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Jetblue-Case Study Essays

Sample Essay: Jet Blue Airways: Starting From Scratch Three National Equal Employment Opportunities Laws Jet Blue Airways was established to adhere to corporate values of safety, caring, integrity, fun, and passion (Gittel & O’Reilly, 2001). These values, in turn, became the basis for the human resources policies and procedures established by the company. As a player in the highly service-oriented airline industry, the company’s commitment to its corporate values has enabled it to adhere to several key tenets of the Equal Employment Opportunity policies under the 1964 Civil Rights Act.
In particular, the Equal Employment Opportunity “prohibit the discriminatory practices in hiring, discharging, promotion, layoff, and pay of workers…these policies extend to the training, selection, or recruitment of workers” (United States Commission on Human Rights 1966, p. 1). In view of Jet Airways, one key policy that ensured that it complied with, and even surpassed, the equal opportunity tenet was on the aspect of pay.
In particular, the company provided customized employment packages intended to “ensure overall equity in treatment” (Gittel & O’Reilly 2001, p. 10). The company also waived the probationary period, which meant that employees were certain of job security. Furthermore, the company also gave above industry compensation, medical benefits, and profit-sharing benefits to the “most overlooked group in the industry – the customer service and ramp workers” (Gittel & O’Reilly 2001, p. 11).
Hence, as a service-oriented company that employs a lot of people, Jet Blue Airways and its recruitment policies are also significantly influenced by the Equal Pay Act, which “protects men and women who perform substantially equal work in the same establishment from sex-based wage discrimination (Equal Employment Opportunity Commission, 2009). Consequently, since the company provides 401K benefits and insurance benefits, the company is adhering to the spirit of the Age Discrimination in Employment Act of 1967 which protects individuals 40 years and above (Equal Employment Opportunity commission, 2009).
The long-term compensation and added benefits provided by Jet Blue Airways are designed so that even older employees are taken cared of. While the human resources policies of Jet Blue Airways are extremely pro-employee, the management is very strict about drug and alcohol abuse since these acts run counter to the safety code of the company. Drugs and alcohol abuse is one condition not protected by under Title I and Title V of the Americans with Disabilities Act of 1990. This means that companies have the right not to hire and to fire people who are confirmed drug and alcohol abusers.
Recruitment Efforts External Recruitment External Recruitment entails hiring people with the help of other from organizations (e. g. headhunters, employment firms, etc. ) and through endorsements. In the case of Jet Blue Airways, the company’s external recruitment policy was evident its practice of hiring talented, committed people from other airlines. Examples of externally hired people included most of the company’s top management team, one of whom was president and Chief Operating Officer (COO) Dave Barger who previously worked for Continental Airlines.
The company also externally hired pilots from other carriers who were friends of pilots already working for Jet Blue Airways. Internal Recruitment Consequently, the company also practiced internal recruitment, which entailed hiring from within the company or an affiliated one. A good example on how Jet Blue Airways applied internal recruitment was in the hiring of Ann Rhoades, who previously worked for Southwest Airlines. Her hiring was internal by nature because Jet Blue founder David Neeleman and Ms.
Rhoades used to be colleagues when Neeleman’s Morris Air was bought by Southwest Airlines. In effect, both Neeleman and Rhoades were already previously working for one organization (i. e. Southwest Airlines) and hence there was no need for Neeleman to enlist the help of a head hunter or employment agency or seek referrals in hiring Rhoades. Another internal method of recruitment practiced by the company entailed job postings. An example was the local newspaper advertisement the company did in Salt Lake City for reservation agents. Effects of Recruitment Effort
The focus of Jet Blue Airways of hiring highly competent, well experienced personnel in managerial and operational positions translates to increased costs for the company. For example, the company provides salaries and benefits that are above industry standards. Furthermore, employees are provided complete medical benefits, extended leaves, and other perks. Meanwhile, the company also shoulders pilot training unlike other carriers. Essentially, the company provides generous compensation packages because they recruit the best, most committed people who subscribe to the company’s culture.
The company’s internal recruitment efforts for its reservations agents were a success considering that 2,500 applicants applied for the job. This internal recruitment initiative entailed a job posting performed by the company at a local newspaper. Meanwhile, Jet Blue Airways’ external recruitment efforts using referrals has allowed it to tap well-trained, highly experienced airline pilots, mechanics, and technical personnel. The fact that the company’s management were held in high esteem was other carriers in the industry translated into the recruitment of a string, dynamic management team.
Personnel Selection Personnel Interview Process for Pilot and Mechanics In recruiting mechanics and pilots, which are the most sensitive and vital positions in an airline, Jet Blue management looked for applicants who displayed integrity and showed traits consistent with company values of safety, caring, integrity, fun, and passion. For mechanics, management conducts an interview process wherein the applicants were asked on how they handled sensitive, ethical dilemmas and situations in their previous company.
Consequently, Jet Blue officials hired those who did not compromise on passenger safety like the case of a mechanic who incurred the ire of his former bosses because he did not “sign off” or certify an aircraft because it did not comply with standards. Meanwhile, in recruiting pilots, Jet Blue COO Dave Berger required people who were not only well-versed in computers, but also displayed a cultural fit with the Jet Blue organization. This is extremely vital because the company incurred a heavy investment on pilots by paying their pilot certification training (i. e.
US$30,000 per pilot), which other carriers did not do. In return for the investment, Jet Blue officials expects commitment to the company’s values and culture. Performance Appraisal System Factors that Influence Performance Evaluation Performance evaluation is a tedious process that takes into consideration various factors impinging on it. One key factor is existing legislation that requires performance evaluation processes to be nondiscriminatory. For example, performance evaluation that accounted for racial, gender, religious stereotypes are considered discriminatory under the 1964 Civil Rights Act.
Another factor concerns the influence of labor unions. As mentioned in the Jet Blue case, labor unions are used to standardization in employment compensation packages. This policy definitely runs counter to the customized compensation policy of the company, which is also a reason why Jet Blue officials refuse to let union activity take root in the company. A third factor influencing performance evaluation is corporate culture. The company leadership expects employees to commit to values and philosophy of the organization and they are assessed as to how well they live to the company credo.
In the case of Jet Blue, employees are rated in terms of how well they nurture safety, integrity, a caring attitude, passion and fun in the work place. 360-degree Feedback Evaluation The 360-degree feedback evaluation is a type of employee performance evaluation that adheres to a multi-unit approach to feedback that includes not only employees and their supervisors, but also external and internal customers, peers, and sub-ordinates (United States Office of Personnel 1997). This type of feedback system has several advantages.
For one, the appraisal tends to be more objective considering that multiple sources of information are derived to evaluate an employee. In traditional performance evaluations, an employee is simply assessed by his or her supervisor. This is a very limited form of appraisal since only one person’s view is taken into consideration. Another advantage of the 36-degree model is the quality of information derived. The opinions and insights of a broad number of people allows for diverse perspectives about the employee, which leads to a more balanced, relevant evaluation.
A third advantage of the 360-degree feedback system is that it helps to “gain agreement on expectations” (United States Office of Personnel 1997, p. 66). With more people involved in setting performance benchmarks and norms of behavior, and determining compliance to these, the easier it is for employees to participate and agree on the assessment process. In the case of Jet Blue Airways, the 360-degree performance evaluation system will benefit the company in terms of ensuring consistency in the quality of service provided to airline passengers.
To satisfy customers and succeed in the airline industry, Jet Blue needs to properly monitor and evaluate the performance of diverse groups of people such as in-flight crews, pilots, technical and maintenance people, ground crews, customer services, administrative personnel, among others. Naturally, each group has its own concerns and interests, which need to be communicated to management. If the performance appraisal is confined only to the employee-supervisor level, and leave out feedback from other groups, then the chances of Jet Blue management receiving subjective, incomplete, biased feedback increases.
If all groups are involved in the feedback and evaluation process, management will be able to draw a more complete picture of the overall operating performance of the company and address all employee concerns. This is crucial so that employees will be motivated to deliver the best service to customers. Employee Related Factors in Compensation Compensation is the most basic right and need for employees. Consequently, every employee needs to be given fair compensation for the work provided, but of course, the type of compensation will depends on several factors.
One is the level of competence or skills of the employee. Competence is contingent such variables as educational attainment and previous training and enrichment. Another factor is length of experience. Personnel with more work experience and knowhow on a specific job will naturally be assigned a higher salary compared with someone who just graduated from college. A third factor is performance. An employee who has shown better results and work habits will inevitably be rewarded more than someone with a sub-standard performance. A fourth factor lies in the scope of responsibility.
Employees need to know what functions and duties they have to do; the specific outcomes expected of them; and what person, unit, or department they are accountable to. Basically, the larger the scope of responsibility assigned to an employee, the higher the pay he or she gets. As cited Allbusines. com (2009), the pay structure is usually made up several components namely a) basic salary, b) provision for bonuses, c) long-term benefits such as stock options or grants, and pension plans  d) insurance (e. g. health, disability, life, etc. , e) retirements plans such as 401K, f) time off and flexible schedules, and g) other miscellaneous items. Discretionary Employee Benefits Discretionary employee benefits pertain to compensation other than hourly wage or salary (Martocchio, 2009). There are several types of discretionary benefits, one of which are protection programs. These programs involve various kinds of insurance packages for the benefit of the employee such as disability insurance, life insurance and retirement plans (Martocchio, 2009). Another type of discretionary benefit is a term called paid time.
This refers to vacation leaves, sick leaves, and holidays. A third type of discretionary employee benefit involves accommodations and enhancements (Martocchio 2009). These cover a sleuth of programs that promote the mental, physical, and emotional well being of employees such as family assistance programs, skills and knowledge acquisition (e. g. continuing education or schooling), flexible work schedules, and other incentives to motivate personnel (Martocchio 2009). Jet Blue Airways as a company provides very generous discretionary benefits to its employees.
For example, all workers receive medical insurance, 401k plans, and profit-sharing incentives. Furthermore, full-time workers are allowed personal time off when necessary and get double pay when they work on holidays. For its flight attendants, the company also provides accommodations and enhancements such as flexible work hours, travel and vacation perks, and family time off. Meanwhile, the company has instituted a “work from home” policy for reservations agents and allowed top management to hold office in their areas of residence so as not to “disrupt their families and personal lives” (Gittel & O’Reilly 2001, p. ). Overall, Jet Blue Airways has lived up to its mission of caring for its people. JetBlue Airway is an airline industry. Founder is David Neeleman, a Salt Lake City entrepreneur. The eighth largest passenger carrier in United State. Have won many awards including “Best Domestic Airline”, “Best Domestic Airline Value” and “ Best Overall Airline”. The case study discuss on the JetBlue Corporation emphasize on its founder, on its financial performance, human resource management practices, organizational culture and strategies. QUESTION 1: What was David Neeleman’s original strategic vision for JetBlue?
Should JetBlue’s strategic vision be revised now that the company has new executive leadership? Original vision… Start a company-combined the low fares of a discount airlines carrier with the comforts of a small cozy den in people’s homes. Customer have- cheap and affordable flights-US and abroad aircraft that comfortable- equipped with modern entertainment options customer centric business model make customer service no1 priority Motivation factors– David use leather seats- easy to clean, more comfortable than fabric seat (experience –a flight – fabric seats-was socked with urine).
Should only revised- to further development- to incorporate new technologies- to facilitate growth and profitability. After David resign- the new management-instituted to help rebuild – JetBlue’s reputation & to develop innovative strategies(to prevent incident like Valentine’s Day 2007 – because failed to deliver excellent customer service. Organization no need to change vision. To remain successful the management, they can apply Incorporated New technologies Best practices Provide training to all employees
QUESTION 2: What were the key elements of JetBlue’s strategy in 2008? How has the company chosen to attract customers in sufficient volume to earn profits? How does JetBlue offer its customers value? Key elements of JetBlue’s new strategy: Reevaluate the ways the company was using its assets. Reduce capacity and cut costs. Raise fares and grow in select markets. Offer improved services for corporations & business travelers. Form strategic partnerships. Increase ancillary revenues.
Develop a new terminal at JFK airport – to improve its on-time departure and arrival averages at airports. Sold a stake of its shares to Germen carrier Lufthansa – to increase revenue & allow the customers to book code share flights on Lufthansa flights to Germany. Appealed to business travelers by introducing refundable fares & discounts for corporate meeting planners –for every 40 customers booked to –same destination. Also entered into 5years agreement with Expedia Inc – for the managed & unmanaged business travelers.
Interested in pursuing partnership with other airlines. Example form an agreement with AerLingus – to make passenger easy to book tickets. Attract customer by.. Proving comfortable seats and entertainment services on all of their flights. Using newer, non propeller aircraft on all flights, ease of ticketing, cancellation and flight changes, multiple destinations and faster service. Offer customer value… Creation of the passenger bill of rights- states the companies action regards to flight changes, cancellation, service & more.
This makes the customer to know what to expect on each and every JetBlue flights & from the company QUESTION 3: Are JetBlue’s functional area strategies consistent with its overall strategic approach? What policies, practices and procedures have been developed to execute its business strategy and functional area strategies with proficiency? Functional area strategies are consistent with its overall strategic approach. Vision mainly focus on customer service. when ever vision –challenged- they rebounded with new strategies ,technologies and improve the customer service.
Example of strategic approach: Utilization of 2 different type of aircraft (Airbus A-320 – 150 seats & Embraer E-190- 100 seats) E-190 use for shorther distances & A-320 use for longer distance To save on fuel allocation & help to balance flight/passenger load balances Eliminate service at cities where competition is either too stiff or unprofitable – helps to cate its service to the customer much more efficiency – instead of being general aircraft with limited service compare – to other airlines. Use each plane a little less a day- help cut back on maintenance and other services (cleaning)- reduce costs.
At 2010- JetBlue performingwell compared with other airlines. Able to avoid the plagues of other carriers such as bankruptcy& merger – by its core beliefs and staying with manageable size. QUESTION 4: What is your assessment of JetBlue’s financial performance during fiscal years 2003-2007? Does the company’s recent financial performance support the board’s decision to replace top management? For example: Debt to asset ratio= Total debt / Total assets   The recent financial performance support the board’s decision to replace top management it is because JetBlue’s financial status is positive. The debt ratio was lower.
If replace top management the company began to grow again and developed newer routes, markets, technological innovations. QUESTION 5: What are the factors driving change in the airline industry? How are they likely to impact the future attractiveness of the industry? All of these factors have and will impact the attractiveness of the industry. Individuals who wish to establish their own airline companies will have to take into consideration the market share of the cities they wish to serve, the aircraft and their capabilities and effectiveness, the economy both national and global, and consumer demands regarding air travel.
QUESTION 6: What are the key success factors in the airline industry? How well do JetBlue’s resource strengths and competitive capabilities match these industry success factors? The key success factors are… Attract customer Manage its fleet Manage it s human capital (employee) Manage its finance Jetblue providing low fares, new fleet of modern jet aircraft equipped with DirectTV/wifi/XM Radio service for travel entertaining purpose and have customer friendly employees in order to attract customers.
Using the smaller aircraft for short-haul flights and the larger aircraft for longer distance flights and having the flight crew clean up the aircraft after each flight in managing their fleet. etBlue manages its people by providing training opportunities to each member of the team and even job cross training to maximize the effectiveness of its personnel.
Jet Blue manages its finances by selling shares of stock to other airlines JetBlue also delayed the acquisition of several new aircraft and reduced its fleet size to accommodate for the turbulent economy JetBlue has now started charging for second checked bags on all of their flights, in-flight meals and other services to help boost revenue. QUESTION 7: Do the strategy and changed to operating practices initiated in 2008 seem well-matched to the industry conditions and the company’s internal situation” What recommendations would you make to help speed JetBlue’s turnaround and revive its growth in revenues and earnings?
Strategies are well-matched to the industry conditions and its internal situation. Partnerships with AerLingus, Lufthansa and South African Airways allow the company to grow its market share by allowing its customers to fly on its code-share partners. Gain revenue by sell the several A-320 aircraft. Eliminating service at cities where competition is either too stiff and or unprofitable allows the carrier to focus on a lean market.
And finally using each plane a little less in the day helps to cut back on maintenance and other services (cleaning, replenishing in-flight magazines, etc…) which reduces costs Refer page c-71 Recommendation… As the airline revenue growth is positive, JetBlue able to avoid bankruptcy and mergers. As a recommendation, the marketing team at JetBlue should look into developing an application for the iPhone where customers can check in for their flights, check flight statuses and even track flights, purchase tickets and display boarding passes (to cut back on paper tickets) as Southwest, American and Delta airlines

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