How Bad Labor Relations can Kill Opportunities
A lot of lean is based on the idea of “respect for people.” That was often lacking when I worked at GM in the 90's. It certainly seems to be lacking in many airlines.
How hard do you have to work to get such bad labor/management relations as they have at American Airlines? American is pretty much excluded from the running to get a lucrative Dallas/Shanghai route because the pilots union won't cave on a work rule involving a difference in 15 MINUTES.
It also is an indicator of how far labor relations have deteriorated at the airline, which has struggled for three years to improve cooperation with union leaders. Pilots refused to sign off on a deal that would have allowed the longer flight times from D/FW without some improvements to their contract. Management, in turn, refused to negotiate on the issue.
With relations that toxic, it's LOSE/LOSE.
Before we go blaming the union or the pilots…. look at management. It's a money losing industry, yet management continually enriches itself (through “retention bonuses” usually) and forces job and pay cuts on employees.
Leaders of the pilots' union have been angry at the company since early this year, when it gave bonuses to about 1,000 executives and managers, with a few topping $1 million. Pilots are still living under wage concessions they approved in 2003, when American was near bankruptcy.
Is there a lean lesson here? I think it's helpful to look at situations of companies that have totally botched up their management/”worker” relationships. Even if American were working to reduce waste from its processes, it still has this HUGE “respect for people” hurdle to get over. That's the hardest part to change, the management culture. United Airlines is working on lean (with their unions) — but how much are they working on the people side?
When private equity firms or other investors go stomping around factories looking for turnaround opportunities (interesting article in FORTUNE magazine about Wilbur Ross doing this in the auto world). The obvious things to look for are on the balance sheet (inventory, orders) and the shopfloor (disorganization, opportunities to improve flow, etc.).
But I wonder how much they dig into the people side of things. Are employee/management relations good or so damaged that you'd either not be able to turn the place around, or you'd have to replacement management. Or, like some GM factories, maybe the workers are all so scarred and worn out by bad management that they wouldn't be willing to work with anyone??