West Jest vs Air Canada free essay sample

How serious is the threat  from conventional airlines that want to imitate the westjet culture? What does it take to imitate organizational culture? Can Air Canada compete against westjet’s employee productivity and its relationship with its employees? Ever since its establishment in 1996, WestJet has aimed to operate as a low-cost carrier while employing non-unionized members in a unique organizational culture. In its simplest form this unique organizational culture can be labeled as a labor managed firm. In a labor managed firm employees are owners, and they are affected by the company’s performance through profit sharing. Then it should not be surprising that in labor managed firms, the employees can voice their opinions and actually contribute ideas and theories in regards to how to best run the company, or the airline in this case. An interesting example for WestJet: the employees have formed a group, dubbed the ‘WestJesters’, they do various things to improve the customer’s (referred to as ‘guests’ in WestJet language) experience such as developing little jokes that flight attendants tell. WestJesters is one of the several committees of flight attendants that meet regularly to discuss everything from customer service to language and culture. According to Kruse et al. (2009, Chapter 5) shared capitalism (profit-sharing) positively affects workplace performance. And it has also been discussed that shared capitalism leads to lower turnover and greater loyalty to the firm. It also leads to increased willingness to work hard, especially when combined with high-performance policies, which include incentives. WestJet has produced an organizational culture that sustains the competitive advantages they have derived from their employee involvement and empowerment. And they managed to do this by fundamentally altering how they think about their workforce; employees are referred to as ‘people’ in WestJet language. They see their people as an advantage, a source that can help them achieve higher profits and compete with the best of them. They do not see their people as a labor force. A labor force in its most basic form, through profit maximizing practices, must be minimized, due to the cost associated with it, in order to drive up profit. And it is because of this outlook that WestJet has managed to outperform their competition, for example Air Canada. This theory is in sync with the findings of Jeffery Pfeffer in his 1995 paper â€Å"Producing sustainable competitive advantage through the effective management of people. † As described above, the organizational culture, the foundation of WestJet’s success, is heavily weighted on its people. Where as the competition, sees the workforce as a cost and aims to minimize it, WestJet looks at their work force as an asset and an investment. Conventional airlines run their business as any other company. They look out for the shareholder’s best interest and do not pay the slightest attention to their workforce. In WestJet’s culture, the workforce consists of the shareholders due to profit-sharing and co-operative environment. By nature capital managed firms will have a hard time converting to labor managed firm. They will have to change a lot of rules and regulations that governs their everyday operations. They will face a large number of opposition by their shareholders. According to Fernandez Guadano (2009) even if they do manage to adopt similar practices as labor managed firms, they will never be able to achieve the same rate of employee ownership and profit-sharing as their counterparts, which began their operations as labor managed firms from the start. As a result they will not have the same employees dedication, loyalties and involvement that has led to the success and profitability of the labor managed airline, WestJet. And it is for these reasons that the threat from competition, which aims to imitate the organizational culture of WestJet, is not viable. Based on extensive research Barney (1986) arrived to the conclusion that â€Å"organizations that have a rare and hard to imitate  organizational culture benefit from it as a competitive advantage. † For other airlines to imitate the organization culture similar to WestJet they also have to make extreme changes to their unionized labor force (the case of Air Canada). Given the very nature of unions, it should be obvious they will face sever barriers and challenges, filled with lawsuits and complaints, that will be very costly, if at all possible, to accomplish. Recently, Air Canada has been aiming to move towards an organizational culture similar to WestJet. They went as far as to distribute shares among their employees, roughly $500 to each employee. Half of the share values are given upfront and the remainder is to be distributed in 2014 (The Global and Mail, â€Å"Air Canada in Black, workers get shares†). This number is pretty insignificant compared to the 84 percent of employees at WestJet owning shares in the company. This adds further strength to the argument that a imitating an organizational culture after years of operations will not have the same effects as a co-operative establishment from the very beginning. Somewhere down the line, by adopting new policies focused on employees and customer service, Air Canada may be able to redeem its brand and boost its employee productivity and its relationship with the employees.