Strategic Human Resource Management for Service Innovation at Singapore Airlines

Abstract

Quality of services is a critical component in the airline business. Organizations are investing to ensure that the needs of the customers are met. However, the dynamic nature of the customer preferences and choices calls for a strategic approach to service delivery. Service innovation is a major concern in the airline sector across the globe. While recruitment of talented employees guarantees performance, there is a need for advanced intervention to ensure that the workers are contributing towards the desired service quality and innovation. Singapore Airlines (SIA) is one of the companies where strategic human resource management has created a significant impact on service quality and customer satisfaction. This study investigated the role of people management in service innovation in the company. The study found out that the company has invested in five areas of human resource management: recruitment and retention, training and retraining, high-performance team management, employee empowerment, and motivation and recognition. The strategies have been tailored to inspire a culture of quality services and service innovation in the company.

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Key Words: Service Innovation, Competitive Advantage, Customer Satisfaction, Strategic Human Resource Management, Service Quality

Chapter One: Introduction

1.1 Background of the Study

Services offered to customers before, during, and after flights have become the baseline for measuring the suitability and preferences among airline companies. According to Munusamy, Chelliah, and Pandian (2011), customers are not so much concerned with prices but are attracted by the nature and quality of services they receive from the employees. The nature of pre-flight services, relationship with customers, in-flight services, and cabin environment have become part of the critical elements that customers observe when using a particular airline. Munusamy, Chelliah, and Pandian (2011) concluded that the success of such services depends on nature and approach to human resource management. In most cases, organizations have invested in recruitment, retention, and talent management as a strategy to improve the quality of their service and customer satisfaction (Ramaswamy and Modi, 2011; Haracleous and Wirtz, 2009). Scholars have been attracted to investigate how strategic human resource management has transformed organizations in different industries such as the air transport sector (Munusamy, Chelliah, and Pandian, 2011; Chen and Liu, 2017).

Findings by Mantey and Naidoo (2017) showed that in South African-owned airlines, the service offered defined the level of satisfaction among customers, which increases their loyalty to a specific organization. according to Mantey and Naidoo (2017), reduction in prices is critical but does not create a significant influence when compared to the impact of revitalized and competent human resource teams. A review of the Taiwan airline industry by Chen and Liu (2017) also showed that the loyalty of customers emanated from quality services and effective customer relationships, which is entirely fostered by the employees in that organization. Therefore, the success of airline companies regarding the nature of services and innovative implementations to enhance customer satisfaction depends on the extent to which the management values the employees. Okeudo and Chikwendu (2013) concluded that the employees of Arik Air Nigeria contributed towards the satisfaction and retention of their customers. The two factors, that is, service innovation and quality and employee management, are interrelated when assessing the success of airline companies.

1.2 Overview of the Company

Singapore Airlines (SIA) is a global air transport service company that is associated with a history of strategic growth and development. The performance of the organization by the end of the 2016/2017 financial year indicated that it is one of the top airline service providers with a comprehensive approach to customer and employee management (Forbes, 2018). SIA currently offers services to five continents with remarkable customer service, uncompromised safety, and high-security levels based on ethical business orientation and practice (Berrios et al., 2008). It is essential to point out that the current success story defining the company stems from a long history of strategic planning and implementation. The company started as a wholly-owned subsidiary of the government of Singapore. It was therefore incorporated through as Temasek Holding Ltd in 1972. It was originally known as Malaysia-Singapore Airlines based on the restricted nature of the operation (SIA, 2016; Haracleous, Wirtz, and Pangarkar, 2011). However, the firm was rebranded and launched as Singapore Airlines after a national takeover. SIA started offering international flight services beyond Singapore and Malaysia in 1966. By 1971, the company started to operate independent services as Malaysia Airline System (MAS) and Singapore Airlines (SIA) (Berrios et al., 2008).

Currently, Temasek Holdings Ltd controls 55.49% of SIA's cumulative share value (Berrios et al., 2008). The competitiveness of SIA started when it was separated from MAS where the organization focused on service differentiation. However, to achieve this vital objective, internal reorganization became a mandatory requirement (SIA, 2006). The company embarked on a transformation journey that included five major pillars as defined in their Transforming Customer Service (TCS) Model. The management incorporated selection and recruitment as one of the concerns towards service differentiation. Training and retraining of workers and creation of professional service delivery teams also formed the second and the third pillars of the TCS Model respectively. The fourth element was the empowerment of frontline staff while the fifth concern of the management was the level of employee motivation (Berrios et al., 2008). Through the TCS Model, SIA has become the top air transport company globally in line with the quality of customer service, security and safety standards, and competition-based profitability.

1.3 Justification

Scholars have proved how the quality of service in the airline industry is central to customer acquisition and retention. Mantey and Naidoo (2017) argued that the divergence that exists between customer expectations and customer experience in airline services has transformed the approach to human resource management. Organizations are currently focusing on how employees and their respective teams could be used to improve customer experience. Across the industry, firms have been ranked based on how the feedback of customers ascertains the desired quality services. The human resource plays a central role in ensuring that the desired level of performance in line with the existing service delivery frameworks has been achieved. For Mantey and Naidoo (2017), employees commitment and professionalism and customer service cannot be separated as independent concepts in the airline industry. Chen and Liu (2017) also shared similar sentiments while investigating the factors that contribute to customer preference when choosing an airline. Based on the scholarly perspectives, such as those documented in studies by Chen and Liu (2017) and Mantey and Naidoo (2017), it is clear that strategic human resource meant to improve service provision is one of the measures that airline service providers have resorted to when seeking to improve their performance.

When the history and the current achievements of SIA are considered, there exist several studies that have been tailored to assess the performance of the company regarding customer satisfaction, human resource management, and innovation. For example, in 2011, Ramaswamy and Modi conducted a research regarding the market approach across Asia and beyond. Mahdzan (2006) also examined how the company was building a culture of excellent service to retain and acquire customers. Haracleous, Wirtz, and Pangarkar (2008) studies the how the company was managing the human resources to enhance their internal culture of excellence. Currently, several studies have been centered on the performance of SIA and how the leadership has focused on establishing a competitive customer relationship in the industry. However, the issue of service innovation and how employee management is contributing to this vital dimension in strategic implementation at SIA is understudied. This explains why this study examines how strategic human resource management impacts service innovation in the company. While it is clear that this study builds on the findings of Haracleous, Wirtz, and Pangarkar (2008), a specific focus is set on the management approach to inspire employees to adhere to customer expectations and service quality requirements as defined in the airline industry.

1.4 Objectives and Research Questions

The objective of this study was to investigate employee management at SIA and how it impacts the nature of service innovation. The study focused on the issue of people management as a multidimensional business concept and how the company has tailored its strategic approach to improving the experience of customers. Therefore, the study investigated the issue of human resource management and how it relates to service innovation based on the current strategic short-term and long-term plans of the company. The study was based on two major research questions in line with thee two interrelated factors defined in the objective. The following is the primary and other objectives as well as the two research questions that defined the study.

Primary Objective

• To determine the impact of strategic human resource management on service quality at SIA

Other Objectives

• To determine the key human resource strategies at SIA that are meant to enhance customer satisfaction
• To determine the service innovation milestones at SIA that are meant to enhance customer satisfaction

Research Questions

• What are the key human resource strategies at...