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Human resources management

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Taylor's University, Selangor

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A, Chin Tuck Piew, 2018

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MASTER IN MANAGEMENT

HRM70204 - HUMAN RESOURCE MANAGEMENT


COMPARATIVE ANALYSIS OF GARUDA INDONESIA AND AIR ASIA’S HUMAN RESOURCE MANAGEMENT


Lecturer Name: Mr. Chin Tuck Piew

Submission date: 15th November 2017


Prepared by:

Ahmad


Introduction

Globalization brings service providers in Indonesia in a complex and rapidly changing competition environment, thus, it requires accurate understanding and appropriate methods concerning the goals and important targets of the company in order to win the competition [ CITATION Gar15 \l 1057 ]. To ensure the movement of service companies remains focused towards the company's goals, the company develops the concept of quality service with good human resource practices including performance measurement, global talent development, work safety and comfort, certainty to human resource system development [ CITATION Gar15 \l 1057 ].

This effort is carried out to improve the service company employees' performance that is in directly contact with consumers.

The flight services market in Indonesia is continue to increase in line with the needs of airlines, airport infrastructure and the number of routes that increase every year, in addition, the passenger growth about 7% in a year [ CITATION Cen18 \l 1057 ]. Garuda Indonesia and Lion Air Group are becoming the market leaders of aviation service companies in Indonesia with different market segmentations.

Garuda Indonesia concerning with the executive and business aviation market while Lion Air is focusing on the low cost carriers market segment. Garuda Indonesia Group's market share in 2017 is about 33%, while Lion Air Group controls the low cost carrier market with a 55% of market share [ CITATION Cen18 \l 1057 ]. The high market share of Garuda Indonesia is due to the good quality of service and fleet so that high prices can remains be competitive in the market, while Lion Air Group's market share is obtained from the cheap ticket prices.

Nazwirman (2015) research explains that the only reason consumers buy Lion Air Group services is the variable price of cheap tickets, while the quality of Lion Air Group services is not including in one of the consumer interests variable.

Garuda Indonesia is airline with the best talent and internal management in Indonesia; Garuda Indonesia's customer service is the best customer service according to Skytrax, an airline quality rating agency [ CITATION Gar181 \l 1057 ]. Moreover, Lion Air Group's service quality has a number of problems, ranging from delays that continue to occur, some cases of incompetent employees until the reprimand from the national aviation authority.

The Indonesian Ministry of Transportation in 2017 provided an ultimatum to Lion Air Group management to improve their Human Resources (HR) Management and operational management of the company. This is related to the frequent flight delays and gas leaking cases and the other of unfavorable ethics of Lion Air Group employees [ CITATION Tri171 \l 1057 ].

According to Gary (2015), employee performance is a hot topic that is highly emphasized in the context of the service industry, because it is a job that requires direct contact between employees and the customers, where within the scope of employee performance can easily influence the purchase intentions, brand image, customer satisfaction and loyalty. Therefore, it is very important to understand that the determinants and their effects on job performance (job performance) can affect the formulation of the best way to increase employee productivity regarding the demands of the service industry [ CITATION Gar15 \l 1057 ].

Garuda Indonesia is an airline that implements global talent management that suits the needs of companies and consumers. In addition, the company also developed competencies of the employees who serve as the SkyTransfer airport, SkyPriority, and lounge officer [ CITATION Gar181 \l 1057 ]. Garuda Indonesia succeeds to maintain its human capital both on ground and flight services, acco.....[read full text]

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Meanwhile, in line with the business strategy, the Company strives to improve the Human Capital Manual (HCM) which regulates the HR policies, organization, recruitment and selection, mutations between units and between companies in the group, performance appraisal systems, career development and compensation in Human Resources Management System in order to set up competitive, innovative and high integrity workers who concerning to the goals of the company's business achievement [ CITATION Gar183 \l 1057 ].

In addition to the programs mentioned above, as an effort to create skilled and professional workers who are set up to occupy certain positions in the future, the Company opens a special line recruitment program, namely the Management Trainee Programs. This program aims to prepare potential workers who are expected to be able to create changes in work patterns, work atmosphere and high work commitment [ CITATION Gar181 \l 1057 ].

Through this Management Trainee Program, the company also ensures the availability of competent and qualified candidate’s succession.

In Garuda Indonesia Group's work and business ethics document, the company guarantees the opportunity for all employees to reach a certain level in the company according to their performance and potential. The company rotates employees from one position to the other positions in order to give opportunity to their employees to increase their potential [ CITATION Gar181 \l 1057 ].

The process of determining employees for mutations and promotions is done through the Human Resources Committee mechanism. The committee is formed in stages according to the level of position in the organization. The company established 4 levels of the Ministry of Energy and Mineral Resources whose governance implementation is listed in the human capital manual [ CITATION Gar181 \l 1057 ].

For the pilot profession, the process of determining promotions and demos is carried out through the Cockpit Crew Assessment Agency. This process used by the agency through a bidding system. The governance of the Cockpit Crew Assessment Agency is contained in the flight operation unit procedure book and also the Pilot Special Settings book. Whereas for the promotion of cabin crew profession also uses the specialization system that is publicly announced [ CITATION Gar181 \l 1057 ].

The governance of this specialization system is listed in the cabin service unit procedure book and Cabin Crew Special Arrangement book.

Garuda Indonesia ensures the fulfilment of the security and comfort of employees' work by building facilities and implementing a security system that refers to Labour regulations, Aerospace Laws, Employment Guarantee Laws and Capital Market Laws [ CITATION Wil172 \l 1057 ]. Garuda Indonesia assesses and evaluates the effectiveness of the work security system on an ongoing basis in accordance with studies in the business ethics document and work ethics.

Garuda Indonesia upholds the principle of Equal Employment Opportunity, where Garuda Indonesia provides equal and open opportunities to all Garuda Indonesia employees to be able to develop careers in an effort to improve their competencies, in accordance with Garuda Indonesia Joint Working Rules and applicable regulations in the Human Capital Quality Manual or other company rules, while paying attention to the education, experience and competencies of the employees [ CITATION Wil172 \l 1057 ].

The main problem of Lion Air Group's human resource management is the absence of talent pool; including the poor performance measurement and human resource management that does not pay attention to employee welfare. In some cases, flight delays occur due to the unready cabin crew and Lion Air Group employees at the airport [ CITATION Yas15 \l 1057 ]. Yasin (2015) research explains that Lion Air Group has the least airport crew compa.....

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The documents forgery that was realized by management after some years of working was part of the chaotic human resource management in Lion Air Group. Moreover, Sadu, Haglund, & Priyanto (2015) research on employees of Lion Air Tower Jakarta who received customer service training found that the employee work quality was low, discipline was also low, the material given to the training participants was considered difficult to understand which made the employee skills to provide solutions in handling consumer complaints is lack.

Regarding the collateral in association aspects and the rights of workers to take part in financial, business, socio-cultural, political and other legitimate activities not recognized by the management of Lion Air Group. Because in 2016, Lion Air Group dismissed 19 senior pilots who were members of a trade union when the union organization demanded an improvement in the welfare and internal management of the Lion Air Group organization.

A high-level arbitrarily managerial attitude makes the employee guarantees and rights are not fulfilled. The potential for internal conflict is not managed properly so it is creating an unconducive working environment with low work motivation. As a result, Lion Air Group's service quality has declined, as seen in the past 5 years Lion Air Group has not received an award for service quality and more appreciation for marketing as low cost carriers.

Lion Air Group also gets an additional loss of 27% in 2017 with a non-growing market share [ CITATION Cen18 \l 1057 ]. Currently, Lion Air is getting negative sentiment from the customers; the growth of low cost carriers industry with the entry of Garuda Indonesia's Citilink erodes the growth of Lion Air Group's market share. The low quality of services also makes Lion Air Group get a warning from the Ministry of Transportation authorities in Indonesia and unable it to open new routes abroad.

Recommendation

Employees are the most important asset of aviation Service Company, service quality is at stake in the management of human resource management. Lion Air Group needs to learn from Garuda Indonesia Group in managing their human resource management:

  1. Managing Human Resource with education and labour training, to end the poor service quality cases caused by low discipline, competence and ability of employees to carry out services, the Lion Air Group needs to build labour education and training system with global standards. This development can be started by conducting business breakthroughs such as alliances with other airlines, applying the rating agencies standards or like Garuda Indonesia in collaboration with consultants for the development of aeronautical training in Skytrax.

    The absence of consultant partnerships in Lion Air Group's human resource management makes internal auditors not work optimally. Moreover, the IPO plan carried out by Lion Air Group in the next few years will requires companies to obtain human resource management certification from consulting agencies and standardization. Lion Air Group's recruitment process using the management trainee method needs to be continuously developed to .....

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Performance measurement needs to create a reporting system for possible violations of the Company's Code of Business Ethics and Work Ethics that are suitable to protect Lion Air Group's business objectives. Performance Measurement must also be developed to ensure that periodic evaluations are carried out on the implementation of the Business Ethics and Company Work Ethics by the Internal Audit Work Unit to assess the effectiveness of implementation and how to improve existing weaknesses.

In addition to internal performance measurements. Achievement of work performance can be used to improve employee welfare, because if the employee achieves a fortunate one not only the employee himself but the organization and consumers are satisfied. Furthermore, the organizational goals will be achieved according to planning. It is also necessary to differentiate the salary and remuneration for pilots, cabin crews, airport crews and technical workers where there is a pay component variable in the form of production allowance (PA) consisting of flight allowances (FA) and travel allowances (TA) and other variables that depend on fly hours, service productivity and discipline.

  • Maintenance of labour, on the recommendation of this variable covers communication between the actors such as; co-workers, superiors, subordinates, and consumers, capital owners, and the government. Work communication is used to ensure that job security and workers' rights can be fulfilled. Especially the right to participate in business organize; make demands and the right to get proper welfare.

  • Lion Air Group is also expected to be able to control work conflicts related to state law, regulations, ethics and consumer conflicts. The existence of a bipartite or tripartite organization can be used as a meeting place between employers, workers, and can also involve the government as a mediator between employers and workers in accordance with labour regulations.

    Legal approaches and dismissal of senior workers are part of the failure of human resource management.

  • Socialization of the Application of Business Ethics and Work Ethics; Garuda Indonesia believes that socialization is an important step in the implementation of Garuda Indonesia's Business Ethics and Work Ethics therefore the socialization produces reliable employees [ CITATION Gar182 \l 1057 ]. Lion Air needs to develop a Human Capital Management Unit together with the Corporate Secretary Unit to be responsible for coordinating the implementation of an effective and comprehensive socialization of the application of business ethics and employee work ethics by taking into account the following: Socializing Lion Air Group Business and Work Ethics in the Employee orientation program in line with the programs organized by Lion Air Group management and periodic refresher for all employees conducting briefings, coaching and re-socializing, or indirectly, by distributing Lion Air's internal flyers, e-mails and bulletins.

    .....

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    Ariyanti, A. (2018). Pengaruh Etika Kerja, Kepemimpinan Dan Profesionalisme Terhadap Kinerja Karyawan PT Lion Air. Journal M-Progress UNSURYA Vol 8 (2).

    Centre for Aviation. (2018, April 30). Indonesia domestic airline market: rapid growth, rivalry intensifies. September 13, 2018, from

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    Garuda Indonesia. (2018). Etika Bisnis & Etika Kerja Garuda Indonesia. Jakarta: Garuda Indonesia.

    Gary, D. (2015). Human Resource Management. London: Pearson Highger Education.

    Gunadi, A., & Martono. (2016). Current Indonesian Air Transportation. Journal of Applied Chemistry Vol 9 (1), 12-31.

    Lapian, J. (2014). Analysis of Garuda Indonesia Flight Service Performance through the Service Marketing Mix Framework. Journal of Business and Management Vol 16 (9).

    Lion Air Group. (2018). Annual Report 2017. Jakarta: Lion Air Group.

    Nazwirman. (2015). The Influence of Perceived Service Performance and Price Fairness toward Repurchase through Customer Satisfaction and Word of Mouth (An Empirical Study of Lion Air Company). International Journal of Advanced Research Vol 3 (10), 1846-1854.

    News Detik. (2018, May 22). Lion Air Laporkan 9 Pilot dan 1 Karyawan ke Bareskrim. September 13, 2018, from news.detik.com:

    Renwarin, J. (2017). The Influence Of Aviation Industrial Environment And Market Orientation On Competitive Strategy And Its Effects On Aviation Business Performance (Study On Aviation Industry In Indonesia). Journal of Internet Banking and Commerce, Vol 22 (3).

    Ropi, F., Fahmi, I., & Suprayitno. (2017). Factors Influence Satisfaction and Loyalty towards Corporate Partner Program Garuda Indonesia. International Journal of Scientific and Research Publications Vol 7 (2).

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