HRM Policies




TheHR department is tasked with the duty of promoting employees’satisfaction to improve their productivity. The departmentestablishes different policies and guidelines that are followed whilemanaging employees, among them compensation and rewards, health andsafety, Employee training and development, diversity in employmentamong others. Though organizations in a similar industry may adoptsimilar policies, the finer details of the HR policies are influencedby the cultures of the country of origin, referred to as thecountry-of-origin effect. The country-of-origin effect will beanalyzed by comparing HRM policies adopted by the American Airlinesand the Lufthansa Airline of Germany. The different HRM policies willbe outlined in the adopted organization structures, employmentpolicies, diversity in the workplace, employee training anddevelopment as well as the guidelines that pertain to employee healthand safety.

Humanresource management (HRM) policies are the established and ongoingguidelines on the approaches intended to be adopted by organizationsin managing its people. They form the reference point for developingemployment practices and making corporate decisions regardingmanaging the people in the organization (Paauwe, 2004). Thus HRMpolicies reflect the values and philosophies of the organization anexpression of strategies that the organization seeks to follow infulfilling its social responsibilities of its values and beliefsabout how people should be treated. HRM policies are affected bydifferent factors, among them cultures, accreditation policies aswell as global events. HRM policies can be analyzed by studying theairline industry, which is one of the fastest growing industries inthe world. According to Meshksar (2012), the number ofpassengersusing scheduled flights has increased by over sixty percent over thelast three decades. Additionally, the airline industry had beeninfluenced by globalization, a factor that has affected the HRMpolicies adopted by various airlines.

Theindustry has witnessed several global factors such as terroristattacks which have led to stringent security checks, oil crises,industrial actions, deregulations, outbreak of contagious diseasessuch as SARS and Ebola, factors that have made the operating environment increasingly challenging (Cento, 2009). While someairlines such as the TWA have faded away into oblivion, others haveadopted strategies such as rebranding, acquisition and mergers tosurvive. Others adopt different HRM policies to ensure theircontinued relevance and continued success in this turbulent sector(Reiche, Lee &amp Javier, 2009). This research investigates whethercultural backgrounds have a significant influence in HRM policiesadopted by airlines. This will be achieved by comparing the HRMpolicies adopted by the American Airlines and those adopted byLufthansa airlines of Germany from a point of view of three frames:Structural, Symbolic and political point of view to bring thecontrasting differences of the two airlines.


Whileanalyzing the organizational structural frameworks of the twoairlines, it has to be realized that their organizational structureshave been changing periodically (Cento, 2009). The evaluation of thisresearch is a snapshot and a product of key strategic decisions takenby the HR departments of the two airlines. By studying the timelineof Lufthansa Airlines, it is evident that the company has hadconsistent leadership over the last few years and had a well-definedstrategic vision- to increase the company value making it the firstchoice for employees, customers, partners and shareholders. Theairline leverages on technological advancements to reduce the costsof operations. The autocratic system of Lufthansa Company has helpedthe airline to retain its agility in changing its structure that hasbeen helpful in promoting its expansionary plans (Schulz, 2008). Onthe other hand, American Airlines has been changing AmericanAirlines has reframed its strategies over the years to keep up withthe ever-changing customer needs, helping the airline to align totheir motto of providing impeccable services and experience to theircustomers. The American Airline has been practical in utilizingtechnology to support their strategic vision. This is evidenced bythe recent adoption of I-pads for customer care personnel and theadoption of social media sites such as Twitter to offer excellentservices (American Airlines, 2015).

Withits low-cost and efficiency driven strategy, Lufthansa Airlines haslow employees per passengers ratio, which leads to work overload,less time for innovation and unresponsiveness to clients’requirements except those that have significant contributions tocompany’s profits. The policy of reducing the employee perpassenger ratio is aimed at reducing the overall cost of servicedelivery as well as reducing passengers’ dependency on staff. Reducing passengers’ dependency on staff is made more efficient bycharging for some services offered to clients. For instance Lufthansa staff charges a small fee to guide passengers who do not speakEnglish or German as well as those who may require to find their wayto connecting flights in the airport or would like to be escortedpersonally (Lufthansa Group, 2015). The additional fee is additionalrevenue for the airline, but most importantly helps the airline tolead the way in reducing passengers’ over-reliance on staff.However, the Lufthansa airline invests in highly efficient staffwho are committed and goal-bound, with flexible roles andresponsibilities that allow employees to multitask and learn alittle more of every duty undertaken by other employees (Schulz,2008). Conversely, the American Airlines has a high employee perpassenger ration, which is critical in reducing employee workload andpromote innovation. Further, the American Airline creates overlappingduties that often leads to overlapping responsibilities, therebysupporting creativity and innovation. Evidently, the American airlinehas adopted and promoted a culture of team building, which has helpedin creating synergy, thereby promoting efficiency (Parry &amp Tyson,2013).

Increasedcomplexity compels HR department to adopt sophisticated andcoordinated strategies to ensure coordination of efforts of allemployees to promote organizational success. The American Airlineuses a bureaucratic organizational structure that has differentlevels with different roles and responsibilities spread between themanagement and other management. The various levels of management aredirected by specific objectives, service delivery to specific whichis critical to increasing customer service (Reed &amp Reed, 2014).The well-defined roles and responsibilities of all workers reducereplication of employees’ efforts, thereby increasing employees’job satisfaction. On the other hand, Lufthansa has the autocraticorganization structure. Employees have flexible roles andresponsibilities, a factor that often leads to replication ofemployee’s efforts, thus reducing job satisfaction (Parry &ampTyson, 2013).

Diversityin Employment

HRMpolicies aim at promoting and managing diversity in workplace. Employment culture that is based on diversity and equal opportunitiesfor all employees enhances the corporate ability to adapt to marketDiversity fosters creativity and makes companies more receptive andappealing to different values, outlooks, and life experiences. It isa crucial factor for companies, especially those serving a diverseculture to remain competitive (Paauwe, 2004). American Airlinesgives equal opportunities for employment to all potential candidatesthe diverse American workforce is represented at all levels ofemployment, in the board, at the executive level and even the junioremployees. The inclusion and maintenance of the strong diversity aremanaged by the Diversity Advisory Council that informs businessdecisions, educational initiatives and policies in America (AmericanAirlines, 2015). The council is comprised of seventeen employee-ledgrassroots (ERGs), who foster interaction and engagement on culturalmatters. For instance, fifty-nine percent of the workforce in 2012were male while forty-one were female. Thirty four percent of thesewere from ethnic minority, twelve percent African Americans fifteenpercent from Hispanic American and the rest from the Asian and Indianorigin. The diversity in American Airline led to its recognition asone of the most diverse employers in the US for four consecutiveyears up to 2012 (Orenic, 2009). Lufthansa Airlines is also an equalopportunity employer. However, the number of women employees isrelatively lower than that of men though the situation has beenimproving. In 2007, fifty-eight percent of employees were male andforty-two percent were female the situation has improved withfifty-five percent of employees in 2011 being men and forty-fivepercent being women (American Airlines, 2015). The difference in thepercentage of women employees in the two airlines can be attributedto different cultural backgrounds of the two states. However,Lufthansa airline employs literally from all over the world and fromall cultures though their employment is not as diverse as theAmerican opportunity (Lufthansa Group, 2015).

Trainingand Development

Ona broad scope, both the American and Lufthansa airlines have focusedon offering high quality air transport services, a responsibilitythat is practically impossible to attain without having a team ofwell-trained employees. Employee training is essential to improvingworkers productivity, promote safety and health of the employees andincrease corporate profitability and competitiveness (Paauwe, 2004).The American Airlines recognizes the role of employee development inincreasing competitiveness, agility and ingenuity as an organizationand takes appropriate skills to increase the technical andnon-technical skills of their employees. The American airline hasconsolidated most of its training near its headquarters and primaryairport hub in Fort Worth Texas. American Airline offers FAA requiredclassrooms at the Flagship University, as well as at the variousFlight Academy training centers. Operations and experiences offeredin action at nearby maintenance facilities and airports. Beyondbasic training, American Airline provides opportunities for itsemployees to develop the desired set of skills to advance personalcareers towards attaining the strategic objectives (AmericanAirlines, 2015). On its part, Lufthansa Airlines offers all kind oftraining to its employees to help maintain its leadership position inthe aviation sector. Employees, both staff and management, are givenvarious training and workshops to prepare them for their task.Executives are trained in the famed Lufthansa school of Businesswhile the staff is trained on and off-the-job and through varioustraining workshops. Additionally, Lufthansa airlines encourage thestaff to learn more through undertaking more responsibilities withinthe workplace since roles and responsibilities are relativelyflexible (Lufthansa Group, 2015).

Theamount invested in developing human capital in both airlines dependson the type of the employee, where the largest proportion ofresources is spent on improving the skills of the top managers andpilots. Training pilots involves theoretical and practical aspectsaimed at reducing accidents and emergencies related to pilot errors(Cento, 2009). On the other cabin crews and ground staff thatprovide guidelines to passengers are lightly trained since they canbe easily replaced. However, American Airline spends relatively morethan Lufthansa airline on training owing to its attitude towards itsemployees as the main drivers of organizational success (LufthansaGroup, 2015).

Boththe American and the Lufthansa airlines provide tangible andintangible benefits to all employees in the effort or retaining thetalented and dedicated workforce. These benefits start with thecompetitive and direct compensation and benefits packages,performance incentives and profit-sharing and a range of retirementoptions (Reed &amp Reed, 2014) (Pudelko, 2006). However, the dealat Lufthansa Air is fairly simple employees are rewarded for theireffort and given incentives where possible. Thus, the more employeeswork, the more they are paid. Thus, compensation is directly relatedto the number of hours spent in the working, rather than according toa fixed daily working schedule. Both Airlines offers excellent shareoption scheme that allows the employees to own a piece of theairline, allowing employees to enjoy in the success of the airline,which motivates them to promote corporate success (Lufthansa Group,2015).

Promotingemployee safety is one the most critical HR roles that aims atincreasing employee productivity by reducing absenteeism owing toemployee sickness. It is a legal requirement enacted in the 1970s toprotect workers from workplace hazards. Both American and LufthansaAirlines recognize and embrace their role in promoting employeesafety in their workplace. The American Airline established theSafety and Environmental Department that coordinates safety teamsthat operate independently from the airline (Orenic, 2009).Additionally, the airline has consolidated the safety investigationtool using a common software system to analyze, audit and investigateinjuries, ground damages, near misses and other accidents within theairline.The security department ensures that all employees aretrained on all safety precautions, a factor that has led to asignificant reduction of workplace accidents (American Airlines,2015). On the other hand, Lufthansa Airlines has anchored thestatement of promoting safe and healthy working condition in theirmission statement. The company has an integrated health and safetydepartment and has its medical service provider that concentrates onaviation and industrial medicine. The health and safety department iscomprised of employees’ representatives, who are involved in allimportant decisions that affect employees’ health and safety. Bothairlines assess job-related activities to identify probable risks andtakes appropriate measures to prevent their occurrence. They haveinstalled various up-to-date technical equipment at work-stationsminimize job hazards and improve the security of their employees.Improved safety and security provisions in these companies havepromoted their leadership in the airline industry and made them amongthe best employers in their respective countries (Lufthansa Group,2015).

Discussionof the Results

Thereexists a fiery debate amongst researchers about the relevance ofusing cultural differences between countries versus institutionaldifferences when focusing on the differences of adopted HRM policies.However, comparative research reveals that managers from differentcultures hold different assumptions and values about the nature ofthe organization and its management. According to Pudelko (2006), HRMpolicies are the cultural artifacts that reflect the basicassumptions and values of national cultures that binds andorganization. Thus, though two companies may be similar at facevalue, they may be significantly different in terms of the adoptedHRM practices. Among these cultural factors include language, valuesand attitude, religion, social organization, education, law andpolitics. Thus, companies that operate in a similar or sharedcultural background are likely to have similar HR policies, whilethose that operate in different cultural setting adopt different HRMpolicies. Thus, although the American and Lufthansa Airlines areregulated by similar international Airlines policies, HRM policiesare affected by cultural backgrounds of the two airlines, aphenomenon referred to as country-of-origin effect (Wächter, 2003).

Virtually,the US and Germany are bound by similar cultures, especially withrecent developments making the two nations almost similar. However,traditional cultures have continually influenced HRM policies in thetwo countries, a factor evidenced by different policies adopted byAmerican Airlines and Lufthansa. For instance, discrimination inworkplace is one of the significant differences brought out by thedifferent cultural background, where the levels of discrimination inGermany are much higher in the US (Meshksar, 2012). Since 1964, theUS has had significant achievements in fighting discrimination, withthe legislature enacting different laws to support the same. Amongthe notable legislations include the Civil rights Acts of 1964 thatprohibited all forms of discrimination, the Equal Credit OpportunityAct, the Fair Housing Act, Pregnancy Discrimination Act, US CodeTitle 42, and Chapter 21 among others. Thus, The US cultures havecreated an environment that does not allow any form of discriminationin the workplace. This culture is evidenced by the diversity of theworkforce in the American Airlines that represent the diversecultures of the US, with gender equality. Conversely, the Lufthansaairline adopts HRM policies that are guided by Germany cultures andtraditions. Until recently, Germany did very little in ending allforms of discrimination. According to Reiche, Lee and Javier (2009),Germany has the lowest percentage of women in workplace especially intop management levels. Until 2006, women in Germany were earningtwenty-three percent lesser than their male counterparts even insimilar employment positions. This reflects the in-depth gender-baseddiscrimination in workplace. This increased discrimination isevidenced by the low percentage of women in the airline. However, thesituation is changing and Germany is slowly fighting against allforms of discrimination in the workplace (Kusluvan, 2003). In 2001,the Federal Act on Equal Opportunities between Women and Men in theFederal Administration and in Courts of the Federation was enacted topromote equal representation of women in the justice system. This wasfollowed by the General Equal Treatment Act (AGG) of 2006 that gavewomen equal rights and opportunities as their male opportunities inthe workplace. Following the legislation, the women assume seniorposition and receive similar salaries in employment as their malecounterparts. This legislation has contributed to the increasingnumber of women employees in the Lufthansa Airlines (Reiche, Lee &ampJavier, 2009).

Culturaldiversification is another factor that has significant influence onHRM policies. The US is comprised of several cultures, AfricanAmericans, the natives, Asians Indians and others. The US culture ofequal opportunities and representation of all cultures has led to therepresentation of all these cultures as employees of the AmericanAirline (Aykan, etal.,2000). On the contrary Germany is relatively lesser culturallydiverse. Hence, the majority of employees in Lufthansa Airlines areGermans. Other cultural factors, such as racial discrimination andcare for the disadvantaged persons in the community featuresprominently in the HRM policies of Lufthansa and American Airline(Wächter, 2003). The American culture encourages its people toassist the disadvantaged persons thus the free-of-charge servicesoffered by the airlines. On the other hand, the Lufthansa Airlinesoffer any extra service at a fee, representing the German culturethat promotes independence of individuals from others (Aykan, etal.,2000).

Fromthe above, HRM policies are the guiding policies adopted byorganizations to manage the employees to improve their productivity.Effective HRM policies motivate employees leading to increasedcorporate productivity. However, the enactment of these policies isaffected by several cultural factors such as politics, laws, beliefsand cultural expectations. Thus, organizations of a similar sectorbut from different cultural background may have significantlydifferent HRM policies owing to the country-of-origin effect. Thedifferences in HRM policies can be illustrated using adopted by The American Airlines and the Lufthansa airlines.

Whileboth are equal opportunity employers, the American Airlines have asignificantly diverse workforce than the Lufthansa airlines. Whileboth have effective customer care services, the Lufthansa Airlinescharge for extra services to encourage independence of the passengersfrom the staff while the American Airlines offer the extra servicesfor free. In terms of managing the employees, the American Airlineshas a divisionalized bureaucracy structure where all employees havedefined work specifications to prevent replication of efforts andincrease employee satisfaction. Conversely, Lufthansa has anautocratic structure where employees are encouraged to take ondifferent roles a factor that sometimes leads to replication ofefforts and reduced employee satisfaction. However, both companiesinvest in improving the welfare of their employees through wages andother benefits and promote innovation to increase productivity.


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