- The VSS should be structured better
By: Salman Munir
There was a happy and productive worker in a public sector organization far away. The organization was profitable and happy too. It wanted more of this happiness and kept looking for ways to increase revenue and provide employment to some highly recommended citizens. For the organization, increase in revenue always brings happiness no matter at what cost to its people. One day it occurred to the organization that the worker was not supervised and perhaps with supervision his productivity will increase. So they brought in a supervisor.
The worker was still happy and productive. One day the supervisor thought there should be a layer between him and the worker so he doesn’t have to interact directly with the worker. So he brought in an assistant supervisor. Even with this increased supervision the worker was happy and productive and the organization was still making money. In its wisdom, it thought that with some more supervision there were chances of further increase in productivity and revenue. So they brought in a manager to supervise the supervisor. After a few days the manager thought that an assistant manager will be effective in maintaining close level of supervision and hence may contribute further to the bottom line. The worker started losing some of his productivity and happiness with all these layers of management. But by now there was no one close enough to the worker to care about his productivity and happiness. The worker with each passing day lost productivity resulting in the organization losing money. He felt left out, disengaged and unhappy. This state of affairs affected the bottom line.
The organization was concerned at this constant loss of revenue and hired a very expensive and world-renowned management consultant to find what the problem was? The consultant ran numbers, interviewed every one concerned and informed the organization that it was overstaffed and that was the reason it was losing money. The consultant recommended a redundancy program. So the organization fired the happy and productive worker.
Sounds familiar! This could easily be PIA. I had read this story some 40 years ago in a management magazine. This still holds true in all organizations, especially state-run enterprises. Pakistan International Airlines (PIA) is again in the news trying to tackle overstaffing. This time offering a large-scale Voluntary Separation Scheme (VSS), the numbers of which are staggering. This is not the first time PIA is going this route. This has happened before and is a road much travelled. PIA informed the Supreme Court that it is set to reduce it’s employees from 14,500 to around 8000 for 29 aircraft through VSS. Compare this with Turkish Airlines, no jewel among airlines, with 31,000 employees for 329 aircraft. Along with the VSS, PIA will carry certain other measures of separating core and non-core activities, discriminatory transfers to dislocate employees so they leave of their own accord (also called harassment), and reduce allowances arbitrarily to go in the black one way or the other. How did PIA come to this sorry state of affairs and will VSS help in any way?
A few words about the VSS: In my view, the reason for VSS is flawed. PIA would like to reduce its staff strength by 50 per cent. Why? Because the airline has just 29 aircrafts and believes this number is adequate for 29 aircrafts.
While the free fall of PIA is not a state secret and you do not need 007 to uncover it, it is still worth mentioning. First is staffing: In 1975, PIA embarked on a large intake of Grade 6 officers fresh out of university. Some of my ablest of classmates took up employment with PIA. Surprisingly, two of the MBAs from the Punjab University left Citibank and joined PIA. This was the kind of lure PIA enjoyed. Gradually, the recruitment standard fell. Emphasis shifted during President Zia ul Haq’s time from ability to knowledge of religion. Later, recommendations of politicians started mattering more than either ability or knowledge of religion. The result of this meddling is in front of us. Second is management: at best, the management has been loose, incompetent, and corrupt or based on cronyism. Again the result is in front of us. Third is business acumen: PIA’s biggest assets were the routes it was lucky to have as an old airline when the world was smaller and less competitive. Gradually and perhaps intentionally the most sought after and profitable international routes were given up making it a regional airline. Now efforts are afoot to give up PIA Investments’ hotels too.
A few words about the VSS: In my view, the reason for VSS is flawed. PIA would like to reduce its staff strength by 50 per cent. Why? Because the airline has just 29 aircrafts and believes this number is adequate for 29 aircrafts. Does this mean PIA plans to keep the aircraft strength around 29? Then of course this makes sense. To pay off a large amount of money to a large number of people to reduce future costs. If, however, PIA plans to increase the number of aircraft then it will again embark on a staffing drive. Adding additional costs, and perhaps at a higher level. Replacement costs are always higher in the corporate world.
According to reports the VSS has been introduced and staff has been given up to December 28 to opt for it “if they like.” Otherwise, wide scale transfers shall take place. This is like opening a Pandora’s box. The people will run to the courts and the courts will come to their rescue and the story will go on and on. Even the beginning of the VSS was flawed, asking staff who opt for it to pay for their trainings undertaken at PIA’s expense. I am glad PIA management withdrew this condition because it would have never withstood the Courts’ scrutiny. Now the tussle is about giving up medical and travel facilities if opting for the VSS.
So what should be done? I understand that this number of some 7500 employees will be a mix of white and blue collared workers. While Labor Laws apply to blue collared workers, white collared workers have no such protection under the law and are treated as master and servants. And our courts are renowned in taking their own sweet time in deciding cases filed by such employees, which obviously benefits the employers. So PIA can hide behind this or be fair to it’s workforce and apply across the board fair and equitable scheme of “Last-in-first-out.” LIFO is a principle used in selecting workers for redundancy. This simply means that those with the least seniority are the first to lose their jobs. This method has always seen as a fair way to deal with redundancies and most likely to stand the judicial scrutiny. Furthermore, the governments of MQM, PPP and PML (N) have been accused of extreme cronyism in PIA’s recruitment drives earlier this century. LIFO will take care of that too.
PIA might see this method as unfair because it does mean that the organization might loose some of the best employees who are relatively new and some of the worst older ones staying on. Well there is no perfect method. But employees and the public always perceive a method as fair and transparent if applied across the board with the same criteria without fear or favor or discrimination or antagonism. After all, the secret of good governance is in its application.
Another thing PIA must introduce is to recruit on a fixed-term employment of 2/3 years. In other words discontinue open-ended employment. This way it might be able to retain a skills mix that can cater to the future. Or even re-hire the good ones lost under LIFO. It also gives the employer a lot of flexibility to deal with COVID-19 like emergencies, ever-changing business scenarios, long-term expenses and ultimately be profitable. After all “the business of business is business,” said Milton Friedman, the winner of 1976 Nobel Prize for Economic Sciences.