Straits Times, 24.03.04
Lessons to be learnt from SIA falling-out
By Rebecca Lee
THE public airing of the dispute between Singapore Airlines and its pilots may have blown over, with all sides having had their say.
However, one nagging thought remains: Why did the Government have to step in and go into the internal affairs of a commercial entity in the manner it did?
To be sure, the Government made its reasons for intervening clear. As the majority shareholder of SIA with a 57 per cent stake in the national carrier, it had the right to intervene.
Moreover, what was at stake was Singapore's position as an air hub, whose contribution to the country's economy is not to be snubbed. Add to that Senior Minister Lee Kuan Yew's personal involvement in helping to build up Changi Airport and SIA.
The fear that the worst might happen - unions taking a hardline approach and initiating industrial action - meant the Government had to step in to prevent matters from spiralling out of control.
What if it hadn't intervened?
Perhaps the matter would have been resolved amicably behind closed doors.
Or perhaps industrial relations in SIA would have degenerated into strife and chaos.
However, this is now a moot point. We will never know.
In the end, the intervention, and indeed the entire episode, can be boiled down to a matter of political judgment.
Yet, even if one agrees that the Government was right to nip the problem in the bud, a troubling issue remains: Why could SIA not be trusted to resolve the problem internally?
On this point, perhaps the pilots' union and the Government were not so far apart after all: Neither had 100 per cent faith in SIA's management to resolve its human resource issues.
The Government itself has had to bear part of the cost, because it has had to expend political capital on the problem and leave the impression it was high-handed.
But now, as the episode draws to a close - at least publicly as all sides have agreed to bring it back behind closed doors - what are the lessons to be learnt from SIA's experience?
During the debacle, SIA union leaders spoke bitterly of a change in the culture of their workplace over the last three years or so.
They said the work environment had morphed from being a family-spirited one to a place where a 'culture of fear' reigned, where employees were often threatened with the sack.
Perhaps these complaints ought to be set against the backdrop of the wrenching changes the aviation industry has been through these last few years.
The Sept 11, 2001 terrorist attacks, followed by the war in Iraq and the Sars outbreak last year battered an industry that was already in the midst of a shakeout.
The growing threat from budget airlines, coupled with the external crises, jolted major airlines the world over to go into cost-cutting mode - laying off thousands - to ensure their long-term survival.
Arguably, SIA's management skilfully navigated the airline through the crises and delivered results - on the profit front.
The airline made $631.7 million for the year ended March 31, 2002, at a time when the global aviation industry, littered with the carcasses of some long-established airlines, raked up total losses of US$12 billion (S$20.4 billion) and shed more than 200,000 jobs.
However, one department - the company's relations with its employees - was clearly scarred.
Employees who had to suffer wage cuts felt the company, hitherto highly profitable, had 'cried wolf', as SIA chairman Koh Boon Hwee put it in an inhouse newsletter early last year.
The workers felt they were bearing the brunt of cost-cutting measures in order to enrich shareholders.
Clearly too, a sense of having been shortchanged and a mistrust of management seeped into the same company culture that had made them fearful of losing their jobs.
It didn't help matters that Sars hit when the airline's business looked to be on the mend. This time, not only were wages cut again, but also close to 600 employees were laid off.
The crises served up a reality check that the fat and happy payout days - when SIA employees could get as much as six months' annual bonuses - were over.
The work culture, often described simply as 'the way we do things around here', was also said to have changed.
When SIA laid off employees for the first time in its history, it broke an unspoken compact it had with employees - the sense that it was a family which would go through thick and thin together.
This shift in management culture unsettled workers, hit their morale and ultimately could affect their performance.
SIA's management may be skilled at hedging against fuel price or foreign exchange fluctuations and managing the airline's capacity against passenger demand. But it may have overlooked the manner in which it executed its decisions and the impact it would have on employees.
The business of rebuilding a conducive work culture is complex, made worse by the fact that it is intangible.
But ultimately, for a company whose business is in providing service, where the morale of employees is paramount, this is one area it must fix - fast.
Other similarly large companies trying to remake themselves, beware. When management shifts gears, it must take care to look behind to see if the rest of the team understands where the new destination is.