Strategic Human Resource Management at Air New Zealand

This document discusses the strategic human resource management approach used at Air New Zealand. It explains how HR functions are divided into four main compartments and how employees are involved in the change process. It also explores how HR strategies are aligned with the organizational goals and how they lead to improved employee performance, communication, motivation, competitive advantage, and conflict resolution.

Running head: Human Resource Management 1
Strategic Human Resource Management
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Name of Institution
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Strategic approach to human resource management at Air New Zealand
Question 1 a
Air New Zealand is a leading airlines company in New Zealand which has grown in leaps and
bounds over years due to the strategic human resource management approaches used at the
organization (Abell, 2013). Based on Ulrich’s model, HR functions are divided into four main
compartments which include: strategic partner, change agent, administrative expert and
employee champion.
Change agent
This perspective by Ulrich brings out one importance of human resource management as an
agent for change. Through the implementation of the right human resource management
strategies, it is possible to initiate a process for change at an organization. The employees in the
organization form an important function of the change process hence the need to adequately
involve them. This process includes preparing the workers for the change process in addition to
deriving their opinions and ideas with respect to the suggested change. A successful transition as
a result of a new innovation in the organization largely depends on the extent to which the
managers link with the employees in the various stages of the process.
At Air New Zealand, the employees are often involved in case a change is to be implemented.
This strategy has always been used by the managers in a bid to ensure that the employees are
critically involved in the daily affairs of the organization. For instance, in 2001 just before Air
New Zealand’s merger with Ansett Australia, the human resource fraternity was adequately
involved in the transition and their opinions factored in. Despite the fact that this process was
met with resistance from some quarters, the organization mainly banked on the contribution and

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support from the employees to see the successful implementation of the change (Armstrong &
Baron, 2012). In a nut shell, the organization’s HRM strategy involves including the employees
in critical decision making processes especially those that involve change in order to incorporate
them as core agents in the process of change.
Employee champion
Air New Zealand has put in place the right strategies to ensure that the rights and privileges
meant for employees are upheld at any given time (Berg & Huebner, 2011). The organization
sees the workers as valuable assets within the organization hence constantly coming up with
measures to ensure that they stay not only motivated but also competent in their areas of
responsibility. Between 2010 and 2015, the organization has invested on employee
empowerment through training and exposure. The strategy in this case involves taking the
employees through sessions aimed at sharpening their skills and hence ensuring quality service
delivery. The organization carries out annual and bi annual seminars in which employees are
taken through interactive, informative and educative sessions all aimed at improving competence
and awareness. Furthermore, Air New Zealand has a stable reward scheme. In 2017 during one
of its annual meetings, the organization recognized and awarded the best performers in various
departments. These strategies are aimed at ensuring the well being of the employees, improving
their commitment to the organizational goals and eventually improving the overall output at the
organization.

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Q1b
Aspects of the place of HRM based on the organizational value chain
Technological development
HRM plays a pivotal role when it comes to the incorporation and implementation of technology
within an organization. The human resource department works hand in hand with the
management to identify technological ideas and innovations, mostly from the employees. The
feasibility of these technologies is then identified before the implementation. The management at
Air New Zealand is keen on innovation and organizational development (Armstrong & Long,
2014). As such, the organization, as a HRM strategy has set aside moments for interaction with
employees where they present innovative ideas. The most feasible projects are taken up and
implemented by the organization. For instance through technology, the organization currently
boasts of an interactive website which does not only assist in online booking but also offers an
appropriate marketing platform (Bolman & Deal, 2017).
Operations
Human resource management strategies are always useful in enhancing the effectiveness of
operations within an organization. Operations, as outlined by Porter, involve the activities which
change the inputs into outputs which are eventually given to the consumers. At Air New
Zealand, one of the human resource strategies involves careful scheduling of activities as well as
effective division and description of roles. Furthermore, the employees are empowered with the
necessary skills through training in order to ensure minimal errors are registered in the process of
executing roles (Baird & Meshoulam, 2010). HRM therefore ensures the smooth flow of these
operations in order to enhance positive customer experiences.

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Marketing and sales
Successful human resource management strategies do not only enhance the output within the
organization but equally supports the stability of the brand. The employees at Air New Zealand
are all considered as brand ambassadors. This tag ought to be maintained in every area of
responsibility. The workers therefore play a part when it comes to marketing the airlines through
the provision of high quality services to the consumers (Barney, 2011). The treatment of the
customers by the crew for instance, determines whether they would come for the services again.
The organization has effectively involved the employees in enhancing marketing and sales which
explains an increase in number of passengers by 5% between 2015 and 2016. The organization’s
market dominance especially in the local arena has gradually improved due to the successful
implementation of human resource management strategies which enhance marketing and sales.

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Question 2
Models of Strategic Human Resource management
1. Business Partner model
The dynamic nature of the corporate world indicates that the roles of HR are changing every
time. Most of the traditional approaches involved manual hands on approach; however, the rise
in technology has given room for automated HR roles hence making it a crucial element in
management. Most companies therefore see HR as a key business partner hence the need for
alignment of HR goals and that of the organization. The core strategy at Air New Zealand is to
enhance customer satisfaction through the provision of high quality services, use of sleek and
safe flights and competent personnel (Ashforth & Kreiner, 2009). Based on this model, the
Airlines may need to consider aligning its HR strategies to the organizational goal. The aim of
the organization is to ensure a stable base of clients and an improvement in the number of
passengers every year. The HR strategy which can be used to achieve this include training of
workers to improve competency and skills, compensation which enhances motivation as well as
hiring of qualified personnel to work as the cabin crew. The HRM outcomes lead to improved
performance within the organization which increases the market grip (Boxall, 2009). This would
culminate in better financial performance since the increase in number of passenger annually
leads to improved return on investment.
Advantages
One advantage of this model is that it gives the organization a competitive advantage over the
others. The model enhances internal performance which generally improves the quality of output

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hence culminating in positive consumer experiences. This improves sales and hence returns on
investment.
Secondly, the model enhances communication within the organization since aligning the
strategies involves a network of interactions between various individuals (Christensen, Hall,
Dillon & Duncan, 2016). Interactions enhance the growth of positive relations which in turn
improves communication.
Thirdly, the model is essential in helping the organization to understand the needs of the
consumers. The strategies can therefore be specific and objectively aimed at addressing the needs
of the consumers. Through company customer relations, it is possible to identify the loopholes
which can then be filled to enhance better outcomes.
Disadvantages
Some of the components of the model such as hiring and training my involve high cost
implications on the organization. The organization may at times strain while implementing these
strategies especially when they require many resources
The components of the model also require a lot of time to implement. This becomes a setback
especially when speedy outcomes are needed (Boxall & Purcell, 2013). The model can only be
effective in situations where problems are solved through the implementation of long term
projects.

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2. Performance Culture Model
The model starts with the stakeholders’ interest as a major element. The customers, employees
and managers are seen as important stakeholders who collectively enhance a high performance
culture once the right strategies are put in place. Air New Zealand while using this model needs
to identify the key stakeholders and their roles in enhancing a culture of good performance at the
organization. Policies are then put in place in a bid to adequately cater for the interests of the
stakeholders (Daniels, Radebaugh, Sullivan, 2014). For instance, the customers are among the
key stakeholders at the organization. To cater for their varied needs, the organization may need
to introduce varied pricing policies and introduction of different classes as well as staff training.
This would address the interest of the customers which are related to economic abilities.
While crafting the policies, the organization also needs to consider the situational factors like
unions and workforce characteristics (Edelman & Singer, 2015). This ensures that the policies in
step one do not compromise the expected human resource management standards but lead to
improvement in performance. The situational factors are important points to consider as they
influence policies on hiring and recruitment. The right HRM policies enhance positive outcomes
including employee commitment and overall positive customer experiences (Boxall, Purcell &
Wright, 2009). This also leads to long term consequences such as organizational continuity and
market performance.
Advantages
This model also improves motivation within the organization which in turn improves the overall
output and better return on investment

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The model leads to innovation and incorporation of policies which are promising. The
organization is therefore able to monitor and identify the most effective strategies before making
the necessary adjustments to enhance outcome (Guarreillo, 2017)
The other advantage of the model is the fact that it improves organizational cohesion especially
between the various stakeholders within the organization. This leads to an easy flow in the
various processes hence better outputs.
Disadvantages
The model may equally involve high cost implications. It may be hard to implement such a
model when the organization is financially strained.
The model comprises complicated elements hence the need for training and exposure of
stakeholders. This makes is quite demanding as an investment.

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Question 3
Benefits of designing and implementing a HRM Strategy at Air New Zealand
Improved employee performance
One of the core organizational strategies at Air New Zealand is to enhance improved internal
performance. This is a milestone that may be hard to achieve without the implementation of
strategic human resource approaches. The organization has heavily invested in employee
empowerment through training and exposure. This has led to a drastic improvement in the level
of commitment especially to the organizational goals (Camps & Luna-Arocas, 2009). It can
therefore be established that the implementation of HRM strategies leads to improved employee
performance which culminates in overall organizational performance.
Improved communication
The process of designing and implementing human resource management strategies involves a
number of interactions and development of appropriate networks. These interactions may not be
effective unless the right communication culture is established at the organization. It is a fact
worth noting human resource strategies have led to improved communication not only between
the management and employees but also among the workers as well. This has led to an effective
flow of information which in turn improves processes within the organization
Motivation
HRM strategies are often aimed at obtaining the best from the employees. Despite the fact that
the strategies, are meant to enhance the achievement of organizational goals, it would be
important to note that the strategies are always targeted at enhancing the well being of

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employees. For instance, the training, staff empowerment and compensation policies at Air New
Zealand has done much in improving motivation levels within the organization. The employees
therefore become more committed to the course which in turn enhances the organization’s
financial performance.
Competitive Advantage
The human resource fraternity is a crucial function of any organization. The continuity and
performance of an organization despite the many challenges in the corporate arena largely
depend on the HRM strategies put in place. The implementation of HRM strategies at Air New
Zealand has gone a long way in giving the organization a competitive edge. With rise in fuel
costs and increase in the number of rival companies, the organization has been able to maintain a
firm grip on a good number of its clients through the provision of quality services (Chandler,
2012). The employees have played a crucial role in achieving this feat which has mainly
emanated from strategic HRM approaches.
Conflict resolution
Effective HRM strategies lead to a general cohesion and unity between different parties within
the organization. The free flow of information and effective communication equally enhance
healthy interactions. This implies that effective HRM strategies enhance an environment in
which individuals are free to interact with each other. This has become beneficial to Air New
Zealand especially during conflict resolutions. The generally good atmosphere at the
organization has reduced the number of conflicts and even when they occur, amicable
approaches to solve them have been easily used (Henisz & Zelner, 2010). This brings out the

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direct relationship between proper human resource management strategies and conflict resolution
within an organization.
Question 4
Evaluating the alignment of Air New Zealand’s corporate strategy with the HR strategies
Vertical integration
Vertical integration sees an organization take control of more than one level of the supply chain.
This allows the organization to easily monitor the effectiveness of aligning the HR strategies to
the organization’s corporate strategy.
One aspect of vertical integration is the fact that the company owns the supply chain. Each
department deals with a different goal or objective. Each of the sub goals are aimed at the
achievement of the common goal. At the organization, the Air New Zealand Engineering
department which is a subsidiary ensures the aircraft are in good condition. The finance
department oversees the careful distribution of resources to ensure procedures and processes
easily flow. Each of these departments are attached to the HR strategy which aims at employee
empowerment and motivation. It therefore implies that each of the departments can work
effectively only when the HR strategy is efficient (Keddy, 2017).
Vertical integration also entails the internal link between the various stages within an
organization. At Air New Zealand, the management is keen on enhancing the right connection
between the human resource department and other aspects of the organization such as marketing,
production and sales. Each of these goals is aimed at enhancing the overall outcome at the
organization. Information flows from the top management and effectively flows to each of the

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departments (Delery & Doty, 2016). The organizational culture also revolves round the corporate
strategy. The employees as well as the managers are therefore able to monitor and establish the
extent to which the HR strategies remain aligned to the core goals.
The third aspect of vertical integration involves forward integration in which the organization
controls some of its distribution centers. Air New Zealand has remained keen on expanding the
market base through the establishment of smaller airlines in various locations not only in the
country but world as a whole. To achieve this, the organization implements the HR strategy of
hiring and training of more employees to ensure the procedures in each of the subsidiaries move
in accordance with the corporate strategy (Kissane, 2017). This reveals a proper alignment
between the organization’s strategy and the HR strategy.
Horizontal integration
One common aspect of horizontal integration is the formation of mergers with a company or
organization which is at the same level of production. The main objective in this case is to ensure
improved performance in addition to better interactions between employees. The merger between
Air New Zealand and Ansett Australia is an example of horizontal integration which went along
way in improving the market strength of the organization. Through the merger, the employees
are able to interact and learn from each other hence achieving the HR strategy aimed at employee
empowerment, training and exposure.
The other vital component of horizontal integration is the fact that the strategy enhances
reduction in costs of production and operations. One of the main goals at the organization is to
ensure maximum profits and good return on investment at relatively minimal costs. Horizontal
integration allows from reduction of costs since the costs are shared between the parties taking

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part in the merger. With reduction in costs, the organization is able to distribute resources to
other investments such as staff training and empowerment (Koschmann, 2012). This reveals the
connection between the HR strategy and the organization’s’ corporate strategy with references to
the aspect of horizontal intergration.
Question 5
Cost reduction
The HR strategy at Air New Zealand has and will continue to have more positive impacts on the
overall performance of the organization. The strategy aims at empowering the employees in
order to equip them with the necessary skills and competencies for efficient execution of
responsibilities. This does a lot in reducing errors within the organization. When the quality of
services is enhanced due to the competence of the workers, the organization ends up spending
less in making up for the errors. At the same time, the HR strategy involving horizontal
integration also helps in minimizing cost due to the shared responsibilities. HR strategies
therefore lead to reduced operational costs.
Increase in return on investment
HR strategy has a direct impact on the financial outcomes recorded by the organization. The
standard causal model reveals the benefits that come with aligning HR strategies with the core
organizational goals. Through HR strategies, the employees are empowered and their
commitment levels greatly improved. This in turn leads to an improvement internal performance
which can be gauge by measuring the level of customer satisfaction. Customer satisfaction
increases the number of passengers hence an increase in the overall return on investment. This
can be confirmed by reviewing the net margin at Air New Zealand between 2014 and 2017

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which indicates a general improvement. Effective HR strategies therefore lead to positive
impacts on the organization’s financial outcomes.
Improved organizational outcomes
HR strategies have an overall impact on the organizational outcomes. This can be measured by
evaluating customer satisfaction. The level of consumer satisfaction has largely improved over
years mainly as a result of improved services offered to the clients. The improvement in the
quality of services comes as a result of the organization’s investment in the area of employee
training and exposure. The organization also has a better grip of the market both at the local and
at the international environments. There is improved brand awareness which also leads to
positive organizational outcomes. Each of these benefits can be attached to the effective human
resource strategies implemented at the organization.
Organizational expansion
HR strategies play a crucial role in enhancing the expansion of an organization. The strategy at
Air New Zealand involves hiring of competent individuals who are further taken through training
in a bid to sharpen their skills. Bringing in more employees gives room for the organization to
widen its base of operations. This explains why it has been possible of the airlines to open up
subsidiaries in various lactations. HR strategies help in attracting workers into the organization’s
fold. The availability of human resource therefore enables the organization to easily implement
its expansion strategies.

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Human resource outcomes
Human resource strategies have the biggest impact on the employees within an organization.
Effective strategies lead to improved commitment and motivation among workers. This aspect is
notable at Air New Zealand since the consistent HR strategies have gone a long way in
enhancing employee retention in addition to a generally motivated workforce. Low sickness
absenteeism and employee resignation are core metrics which indicate that the management at
Air New Zealand has done well in satisfying its employees through effective strategies.

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