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Case Introduction This case examines the Human Resource Management system at American Airlines and its role in the airlines past and continued success The case takes us through a time line from 1980 to 1992 of the company of how the growth of the company was followed by changes in the strategy changes in the HR policies at different time and finally their effect and impact on the employees and the company as whole Events 1 1978 Deregulations of the airline industry 2 1980 AAs growth plans called for ore planes new routes increased membership in its AAdvantage frequent flier program and an enlarged installed base of its SABRE reservation system 3 1981The Presidents Conferences began 4 1983 Two Tier compensation system concepts was adopted Head count restrictions was applied to the managerial posts 5 1985 Decline in fuel prices AA began building up it US route network 6 1986 Developed presences in 15 different European countries 7 1987 AA began a Peak Performance Through Commitment program 8 1988 AA decided to broaden employee involvement to improve customer relations A program named Committing to Leadership was started 9 1990 Industry conditions started to Detroit 10 1991 Due to the Persian Gulf War there was a recession in the economy and slow moving profits And finally new contracts with the employees were finalized CASE FACTS according to the time eras Target market Price-insensitive and business class people who emphasized high levels of service Structure Seemingly functional centrally controlled 1 1981-1988 Corporate level strategy Internal Growth Business level strategy Market penetration Surpass United Market development new routes Europe Functional level strategy Differentiation in IS and marketing dept SABRE reservation system frequent flier program lost baggage system sheep-skin seats Low cost in HRM department HRM practices oBase salary lowered yet external equity was maintained Incentive based on suggestions of cost-saving but not performance based In short-term below competitors in long term above
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