Introduction
Delta Air Lines had a great reputation in the 1980s as the one of the leading U.S. airlines known for its outstanding service to its broad base of customers, served with a home grown culture of “southern hospitality” and a loyal workforce that consistently went above and beyond the expected call of duty. (Brannigan & Lisser, 1996) However, by the 1990s, major business developments changed the competitive climate, and HR strategy had to change also. Delta initiated a new strategy, that ultimately set the company into a downward spiral that Delta would be hard pressed to pull out of. (Brannigan & White, 1997) We will take a brief look at the Delta strategy and identify the issues, analyze the issues, recommend a solution, and identify potential limitations to the solution.
Delta’s Strategy
In 1994, after two back-to-back years of epic financial losses, the CEO of Delta Airlines, Ron Allen, introduced a surprising, and not so popular new business strategy cleverly named “Leadership 7.5.” Allen sought to drastically …show more content…
Although the idea of a mass reduction with monetary incentives such, as an early retirement or separation bonus, is a more humane method of reducing the force, this sort of reduction does not differentiate between good and poor performers, but rather eliminates a whole group of employees in one brush stroke and the company still carries a heavy financial burden into the future. (Cascio, 2002) The solution, and one of the primary challenges for HRM is the need to “surgically” reduce the workforce by cutting only the workers who are less valuable in their performance. (Cascio, 2002) Achieving this is difficult because the best workers are generally able (and often willing) to find alternative employment, and they may leave voluntarily prior to the actual layoff, as was done in the case of Delta
Delta Air Lines had a great reputation in the 1980s as the one of the leading U.S. airlines known for its outstanding service to its broad base of customers, served with a home grown culture of “southern hospitality” and a loyal workforce that consistently went above and beyond the expected call of duty. (Brannigan & Lisser, 1996) However, by the 1990s, major business developments changed the competitive climate, and HR strategy had to change also. Delta initiated a new strategy, that ultimately set the company into a downward spiral that Delta would be hard pressed to pull out of. (Brannigan & White, 1997) We will take a brief look at the Delta strategy and identify the issues, analyze the issues, recommend a solution, and identify potential limitations to the solution.
Delta’s Strategy
In 1994, after two back-to-back years of epic financial losses, the CEO of Delta Airlines, Ron Allen, introduced a surprising, and not so popular new business strategy cleverly named “Leadership 7.5.” Allen sought to drastically …show more content…
Although the idea of a mass reduction with monetary incentives such, as an early retirement or separation bonus, is a more humane method of reducing the force, this sort of reduction does not differentiate between good and poor performers, but rather eliminates a whole group of employees in one brush stroke and the company still carries a heavy financial burden into the future. (Cascio, 2002) The solution, and one of the primary challenges for HRM is the need to “surgically” reduce the workforce by cutting only the workers who are less valuable in their performance. (Cascio, 2002) Achieving this is difficult because the best workers are generally able (and often willing) to find alternative employment, and they may leave voluntarily prior to the actual layoff, as was done in the case of Delta