Sunfish
25th Nov 2010, 16:21
I am writing this in the hope that it will shed some light on the state of the aviation industry and the critical issues it faces for the benefit of the slightly wider community that might read Pprune, and to try and pull together several themes under one common heading.
Francis Fukuyama, despite the odd name, is a reasonably well respected American Conservative intellectual. His book - "Trust - the economic value of trust and cooperation" made a deep impression on me. Francis makes the case that economics views the value of trust and cooperation in societies as an "externality" - something with zero economic value. Fukuyama believes that is wrong, very wrong, the value is not zero because the levels of trust and cooperation within a society affect transaction costs - the costs associated with doing a business transaction, and if there is little or no trust the transaction costs increase dramatically, often to the point where no business can be done at all.
According to Fukuyama, countries are poor because of low levels of trust and cooperation in their societies, not because of any lack of natural resources, etc. He points to countries such as Japan and Britain which became prosperous without much natural resources and attributes it to the highly developed social values of trust and cooperation in their respective societies. Today one can easily point to countries that are dripping in oil, gold, diamonds and goodness knows what else treasure, but whose people live lives of absolute misery. Look at Nigeria as an example. People can achieve miracles if they work together, but they cannot work together without trusting each other. Greed is not good. It is poisonous to trust.
So what relevance is this to Aviation? Simple. The same argument regarding the value of trust and cooperation applies within industries and within companies, and most especially to aviation because, by its nature and our natural fear of falling, flying is about the highest trust activity most of us will encounter in our lives. We trust that whoever designed and built the aircraft knew what they were doing and were diligent to a fault. We trust that whoever maintained it and offered it to us as a conveyance did likewise. We trust the pilots are trained, intelligent and sober individuals, selected for aptitude, rested and fit for the journey ahead. We trust the air traffic controllers. We trust that a Government regulator overseas the industry for the avoidance of error and the promotion of safety. ...So we climb into an aluminium tube and put our life in the hands of all those people.
Still don't get it? The above is just the trust part. The transaction costs occur because if I can't be satisfied that each organisation is trustworthy and diligent, then I, as passenger or consumer, must take steps, and incur costs, to ensure that either they are trustable, or I go to another airline, or I don't fly at all. That is where the value of a reputation Like QF's is so important.
But the costs of not having sufficient trust and cooperation really start mounting up when I get inside the organisation because protecting your self from untrustworthy individuals and organisations takes time an effort, and money. Suppose the industry regulator is capricious, given to personal vendettas, unfair and unjust and armed with draconian powers, how much of your work time is spent not only on doing a job correctly, but ensuring the associated paperwork is proof against assault by the most assiduous nit pickers?
Suppose people in your workplace are promoted not for ability, but for their willingness to cut corners and lick backsides? Suppose people are fired for telling the truth? Will this have an effect on job performance? Of course it does! Ultimately it means that you will retain the people you really shouldn't want and lose the people you should want. Of course no manager would want to be in charge of an organisation that was operating like this would they? Unfortunately the answer is yes. There is a class of person for whom the exercise of dictatorial powers and the infliction of pain and suffering on others is highly enjoyable especially when they get bonuses for doing it, but this post is not about narcissists in management. We covered what they do, why they do it and how they infest some modern companies elsewhere.
So where is the industry as a whole going? The answer is backwards, certainly in Australia and probably internationally if recent revelations about the Indian subcontinent, the behaviour of the likes of Ryanair are anything to go by. Read the Colgan Buffalo crash cockpit transcript and weep. Two poor schmucks trying to make a dollar, and flying wasn't even their first career choice! Look at the current situation of Sunstate engineers - being docked four hours pay for being a little slow changing a tire! Look at the procession of cases sent to the AAT regarding CASA! Look at the air traffic control incident involving Emirates and Qantas and the perennial discussions about the difficulty of recruiting and training ATC staff! Look at criticism of Jetstars pilot cadet scheme.
Ah! You say, "but none of these incidents are related!" Of course they effing well are! They are all related to the practice of current management in many organisations of trying to get blood out of a stone and ignoring effects on corporate culture, let alone the feelings of the individual employees concerned, let alone the long term negative effects of their bastardry on the organisation. Airlines are fertile grounds for bastardry because they consist of the differing tribes of pilots engineers, cabin crew as well as office staff. There are almost infinite gradations in the various pecking orders caused by seniority, aircraft type, qualifications and suchlike, all held together by Twenty Four hour duty rosters that can be played like a violin by management intent on gratifying itself by causing misery. This is trust reducing behaviour and it is going to bite you.
Continue you current management behaviour Qantas, and you will go the way of Ansett. The RR/A380 thing was a bit of a surprise wasn't it? Let the regulator and ATC continue on their merry way as well and wait for the eventual Coroners Inquiry and Royal Commission, it's coming.
Francis Fukuyama, despite the odd name, is a reasonably well respected American Conservative intellectual. His book - "Trust - the economic value of trust and cooperation" made a deep impression on me. Francis makes the case that economics views the value of trust and cooperation in societies as an "externality" - something with zero economic value. Fukuyama believes that is wrong, very wrong, the value is not zero because the levels of trust and cooperation within a society affect transaction costs - the costs associated with doing a business transaction, and if there is little or no trust the transaction costs increase dramatically, often to the point where no business can be done at all.
According to Fukuyama, countries are poor because of low levels of trust and cooperation in their societies, not because of any lack of natural resources, etc. He points to countries such as Japan and Britain which became prosperous without much natural resources and attributes it to the highly developed social values of trust and cooperation in their respective societies. Today one can easily point to countries that are dripping in oil, gold, diamonds and goodness knows what else treasure, but whose people live lives of absolute misery. Look at Nigeria as an example. People can achieve miracles if they work together, but they cannot work together without trusting each other. Greed is not good. It is poisonous to trust.
So what relevance is this to Aviation? Simple. The same argument regarding the value of trust and cooperation applies within industries and within companies, and most especially to aviation because, by its nature and our natural fear of falling, flying is about the highest trust activity most of us will encounter in our lives. We trust that whoever designed and built the aircraft knew what they were doing and were diligent to a fault. We trust that whoever maintained it and offered it to us as a conveyance did likewise. We trust the pilots are trained, intelligent and sober individuals, selected for aptitude, rested and fit for the journey ahead. We trust the air traffic controllers. We trust that a Government regulator overseas the industry for the avoidance of error and the promotion of safety. ...So we climb into an aluminium tube and put our life in the hands of all those people.
Still don't get it? The above is just the trust part. The transaction costs occur because if I can't be satisfied that each organisation is trustworthy and diligent, then I, as passenger or consumer, must take steps, and incur costs, to ensure that either they are trustable, or I go to another airline, or I don't fly at all. That is where the value of a reputation Like QF's is so important.
But the costs of not having sufficient trust and cooperation really start mounting up when I get inside the organisation because protecting your self from untrustworthy individuals and organisations takes time an effort, and money. Suppose the industry regulator is capricious, given to personal vendettas, unfair and unjust and armed with draconian powers, how much of your work time is spent not only on doing a job correctly, but ensuring the associated paperwork is proof against assault by the most assiduous nit pickers?
Suppose people in your workplace are promoted not for ability, but for their willingness to cut corners and lick backsides? Suppose people are fired for telling the truth? Will this have an effect on job performance? Of course it does! Ultimately it means that you will retain the people you really shouldn't want and lose the people you should want. Of course no manager would want to be in charge of an organisation that was operating like this would they? Unfortunately the answer is yes. There is a class of person for whom the exercise of dictatorial powers and the infliction of pain and suffering on others is highly enjoyable especially when they get bonuses for doing it, but this post is not about narcissists in management. We covered what they do, why they do it and how they infest some modern companies elsewhere.
So where is the industry as a whole going? The answer is backwards, certainly in Australia and probably internationally if recent revelations about the Indian subcontinent, the behaviour of the likes of Ryanair are anything to go by. Read the Colgan Buffalo crash cockpit transcript and weep. Two poor schmucks trying to make a dollar, and flying wasn't even their first career choice! Look at the current situation of Sunstate engineers - being docked four hours pay for being a little slow changing a tire! Look at the procession of cases sent to the AAT regarding CASA! Look at the air traffic control incident involving Emirates and Qantas and the perennial discussions about the difficulty of recruiting and training ATC staff! Look at criticism of Jetstars pilot cadet scheme.
Ah! You say, "but none of these incidents are related!" Of course they effing well are! They are all related to the practice of current management in many organisations of trying to get blood out of a stone and ignoring effects on corporate culture, let alone the feelings of the individual employees concerned, let alone the long term negative effects of their bastardry on the organisation. Airlines are fertile grounds for bastardry because they consist of the differing tribes of pilots engineers, cabin crew as well as office staff. There are almost infinite gradations in the various pecking orders caused by seniority, aircraft type, qualifications and suchlike, all held together by Twenty Four hour duty rosters that can be played like a violin by management intent on gratifying itself by causing misery. This is trust reducing behaviour and it is going to bite you.
Continue you current management behaviour Qantas, and you will go the way of Ansett. The RR/A380 thing was a bit of a surprise wasn't it? Let the regulator and ATC continue on their merry way as well and wait for the eventual Coroners Inquiry and Royal Commission, it's coming.