The Management Lessons of a Beleaguered Industry

As the airline industry struggles — again — through a new round of challenges, some experts still see a profitable way forward. Is management-employee collaboration still possible? Long-time observer Thomas Kochan weighs in.

Airline companies may be the businesses everyone fantasizes the most about trying to fix. (In the case of that other I-could-run-it-better favorite, restaurants, at least plenty of excellent efforts counterbalance the bad.) And just now the fixing would require more work than usual. A new round of mergers, a new climb in costs and a new wave of customer dissatisfaction all pose fresh challenges. Add to that an industry work force whose wages have plummeted by $15 billion since 2001 and whose morale is at a low ebb and an air traffic infrastructure that both experts and customers realize is overstressed, and the overall industry repair problem can seem impossible.

Thomas A. Kochan, along with Greg J. Bamber, Jody Hoffer Gittell and Andrew von Nordenflycht, takes up the task in the forthcoming book, Up In the Air: How the Airlines Can Improve Performance by Engaging Their Employees (Cornell, New York: Cornell University Press, January 2009). Kochan, the George Maverick Bunker Professor of Management at the MIT Sloan School of Management and a longtime leading analyst of workplace relations, identifies the need for utterly altered employee/ employer relationships as the critical opportunity and threat that the airline industry faces. It could go either way, he admits. And movement along the positive path won’t be easy.

In this interview, Kochan explores the airline industry models that have worked (and are working) along with those that haven’t. And he suggests that the airline industry isn’t alone in encountering fundamental choices about how collaborative their workplaces will become. He spoke with MIT Sloan Management Review editor Michael S. Hopkins.

In the News: Delta and Northwest

The Continental Airlines and United Air Lines merger was shelved earlier this year, but it appears that the Delta Air Lines and Northwest Airlines deal is on track to happen. Will it be a success?

KOCHAN: Ultimately — and inevitably — there’s going to be more consolidation in the airline industry, but unless Delta and Northwest begin to address the differences in their cultures, the differences in their employee relations, the fundamental differences in their labor relations, this is a merger destined to fail.

Why wouldn’t Delta and Northwest manage those differences? Don’t leaders on each side understand the problem?

KOCHAN: It’s not that they don’t understand it. My experience in the airline industry is that the managers always say, “We’ll get to those issues in due time.

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