Summary of proceedings:
Globalization of the airline industry: The case of Lufthansa
T. Sattelberger,, Corporate Senior Vice President
Executive Personnel and Human Resource Development
Lufthansa, Germany
In his presentation based upon the example of the transformation of Lufthansa and other globally-operated companies, Mr. Sattelberger emphasized the corporate responsibility of creating employment and employability, which he described as both local and global. This responsibility is global because companies grow globally and socially and not only nationally. However, the social responsibility is also local because the company's corporate culture has its roots in the country of origin.
To explain this thesis Mr. Sattelberger provided a very interesting evolution of organizational development - from the vertical structure before the 80s to becoming flatter with less management layers, to very horizontal with profit centre orientation in the early 90s, and to present networks of virtual companies. The last structure is particularly efficient in transcending national borders and becoming global by nature. This could have both positive and negative effects on employment and other social concerns, although, as a rule, they are more productive, flexible and dynamic.
He described the process of restructuring of traditional companies through the outsourcing of non-core business and automatization of production and service processes on the one hand, and internationalization of production through globalization, networking alliances and franchising on the other. This coupling of the lean production and its outsourcing to other countries would create a dramatic effect in increasing productivity globally while at the same time reducing employment in one country and moving it, not necessarily in the same quantity, to another country where social standards could be much lower. However, the receiving countries could gain more income generating employment and as a result their social standards could be increased.
Mr. Sattelberger indicated that, in his view, growing competition will result in a reduction in the number of mega-networks of cooperating companies, particularly in aviation transportation. For example, in each major region only four major alliances consisting of 12 to 15 of the most efficient national companies would dominate the global air transport market. These alliances would control prices and quality of service, and they could very easily move their assets, people, jobs and cost elements around, and ignore high labour standards of the most advanced countries with excessive labour costs and labour markets rigidities.
At the same time, to compete in this highly competitive environment, companies have to change their business and management philosophies, approaches and their mode of operation - from companies focused on assets, controlling investments, reducing head counts and process improvements - they have to move to companies creating opportunities: creating new markets, new innovative products, superior customer value, developing human capabilities and improving organizational learning with increased speed and flexibility in doing their business.
The workforce attitudes and types of employment would also have to change: from job security to employment security; from permanent employment to a fluid, resilient and peripheral workforce. More self-employment, particularly in the service industry, and in professional occupations is expected. The companies would concentrate more on core workforce and management teams with the highest labour costs in their human resource management strategies.
Human resource management in virtual organizations will be concerned mainly with establishing broad multi-skilling employability, the empowerment (mental and organizational) of the people; a counselling and coaching into, within and out of the organization; developing and maintaining flexible performance management systems and multi-optional management of mobility and careers.
As a result of the above changes and trends, Mr. Sattelberger presented what should be the future profile of the most important company stakeholders: corporate leaders should focus more on numerator management, champions of value creation, balancing profitability and social responsibility; human resource professionals should play the role of the reconciliator of the workforce, create the learning infrastructure and be an architect of social innovations; the employees will be owners of their own careers, life-long learners, and responsible for their own self-development; trade unions will be advocates for employability and partners in the learning business.
(A number of overhead transparencies used by Mr. Sattelberger during his presentation are presented below)