Reference no: EM132982000

i am to this case study on the following scenario and the questions at the end OUTSOURCING AT JET RED AIRLINES1 Patricia Elliot, CFO, says: Look, we are facing a loss of $300 million. If we outsource our maintenance services, we can reduce our labour costs by at least one-third. We have a moral responsibility to our shareholders to operate as efficiently as possible.' Ella Li, HR manager of Jet Red Airlines, glares at Patricia. 'Yes, Patricia, and we have to be realistic. Why should Australian jobs be shipped offshore? Our concern is with the welfare of our Australian workers. Why should Australian money end up in the pockets of foreign workers?' Patricia snaps back. 'For the very good reasons that the work will be done at much lower cost and with much better results! And you outsource so I don't see why you find it so distasteful when it is done by our company.' 'What do you mean?' Ella asks. 'Come on Ella, think - who does your house cleaning? Who cooks your takeaway? Who mows your lawn? Who does your hair? Who tutors your son? Who walks your dog? Who runs your kids' parties? Not you - it is all outsourced. Why? Because it is more convenient, more efficient and more cost effective. Jet Red Airlines is no different.' 'Yes', smiles Grant Pirelli, operations manager. 'I understand even high school and university students outsource their assignments to India and Pakistan.' 'Patricia, wake up', Ella says sharply. 'You know how politically sensitive the airline industry is. Imagine what the government and the press will do to us when this becomes public knowledge.' 'Yes', interrupts Jason Clegg, manager of marketing. 'Can you think how many politicians will be prepared to stand up and publicly declare that they are in favour of exporting Australian jobs? Outsourcing may be okay, where companies are not subject to the public and political pressures we are. Just imagine the reaction of the unions when we announce that the airline is going to get rid of with 200 jobs? They see outsourcing as sloppy management.' 'What?' questions Patricia. Jason looks directly at Patricia and says, 'The Australian Metal Workers Union and some WA employers are putting pressure on the WA government to pass laws that would require companies to source their labour requirements within Australia.' 'Well I think that it is ridiculous', replies Patricia. 'How do they expect companies to compete? Don't they realise that we operate in a globalised marketplace? What is more, how can the unions complain when they themselves outsource?' 'What do you mean?' asks Jason. 'Unions such as the Communications Electrical and Plumbing Union and the Victorian branches of the Australian Education Union and the Community and Public Sector union outsource their membership recruiting to a private company.' 'Well unions, like companies, use a range of professional services provided by people such as accountants and lawyers - so what is the problem?' asks Abe Cohen, manager business development. 1 This case study is from the textbook, pages 103-104. Stone, R 2017, Human Resource Management, Wiley, Milton, Queensland. 2 'Precisely, there is no problem - they do it for the same reasons that we outsource. Because it makes economic sense', answers Patricia. 'Given the size of our losses, the increasing costs of fuel and labour, to say nothing of the cut-throat competition, we really have to face up to the alternatives - cut services or increase fares or go out of business. Sooner or later we are going to have to face the reality that no one owes us a living.'2 'I don't care, it's still morally wrong. Everyone knows that outsourced workers earn less and have fewer or no benefits', Ella says. 'Like it or not, Ella, outsourcing is the key to this company's profitability', snaps Abe. 'Maybe', replies Ella, 'let's see how keen you are on outsourcing when your job is the one designated to go offshore.'

The following questions:

1. If you were the HR manager in this case, how would you demonstrate to the line managers that HR planning is relevant to them and the attainment of the company's strategic objectives?

2. What other strategic HRM and HR planning issues can you identify in this case? Make recommendations on how these can be resolved. Support your recommendations with evidence from literature.