discussion – From our interviews, both men and women are treated equally in

MAS until it reach at certain things that are requires consideration from both

men and women. According to Mr. Rashid, in MAS Aerospace Engineering, men

and women are treated fairly. Men and women are doing the same job

appointed to them. MAS practices a strong teamwork in their working

environment whereby men and women have to collaborate to make sure the job

done is at the best quality. When come to a certain level where women who

does the technical job such as maintaining the Power plant unit, airframe

maintenance, cabin, avionics instruments, auxiliary power unit (APU), radio and

many more technical work. After the women get married and have kids, the

women engineers or technician will be given an option to be moved to the white

collar work. The women engineers given a choice to change to office

environment that is proper to married women. The term white-collar worker

refers to a salaried professional who performs semi-professional office,

administrative, marketing and sales coordination tasks, as opposed to a blue-

collar worker, whose job requires manual labor.

On the other hand, women who work for MAS have been given other benefit

which is a protection for them. Women who have work until late night or

working until more than 2200 hour (10 p.m.), they will be provided a free

transportation by MAS to send them home. This benefit is stated in the

Employment Act 1955 (Act 265) (refer to Appendix 4). This benefit applies to all women

either in technical job or in the white collar job. This is to protect the women

employees and to give equal right for the women to compete with men. In

addition to that, there are also several more benefits as stated in in the

Employment Act such as maternity leave.

Besides that, MAS also have an issue of gender bias practices. In this issue, MAS

has discriminated the unfair and unequal treatment of the female cabin crew

has a direct impact on women's access to equal opportunities. A memorandum

on gender bias practices by the MAS by the joint initiative against gender

discrimination was made. The Joint Initiative (refer to appendix 1) strongly disagrees with

the discriminatory practices of MAS. They believe that MAS has discriminated

against female cabin crew on the basis of gender and denied them of their right


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to work in a non-discriminatory and stress-free environment. Bearing in mind

women workers make up 60% (2300) of the MAS cabin crew, it is their

inalienable right to fair and equal treatment. This memorandum seeks avenues

to end gender-based discriminatory practices and to recognize women workers'

right to equality and justice.

Further on, MAS have an issue regarding the discrimination retirement policy to

women stewardess. Women stewardess in MAS has to retire at the age of 40

and another five years extra for those in senior positions. This discrimination is

even more pointed when compared to their male stewardess, in which male

flight attendants are given the option of retiring at the age of 55(refer to appendix 2). In

this issue, it has become a problem where women who have reached the age of

40 and above are not as attractive as they used to be. This issue has thickening

the layer of discrimination to the already sexist and age-ist statement. MAS

should start to value their employees beyond perceived gender stereotypes and

instead take a REAL look at these women who are vibrant, intelligent and

attractive, and who possess an added advantage - experience. If not, and if such

ancient principles are continued to be enforced, MAS might find itself in the

precarious position of losing such experienced stewardess.

Opinion – From our perspective, MAS did face the discrimination problem

frequently. MAS did try to avoid discrimination between their workers and as

one of their values is integrity and teamwork in their working environment has

made them success. MAS did counter the problem and manage to solve it on its

own way. In MAS, both women and men can work in harmony and equally as

every opportunity provided by MAS to both men and women are the same as

long as they achieve their mission and vision. Diversity in a working

environment is a good and conducive working environment.


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Problem 3 - Employees Union (MASEU)

Issue - Employees Union is a representative of the group of the employees in

the company to represent the employees. Employees’ Union is usually a

separate management of the company and the employee. It is a group. And the

union will voice out to the company administration about what they want and

they demanded a negotiation between them members and the company’s

management. They will negotiate about their salary, benefits, allowances and

many other things. Same goes to MAS. In MAS, there is an Employee Union

which is called, MAS Employees Union (MASEU) and it is classified as an

association. MASEU is the representative of the group people in the company to


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voice out about their salary, benefits that they can get while working in MAS,

what they did not satisfy with the company and many more.

Discussion – in 1971, five new joint councils were introduced without collective

bargaining rights. Henceforth, the scope of the union’s role was limited and it

merely assumed consultation status the government. In essence, the

government would solely decide on most matters affecting the workers and

unions.

The same year witnessed the Malaysian Airlines System Employees Union

action, which received solidarity support from international workers

organizations. This provided the pretext for more restrictive trade union and

labour relations laws to control public and private sector unions. A strike was

held in an action of demanding pay rise from MAS and resulting the operation of

MAS was disrupted. MAS been closed for 2 weeks. About the same time,

CUEPACS deputy president A. Ragunathan and secretary general Jamaluddin bin

Mohd. Isa had also visited Tun Dr. Mahathir Mohamad and, within two weeks,

the bickering between CUEPACS leaders and the Malaysian Trades Union

Congress (MTUC) became public. That is the beginning of the Employees Union

problem.

Then, cames several more of the MASEU problem such as demanding of their

rights and fairness as mentioned in above issue. MASEU intervention to the

management of MAS regarding the dissatisfaction of the demotion of workman,

Ungku Yacob Ungku Suleiman (refers to Appendix 3). This case has been up to the court

and it is between MASEU and MAS berhad (Malaysian airlines system bhd v.

Malaysian airlines system employees union peninsular Malaysia industrial court,

Johor). The union was unhappy with the decision of the company to demote the

workman from the position of customer services officer, a Grade C position to

the lower position of customer services agent, a Grade B position. This is a trade

dispute referred to the Court by the Honourable Minister of the Human

Resources under s. 26(2) of the Industrial Relations Act 1967 ('the Act'). It is in


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respects of the demotion of one Ungku Yacob Ungku Suleiman ('the workman'),

a member of the Malaysian Airlines System Employees Union, Peninsular

Malaysia ('the union') by the Malaysian Airlines System Berhad ('the company').

MASEU has been demanding more and more to MAS about pay rise and more

benefits for their members for quite some time and what MAS do to overcome

this problem is by dealing closely with MASEU, negotiating with MASEU

representative and tried to reasoning with them. MAS cannot simply ignore

MASEU because it is protected by the Act and laws. So, what MAS management

do is by to treating MASEU nicely. Besides that, MAS also have gained the

benefits for their employees to void any dissatisfaction and problems arise by

MASEU.

Opinion – Appointing the Employee Union in MAS (MASEU), we observe that

Employee Union is a good platform to find out what the employees wants and to

survey how the HRM efficiency can be improved from the Employee Union. HRM

can work together with Employee Union to handle the problems regarding the

Human Capital Management. Further on, MAS can use MASEU as a platform to

negotiating with the employees.

Problem 4 – Competencies (Asset or Liabilities)

Issue - What is a k-employee, and who is worthy of such a title? Much has been

written on the subject of k-employees, and in our opinion most of it flat misses


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the mark. In fact, go so far as to say that what most people refer to as k-

employees are not really assets, but rather large liabilities. If you allow your

organization to be held hostage by those employees who feel like they are

indispensable, you are only exacerbating the problem. The need to retain talent

and reduce turnover, disputing the conventional wisdom of how most

businesses address the risk of managing key employees. A fresh perspective on

the employees competencies.

Discussion - To be a competitive airline, the airline should have better

performance to compete with other airlines in the world. That was how Malaysia

Airlines did to be one of the competitive airlines and become 5 star airlines in

the world. Started from domestic carrier in 1947, Malaysia Airlines turned into

an international airline in less than a decade. Today, Malaysia Airlines flies

around 50,000 passengers daily to some 100 destinations worldwide. The airline

holds a lengthy record of service and best practices excellence, having received

more than 100 awards in the last 10 years.

During our visit at MAS Aerospace Engineering, Mr. Abdul Rashid who is a

Manager Staff Affairs and Human Resources and his colleagues, Mr. Muhammad

Hilmi Mokhtar said that there are several methods to maintain and improve the

organization performance especially in the Engineering Division. Starting from

recruitment, they are very strict in selected those employees. They have

adopted one method known as, Aptitude Skills Knowledge (ASK). ASK method is

that, they need a discipline, punctual and smart employee. Rather than that,

they need an employee that has a skills pertaining to the position offered and

additional knowledge in aviation field. Besides, the candidate needs to match

those requirement that stated by the organization. From ASK method, MAS can

filter those who are only the best to work with them and this way, MAS can

control the quality of their job and performance of their organization.

Moreover, they applied Personal Fatigue Delay (PFD) in order to produce a

productivity employee. PFD is the method to measure the working hours of the

employee used/spent during carried out the job. These PFD must meet the Day

in Life out (DILO) working portion. As example, in Engineering and Maintenance


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Division, the DILO is 80%. It means that, an employee that work 10 hours a day

need to perform 80% from their working hours ; 10hrs x 80% = 8hours. 8 hours

is the useful hour to the employee to perform their work, while the other 2 hours

is the deduction hours from 10 hours. Usually, the other 2 hours, are for another

living activities as a human being that includes going for a break, eat and many

more. That was how the organization measured the productivity of the

employees towards to be a performance organization.

Since they have introduced and practiced lots of method, unfortunately there

are several causes and effects to the organization. These cause and effect need

to be monitored and prevented; otherwise it will affect the organization

performance. Regarding to Mr. Hilmi, they have adopted cause and effect

diagram by Kaoru Ishikawa (refer to appendix 5). The cause & effect diagram is the

brainchild of Kaoru Ishikawa, who pioneered quality management processes in

the Kawasaki shipyards and in the process, became one of the founding fathers

of modern management. The cause and effect diagram is used to explore all the

potential or real causes (or inputs) that result in a single effect (or output).

Causes are arranged according to their level of importance or detail, resulting in

a depiction of relationships and hierarchy of events. This can help the

organization search for root causes, identify areas where there may be

problems, and compare the relative importance of different causes.

Opinion – In our opinion, Mr Rashid, Mr Hilmi and other colleagues did a great

job in order to match their productivity to what they can do to the organization.

They have introduced, developed and applied lots of methods to improve and

maintain the organization performance. Even though there are effects or causes

to the organization, they applied ‘Hot-Stove Principle’, created several methods

of solution and took an immediate action. Last but not least, to be a competent

and effective organization, an organization cannot stand alone without

individuals or people who are supposing to support them at any level. Each of

the divisions or departments need to corporate together towards achieving the

organization objectives.


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Learning Points

Ethics and Moral perspective

Sensing a need to connect ethics and moral in Human resource is important in

Human Resources Management. Referring to our first problem that is

‘discrimination and diversity practices in the corporate environment’, ethics and

moral plays an important role in HRM. Ethics include fairness, judgmental,

beliefs, justice and many more that are related to ethics and moral. In our

observation, ethics and moral is the base line in managing Human Resources.

We can relate that in managing human resources, we need to be fair, justice in

making actions, no discrimination, we have to be diverse in beliefs and

background, we have to be inclusive and motivation based on ideas of right and

wrong. In concerned with principles of right and wrong or conforming to

standards of behavior and character based on those principles; "moral sense";

"a moral scrutiny"; "a moral lesson"; "a moral quandary"; "moral convictions"; "a

moral life" is applied in Human Resource Management. A Code of Conduct is a

written collection of the rules, principles, values, and employee expectations,

behavior, and relationships that an organization considers significant and

believes are fundamental to their successful operation. A code of conduct

enumerates those standards and values that make an organization remarkable

and that enable it to stand out from similar organizations.

Aligning with the corporate strategy

In addressing our fourth problem that is ‘Competencies (asset or liabilities)’ ,

the objective has been to improve liquidity through better yield management,

effective management, and better organizational structure, pre-planning of

corporate structure and needs for committed in working capabilities. Moreover,

key employee title is a good motivation for the employee to improve their

working performance as an individual thus; if an individual is performing well,

the organization also will perform well. In addition, it aims to initiate efforts to


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normalize its leverage and capital structure to bring HRM more in line with its

corporate strategy to compete in the industry. HRM also strive to be standard in

terms of operational productivity, service levels and costs. Its focus is on

improving quality and efficiency, and putting a halt to all form of abuse within

the organization. HRM intends to reassess the effectiveness of its role in

corporate network and trying to give the best out of it. This involves reviewing

the viability of the existing plan structure and organization; and the realigning

and re deploying of its men power capacity to markets that offer the greatest

opportunities for all. Furthermore, HRM has instituted various improvement

programs to raise efficiency and productivity levels to industry standards.

Mutually beneficial cooperation, alliances and tactical arrangements are also

being explored with interested industry.

Deepening into employment act studies

From our visit, Mr. Abdul Rashid Sharif suggested that student that study

management should go into deep learning about Employment Act. Referring to our

second and third problem that is ‘Discrimination and diversity practices’ and

‘Employee union’ , in Human Resource Management, Employment Act is a part of the

guidance and rules especially when it comes to hiring, firing, promoting, laboring and

many more that are connected with the employment. Some company simply just

ignoring the Employment Act and they did not conducting their employees according to

the law. Nowadays, employees are protected by the law and employers cannot simply

hiring and firing the employee. Employers who are recruiting must know and

understand the laws, and at the same time follow the laws that are stated in the

Employment Act.

Up to date with current situation

From the methodology of our research, from what we can sum up is that we can

get the most current issue of what happen in the industry. From this point of

learning, we can get something that is more that we can learn in the lecture and

in the books. We can just learn the theories from the lecture and on the surface

understanding of the theories. But, in this exercise, we can relate the theories


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with the real life working environment. Thus, it helps us to enhance our

understanding in this subject and we can practice our knowledge from the

theories and make it into a new theory. Furthermore, by practicing this exercise,

we can also get more opinion and gain experiences from the experienced

people in the industry. Their opinion and experiences are priceless in contrast to

what we can pay to learnt in the class.

Conclusion

In conclusion, our research made it clear for us to recognize the theories that we

have learn in the class and applied it in this research. This is directly as a

practical exercise for us in understanding more about this subject and its

significance in our study. From our hypothesis and observation, whether Human

resources Management giving an impact to the whole organization’s

performance. The can relate that the theories that we have learnt in the class

and books is successfully applied in this research and we conclude that the

hypothesis is true that Human Resource Management give a big impact to the

whole organization’s performance. The issue stated in this research proves that

an efficient Human Resource Management is crucial in an organization to be

success. The primary area of focus of strategy is the manner in which the HR

department in general aligns activities, policies and procedures with the

recruitment and selection and diversity and equal opportunity imperatives of

the organisation. Each of the individual positions has characteristics that may

be used to expand and/or defend their sustainability of their business growth.

Growth and profitability are ultimate objectives from any actions taken.

Identifying issues such as company-focused or competition-focused and stays

within boundaries or pushes the boundaries are matrix variables that guide

assessment. The MAS aviation market provides distinctive examples of a

business in each of the businesses that MAS do, thus applying the theory to a

real-world situation. MAS must constantly expand the market while defending

against other airlines that seek to take a greater share and Human Resources

Management in MAS must play bigger and more important role in involving the

company’s management.


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From this exemplification of the strategy simply stated is that the market

environment is dynamic and constant assessment is necessary. Managers

seeking to maximize differential advantage and the competition have a wealth

of strategy tools available. Each one provides information. Using more than one

contributes to a manager’s ability to understand the working environment in

Human Resources Management. In a nut shell, this exercise gives us a deep

understanding in managing Human Resources.

Future Implication

From this research, we have come out with one new idea to apply in our future

research. We decided to do an industrial survey to research and investigate

about problems that arise in the organization. Then, by using our knowledge in

statistics, we can do a hypothesis testing and identify the problems and solve it

using statistics hypothesis testing. From that analysis, we can go into deep

research about particular problems and solve it. In addition, we can propose the

research that has been done to be shown to the particular company. By doing

so will help us and the Bachelor of Aviation Management course is well known

and recognized by the industry.

Acknowledgement

We thank to all of the persons and organization who were involved in this

research especially the representative from the Malaysia Airlines System (MAS)

Berhad, Mr. Abdul Rashid Sharif and Mr. Muhammad Hilmi Mokhtar who have

kindly assisted us in discussing the issues faced by MAS and being very helpful

in this research. The management of UniKL MIAT, especially our Lecturer in

Human Resource Management subject, Mr. Nor Hisham Ghafar, Mrs. Sahzilawati

Mohd. Nor, Head of Aerospace Section, UniKL MIAT for permitting us in getting

approval for the visit, Mr. Suhaimi Jantan who helped us to get contact with the

representative from MAS and gave a very supportive information and guidance

and last but not least our Business Ethics lecturer, Mr. Ahmad Maulan Bardai


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who gave us a lot of guidance in preparing for the visit and giving us so much

information regarding the Human Resources in MAS. And finally to, Mrs.

Zabariah M.D Ibrahim for checking the final draft of this document. Not to

forget, to all of our lecturers and individuals who have helped us in doing this

research.

Appendix 1

MEMORANDUM ON

GENDER BIAS PRACTICES BY THE MALAYSIA AIRLINE SYSTEM

BY THE JOINT INITIATIVEAGAINST GENDER DISCRIMINATION

This memorandum is prepared by the Joint Initiative against Gender Discrimination by the Malaysia Airline System (MAS), the national carrier of Malaysia.

This initiative is led by:Malaysia Airline System Employees Union (MASEU)

and supported by:All Women's Action Society (AWAM)

Women's Development Collective (WDC)Women's Aid Organisation (WAO)

Malaysian Trades Unions Congress (MTUC) Women's CommitteeNational Council of Women's Organisations (NCWO)

Women's Centre for Change (WCC) Sisters in Islam (SIS)

The Joint Initiative strongly disagrees with the discriminatory practices of MAS. We believe that MAS has discriminated against female cabin crew on the basis of gender and denied them of their right to work in a non-discriminatory and stress-free environment. Bearing in mind women workers make up 60% (2300) of the MAS cabin crew, it is their inalienable right to fair and equal treatment. This memorandum seeks avenues to end gender-based discriminatory practices and to recognise women workers' right to equality and justice.

ISSUES RAISED AGAINST DISCRIMINATORY PRACTICES


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The unfair and unequal treatment of the female cabin crew has a direct impact on women's access to equal opportunities. The differences in treatment are considerable and they are as follows:

1. RETIREMENT AGE Existing Employment ConditionsThere exists gender biasness in the retirement age, whereby female cabin crew take early retirement at 40 years of age or 45 years for female supervisors, whilst all male cabin crew retire at 55 years of age.

Upon early retirement, a female cabin crew receives a "special gratuity at the rate of RM800 per year for every completed year of service with the Company".

Discriminatory Practicesi. The existing employment conditions contravene Article 8[2] of the Federal Constitution, which clearly states that "there shall be no discrimination on the grounds only of religion, race, descent, place of birth or gender". This guarantees the right of women and men to equal pay for equal work or work of equal value.

The different ages of retirement for MAS female and male cabin crew violate the Federal Constitution.

ii. The retirement age for female cabin crew from other international airlines puts to shame the employment policies of MAS. Their retirement age are as indicated below:

Air India 60 yearsThai Airways International 60 yearsCathay Pacific 60 yearsAll Nippon Airways 65 yearsLufthansa 60 yearsAir Asia 55 years

iii. It is also known that double standards are practiced by the management of MAS. For example, expatriate female cabin crew, employed by MAS, are allowed to retire at the age of 60 or 65, in full compliance with their country's employment law. Yet, when it comes to its own Malaysian staff, female cabin crew are forced to retire early.

iv. Malaysia is also committed to uphold respect and equality for women being a signatory to the UN Convention for the Elimination of All Forms of Discrimination against Women (CEDAW). Under Article 11 it states that:

1. State Parties shall take all appropriate measures to eliminate discrimination against women in the field of employment in order to ensure, on a basis of equality of men and women, the same rights, in particular:a) The right to work as an inalienable right of all human beings: e) The right to social security, particularly in cases of retirement, unemployment, sickness, invalidity and old age and other incapacity to work, as well as the right to paid leave."

This clearly upholds women's right to the same employment opportunities.

The gratuity offered to female cabin crew upon their early retirement is meagre and shows a total disrespect towards the years of contribution that they have made towards building the good image of MAS. Therefore, this gratuity policy becomes irrelevant if MAS increases the retirement age of female cabin crew to 55 years of age.

For example, upon early retirement, a female cabin crew will only receive RM16,000 (This is calculated on the following formula: RM800 x 20 years of service) as a token of appreciation for


24

her 20 years of dedication to MAS. This is contrasted with RM414,000 (for 15 extra years of service; this is calculated on the following formula: (RM2,300 salary per month x 12 months x extra 15 years of service) which she will lose due to her early retirement. It must be noted that this special gratuity is also subjected to taxation. On the other hand, all male cabin crew are allowed to continue to work till they are 55 years of age, with full pay and benefits.

It also makes more economic sense to maintain experienced and well-trained female cabin crew than to spend millions of ringgit on advertisement, recruitment and training for newer and less experienced workers.

2. MATERNITY LEAVE Existing Employment ConditionsThe Collective Agreement between the management of MAS and MASEU states that "a married female cabin crew with five or more years of service … shall be granted leave without pay from the date she is declared medically unfit to fly by a medical practitioner. The leave without pay shall commence not later than the end of her second month of pregnancy. She shall not be entitled to medical leave and compassionate leave during the period she is granted leave without pay."

Discriminatory Practicesi. It must be stressed that income generated by women is vital for the survival of the family. The denial of seven months' pay in the course of a woman's pregnancy is a violation of worker's right and it does not accord respect and recognition to women's contribution towards the growth and well-being of the company.

This further perpetuates the stereotype roles that women's contribution is considered secondary to the workforce of MAS.

IiFemale cabin crew should not be penalised based on their reproductive function, i.e. to be pregnant and to have children. Such a maternity policy falls short of ensuring an equitable coverage for women and infringes on their effective right to work.

Article 11 of CEDAW guarantees that equitable maternity benefit as an inalienable right to all human beings. It states the following:1(f). the right to protection of health and to safety in working conditions, including the safeguarding of the function of reproduction;

2. In order to prevent discrimination against women on the grounds of marriage or maternity and to ensure their effective right to work, State Parties shall take appropriate measures:(a.) To prohibit, subject to the imposition of sanctions, dismissed on the grounds of pregnancy or of maternity leave and discrimination in dismissals on the basis of marital status;(b.) To introduce maternity leave with pay or with comparable social benefits without loss of former employment, seniority or social allowance.

In any Collective Agreement, the terms and conditions should leave workers in a better condition as compared with the Employment Act, 1955. This means that a worker is guaranteed of all benefits attached to maternity, including her entitlement to full pay during pregnancy. Unfortunately the Collective Agreement between MAS and MASEU provides for employment conditions that are below the acceptable standards as set by the Employment Act, 1955.

3. TWO SURVIVING CHILDRENExisting Employment ConditionsA female cabin crew is only entitled to maternity leave benefits "for not more than two surviving children. In the event that she becomes pregnant after having two surviving children, she shall resign from the Company, failing which the Company reserves the right to terminate her services."


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Discriminatory Practicesi. Limiting female cabin crew to two surviving children indicates a non-compliance to Section 37 (c) of the Employment Act of 1955 (Act 265), which states that it is only when a woman has five or more surviving children that she will not be entitled to any maternity allowance.Ii The female cabin crew should not be terminated on the basis of having a third child. This policy coerces women to fit into a particular pattern of reproduction. This infringes on women's right to choose and to make their own decision freely and responsibly in terms of the number, spacing and timing of their children.

OUR DEMANDS

Joint Initiative Group against Gender Bias by the Malaysia Airline System demands that the Management of the Malaysia Airlines System revise the employment conditions for female cabin crew with immediate effect. The immediate revisions required are as follows:

1. RETIREMENT AGE To increase the retirement age from 40 years of age at present to 55 years of age as currently practiced for men in similar job position.

2. MATERNITY LEAVETo be entitled to full maternity benefits and this should include full pay, medical leave and compassionate leave during the pregnancy period until confinement.

3. TWO SURVIVING CHILDREN To comply with Section 37 (c) of the Employment Act of 1955 (Act 265) which guarantees a woman the right to full pay and benefits for up to 5 surviving children.

Signed by:Malaysia Airline System Employees Union (MASEU) All Women's Action Society (AWAM)Women's Development Collective (WDC)Women's Aid Organisation (WAO)Malaysian Trades Unions Congress (MTUC) Women's Committee National Council of Women's Organisations (NCWO)Women's Centre for Change (WCC) Sisters in Islam (SIS)


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Appendix 2

Letter to the Editor

Malaysian Airlines Discriminatory Retirement Policy

4 July 2003

Women's Aid Organisation (WAO) refers to the comment made by Dr. Mohd Don Abdullah, senior general manager (corporate services) of MAS, with regards to the retirement age for air stewardesses ("MAS: We have reason to hire foreigners", The Star, 30 June 2003, Nation 19). Dr. Mohd Don Abdullah stated that MAS had not looked into the retirement age of 40 years (and another five extra year for those in senior positions) because "most women would be expected to be married and have children by then".

We believe that Dr. Mohd Don Abdullah and the senior management of MAS would have to find a better justification than that to continue to enforce such early retirement onto their female flight attendants. This discrimination is even more pointed when compared to their male counterparts, where male flight attendants are given the option of retiring at the age of 55.

Dr. Mohd Don Abdullahs' statement is in total contradiction to our Government's efforts that encourages Malaysian women to join the workforce and have a

retirement age of 50 for women government officials and civil servants. Not only that, the statement is fraught with sexism that places the responsibility of nurturing children only on the shoulders of women. Such understanding harkens to a dinasour

era in today's day and age where everyone should recognise that it is the duty of BOTH men and women to care for their children. It is ironic that recognising the

multiple burden of women, MAS has not chosen to provide adequate support for their employees but instead chose to wash their hands off the matter by disqualifying their

abilities.


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Hiding behind the notion of freedom of contract cannot absolve this gender discriminatory attitude. The substantive inequality that MAS' principle of employment provides for should really be seriously looked into by the government to check for violation of Article 8(2) of our Federal Constitution, and of the Convention of the Elimination of All Forms of Discrimination Against Women (CEDAW) that Malaysia has ratified to in 1995.

In addition, there are millions of women in the workforce who are married and above the age of 40 with children, who have contributed and are continuing to contribute significantly to the Malaysian society. Naming a few are Datuk Rafidah Aziz, Minister for Foreign Trade; Datuk Sharizat Abdul Jalil, Minister for Women and Family Development; and Datuk Dr. Ng Yen Yen, Deputy Finance Minister. Does this mean then that according to Dr. Mohd Don Abdullah, they should retire because of their age and marital status?

Is the senior management of MAS in effect saying that women (who might be married by age 40) are not capable of handling a career and a household at the same time should they choose to? If not, what is the real reason for the age limit on retirement for air stewardesses? Is it because that by the age of 40, these air stewardesses (women) are not as attractive as they used to be? If that is the real reason, then this adds another layer of discrimination to the already sexist and age-ist statement. MAS should start to value their employees beyond perceived gender stereotypes and instead take a REAL look at these women who are vibrant, intelligent and attractive, and who posses an added advantage - experience. If not, and if such ancient principles are continued to be enforced, MAS might find itself in the precarious position of losing the business of all successful working, career women. Where would it find itself then?

Mah Xian-Zhen, InternJaclyn Kee, Communications Officer

Appendix 3

MALAYSIAN AIRLINES SYSTEM BHD v. MALAYSIAN AIRLINES SYSTEM EMPLOYEES UNION PENINSULAR MALAYSIA

INDUSTRIAL COURT, JOHORAWARD NO. 400 OF 2005 [CASE NO: 1/3-16/2004]

YUSSOF AHMAD ; EMPLOYER's PANEL: AHMAD SHARIN MOHD NOR ; EMPLOYEE's PANEL: JAMALUDIN KASIM

26 FEBRUARY 2005

AWARD(NO. 400 OF 2005)

This is a trade dispute referred to the Court by the Honourable Minister of the Human Resources under s. 26(2) of the Industrial Relations Act 1967 ('the Act'). It is in respects of the demotion of one Ungku Yacob Ungku Suleiman ('the workman'), a member of the Malaysian Airlines System Employees Union, Peninsular Malaysia ('the union') by the Malaysian Airlines System Berhad ('the company'). The union is unhappy with the decision of the company to demote the workman from the position of customer services officer, a Grade C position to the lower position of customer services agent, a Grade B position.

The facts are not in dispute. The workman had been guilty of two charges of 'blocking seats' without authority by a competent Board of Inquiry of the company. The exact charge read as follows:


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That you, as a Customer Services Officer of the Company, on 21 May 2001, at about 0843 hours, at set address 003EA2 Johor Bharu Airport Terminal Building, had blocked seat numbered 025A, 025B and 025C for flight MH2618/ 21 May 2001 JHB/BKI by using your sign in/check agent code 'HAPD' assigned to you, without authority from the Company and in contravention of the Customer Services Department notice No. 32 dated 19 May 2000 titled 'Seat Blocking for Protection Against Overbooking'. This was done in spite of a previous warning letter dated 13 April 2000 ref JBZ 011 SM1 issued to you for a similar misconduct.

You have thereby committed an act of misconduct inconsistent with the fulfilment of your terms and conditions of service with the Company by virtue of Clause 15, Para 15.10, Appendix A of the Acts of Misconduct of the MAS Disciplinary Procedure and such act of misconduct attracts major punishment.

The effect of the workman's action was that the seats that were blocked by the workman (without authority) were not available to be sold by the company. This would then allow the company's staff at the airport to release the seats at the last minute to the waiting passengers and to upgrade economy class passengers to business class. It was suspected that the staff at the airport could be paid by those passengers involved to get the seats or to be upgraded. The company has previously warned the workman before for committing the same misconduct. The punishment imposed on the workman was that he was demoted to a lower grade but he did not suffer a salary reduction. This is not, however, a demotion from an executive position to clerical position. The position of officer in the company did not mean an executive position.

At the hearing the workman admitted that he had committed the misconduct but would like to give the reasons why he did it and also he considered the punishment was harsh. In his evidence he explained that he had a good reason for doing what he did. His reason was that the company computer booking system was faulty in that it showed seats were available for sale when actually there was not. These resulted in overbooking and caused problem when some passengers who had confirmed booking cannot be accommodated as there was in fact no seats available in the plane. The court was not satisfied on the balance of probability with the workman's explanation. However, it was satisfied that what the workman did was in breach of a specific instruction not to do this. It is not for the workman to use his own discretion to go against the company's instruction.

In respect of the workman's contention that the punishment was harsh in the circumstances the company's evidence was that another employee committing similar misconduct received the same punishment. Learned counsel cited to the Court BR Ghaiye on Misconduct In Employment. The learned author wrote 'the right to control employees is a distinguished feature of the contract of employment. The right to control implies the right to ask the servants what to work (within hours of service) or what not to work, and to do it. When the employee does certain act which is contrary to his position of a subordinate, then he is said to be guilty of insubordination'. This is what the workman did. He was warned not to block seats and he did just that. It does not matter that he thinks he has good reason for doing it. In any event, the court is not satisfied the reason he gave was a good reason. The court is not satisfied by doing what did he prevented overbooking.

After hearing the evidence and the submission, the court is satisfied that it was proper for the company in the circumstances to have demoted the workman to a lower grade without loss of salary. We even consider that the punishment in the circumstances was rather lenient. The court therefore dismissed the workman's prayer for reinstatement to his former position.

* * * * * *


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Legislation referred to:Industrial Relations Act 1967, s. 26(2)

Other source(s) referred to:BR Ghaiye, Misconduct In Employment

For the company - T Thavalingam; M/s Zaid Ibrahim & Co

For the union - Mustafar Maarof (V Kanagaratnam); Malaysian Airlines System Employees Union, Peninsular Malaysia

Appendix 4

PART VIII - EMPLOYMENT OF WOMEN

34. Prohibition of night work

(1) Except in accordance with regulations made under this Act or any exemption granted under the proviso to this subsection no employer shall require any female employee to work in any industrial or agricultural undertaking between the hours of ten o'clock in the


30

evening and five o'clock in the morning nor commence work for the day without having had a period of eleven consecutive hours free from such work:

Provided that the Director General may, on application made to him in any particular case, exempt in writing any female employee or class of female employees from any restriction in this subsection, subject to any conditions he may impose.

(2) Any person --

(a) who is affected by any decision made or condition imposed under the proviso to subsection (1); and

(b) who is dissatisfied with such decision or condition,

may within thirty days of such decision or condition being communicated to him appeal in writing therefrom to the Minister.

(3) In deciding any appeal made to him under subsection (2), the Minister may make such decision or order thereon, including the alteration or removal of any condition imposed or the imposition of any further condition, as appears just and such decision or order shall be final.

35. Prohibition of underground work

No female employee shall be employed in any underground working.

36. Prohibition of employment by Minister

Notwithstanding the provisions of this Part the Minister may by order prohibit or permit the employment of female employees in such circumstances or under such conditions as may be described in such order.

Employment Act 1955 (ACT 256) & Regulations, Laws of Malaysia.

Publisher: International Law Book Services

International Labour Organization

NATLEX database


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Appendix 5

Illustration 1.


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Ishikawa Model and competency formula drawn by Mr. Helmi Mokhtar. The

Ishikawa model is a guidance that is use in MAS to identify the environment and

effect and the bones of the fish are the elements that to measure the cause and

effect. Another diagram in this picture is the formula to measure the

competency and how to measure the men power needed in a period of time. T

is the time, R is the raw that are needed, P is the package.

Appendix 6

Our group members with Mr. Abdul Rashid Sharif after the end of 3 hours

interview and discussion session. From left, Atikah, Afiq Aqwa, Mr Abdul Rashid

Sharif, Muhd Nazmi, and Nur Fatin.


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From left, Atikah, Afiq Aqwa, Mr Abdul Rashid Sharif, Mr. Helmi Mokhtar, and Nur

Fatin.

Our visit in MAS’s Boeing 747 together with a technician. This aircraft is under

C-check maintenance at Hangar 4.


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MAS own Airbus A330. This aircraft is under C-check maintenance at Hangar 4.

References

M. Sadiq Sohail, (2002), “Malaysia Airlines (MAS) - Facing Challenges in the New

Millennium”, Case Study Related to Business, Vol 1.

Steven H. Appelbaum and Brenda M. Fewster (2007), “Contemporary

Recruitment and Selection and Diversity and Equal Opportunity Practices”, the

Journal of Global Aviation Human Resource Management, Volume 21 Number 7

2002.

Women's Aid Organisation, (2000), “memorandum on gender bias practices by the malaysia airline system”, News, Women’s Aid Organisation. 2000.

Laws of Malaysia. Employment Act 1955 (Act 265) & Regulations. Part VIII,

Employment of Women. International Law Book Services. Malaysia. 2002.


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Interviews:

(Mr. Abdul Rashid Sharif – “Manager Staff Affairs and Human Resources. Engineering and Maintenance division“, personal communication, 24 March 2011)

(Mr. Muhammad Hilmi Mokhtar – “Human Resource Controller. Engineering and Maintenance division“, personal communication, 24 March 2011)

(Mr. Maulan Bardai – “Lecturer, UniKL MIAT”, personal communication, 23 March 2011, 4 April 2011)


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Malaysia Airlines System HRM Issues

Documents

Transcript of Malaysia Airlines System HRM Issues