Case study 1 “Robert L. Crandall: American Airlines”

Executive Summary

This paper is based on a case study about Robert L. Crandall, who was an American Airlines chairman during 1985 to 1998. He had made numerous innovative systems into American Airlines while he was the CEO of it. He is recognised with his innovative thinking and work habits. He had come out with new labour relation concept. Moreover, He had implemented the two-tier wage structure, during the period where the others airline were terminating large quantity of employees. He had asked the union to reduce the wage rate for new workers, while the salary of the existing workers will remained as same. Crandall also developed the automated ticketing and reservation system with IBM. The others innovative creation of Crandall was Super Saver fares where allowed to filled empty seats and unpopular fairs.

The management is the art of getting things done through people with effectively and efficiently. “Effectively” means to achieve the goals that set by an organisation. “Efficiently” means to attain the organisational goals. In other words, “efficiently” means to use minimum resources such as money, people and resources. Good managers will try to balance both of the objectives. There is one of the most basic management roles which are planning, organising, leading and controlling. It is also known as management function. The first process in management function is planning. Planning is to set the goals of an organisation and decide how to achieve them. After setting goals, the managers need to organise and arrange the tasks, people and other resources to complete the work. That is what organising means. Next step is leading. The managers have to motive, guide, to influence their employees to work hard to fulfil the final goals of the organisation. Controlling is the last step of the management role. It is to make sure that the routines are on the right path with the goals. If the performance is in an opposite way, the managers will have to take action to correct it. There are three level of management which is also known as the Management Pyramid. Commonly, there are four levels in the management pyramid. The uppermost level in this pyramid is top-level executives (managers).

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The middle managers will below the top managers, followed by first-line managers. Non-managerial personnel are the normal employees who come from different department of an organisation such as marketing department, account and financial department, production department, human resource department and others. Different management level will play different roles in an organisation. The top managers usually determine the long-term decision about the general of organisation. They will initiate objective and arrange on strategies, policies that could realize the goals successfully. Middle managers will implement the policies and plan of the top managers. Middle managers will supervise and organize the activities for first-line managers in various departments. They are the people who will delicate the order of top managers to first-line managers. First-line managers are the head of department. Normally, the first-line managers are the one who direct contact with the customers. The first line mangers will direct daily routine to non managerial personnel. They will set short-term functional diagnosis and guide the non managerial personnel. According to the Mintzberg’s theory, which founded by Henry Mintzberg in 1971; managerial roles divided into three categories, which are interpersonal roles, informational roles and decisional roles. Interpersonal roles are to interact with people inside or outside of an organisation. The three interpersonal roles include figurehead, leader, and liaison. Informational roles is the most important part in the manager’s job, because Mintzberg believe that informational handling will affects the decision of a managers (Kinicki & William, 2013).

Informational roles are to receive and interact or implement the information. Monitor, Disseminator and spoke person are the informational roles. Usually the top managers will concentrate more in decisional roles. Managers use information to determine the decision on solving problems or take benefits from opportunity. Entrepreneur, resource allocator, disturbance handler and negotiator are parts of the decisional roles.

To answer the first question in the case study, Crandall performed all of the managerial functions. The most and frequently managerial function used by Crandall is planning, and then follow by organising and leading. As a topexecutive of American Airlines, he had to think about the overall organisational long term goals. Moreover, Crandall also needed to decide on how to achieve the organisation’s goals. How many percent of profit should American Airlines increase by this year? What is the targeted profit of this year? How to increase the efficiency of operating process? For example, Crandall had enhanced a system, called as SABRE (semi automatic business research environment). SABRE is improved from automatic ticketing and reservation systems. By increasing the accuracy and efficiency of the whole ticketing booking system, Crandall had invented another great innovation, which is known as Super Savers Fares. This Super Savers Fares will reduce fares available for reservations in advanced of flight in significant numbers. SABRE keeps accurate records of the seats available and the sales records. Later, American Airlines had started the first “frequent flier” program in the airline industry, in order to build customers loyalty to from the frequent customers (Case study, 2012).

To make use all of the functions in SABRE, American Airlines also rent the SABRE terminals to the travel agencies. In return, American Airlines receive more customers. In addition, travel agencies will pay rental fees to American Airlines. As a result, SABRE had committed more that 3000 million and produced a profit 150 million for American Airlines in1985. Organising and leading were also performed frequently by Crandall. He will arrange his time (time management). As shown in case study, he would wake up at 5 a.m. to have some exercise before he reached his office by 7a.m. He would also made weekends meetings with his subordinates. He try balance his life style between his working journey and health. He is a very good leader; he will praise the subordinates when they did well in their task. He would also spend time to listen to the subordinates. For second question, as a very successful top executive, Crandall had used the Mintzberg’s entire roles framework. Minztberg roles had generally divided into three roles, which are informational roles, interpersonal roles and decisional roles. After analyze the Crandall’s Job as a manager, I find out that Crandall mostly use decisional roles followed by interpersonal roles.

Top managers are the one who always make the long term decisional goals for the company. Crandall use decisional roles frequently. There are four roles in Decisional roles which are entrepreneur, disturbance handler, resource allocator and negotiator. Crandall had created several of innovation during his work in American Airlines. For instance, he had created the two-tier wage structure in 1983. Two-tier wage is to reduce unemployment rate in United State during the high unemployment period. In this example, Crandall has shown disturbance handler role. He found out a method to resolve the lower costs by two-tier wage structure. In order to get agreement or support from the Union, Crandall had to use negotiator roles to negotiate with the union. Crandall needed to allocate the resources to increase the effectiveness and efficiency of American Airline. By introducing two-tier wage structure, he could lower the wage costs and assigned the money to invest on others functions at the same time.

Even though the case study did not show enough evidence of Crandall in interpersonal roles, but in logically, he did figurehead role when there is new ceremony or important visitors came in. in leadership roles, he would “praise his subordinates when it is appropriate” ("Motovation - Research Papers - Ynpeck", n.d.). In liaison roles, he had worked with people that were outside the working unit. He rent the SABRE system to the travel agencies as to increase sales and also revenue. In informational roles, Crandall had to monitor the direction of the whole organisation to achieve the organisation’s goals. Both of the monitor role and disseminator role were used by Crandall to give direction to the subordinates. Crandall always needed to give speeches to the subordinates as well as the media.

For the last question, in my opinion, Crandall needed conceptual skills and human skills to perform his functions and roles. Conceptual skill is the capability to think analytically, to picture an organisation as an entire and identify how the parts work together (Kinicki & Williams, 2013). Top managers always need to resolve complicated issue. To them, conceptual skills is a must, Crandall needed to think and analyzed the problem whenever it is happened. As illustration, he thought of the two-tier wage structure and used SABRE for created huge profit for American Airlines. He needed to keep updated on news in the world and airlines industry to manage the company. He also needed to take precaution in the future problems that may faced by American Airlines.

Secondly, human skill is needed for Crandall, where all of us know a good managers need to communicate with people inside or outside of an organisation. Human skills are the ability to work successfully in collaboration with others for the purpose of getting things done. In the context of case study, there is one part which can illustrated that he had make use of the human skills, “His work habits have been part of his tremendous success, …is his understand people” ("Motovation - Research Papers - Ynpeck", n.d.). He worked well in coordinate with his subordinates, he was willing to “listen both side of the story” of his subordinates. He was never mean to praise his subordinates, he praise them when they work appropriate. As the CEO of American airlines, he had to be trusted by his subordinates, as well as the stakeholders. He was the one who represented the whole American Airlines. Human skill is important to Crandall because he needed to interact with the subordinates, the investors and the stakeholders. Apart from that, he needed to convince his subordinates and made them to achieve the goals.

References

1. Kinicki, A., & Williams, B. K. (2013). Management: A practical introduction. (6th ed.). New York: McGraw-Hill/Irwin.
2. Motovation - Research Papers - Ynpeck. (n.d.). Free Term Papers, Research Papers, Essays, Book Notes | StudyMode.com. Retrieved from http://www.studymode.com/essays/Motovation-958585.html

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