Recruitment Selection and Induction

Case Study
Determinants of Loss to PIA

Prepared by:
Wajeeha Javaid
Sabrina Bashir
Shamaila Wazir
Rubina Akram
Sadia Munir
BBA (Hons) 18B
Faculty of Management Sciences
International Islamic University, Islamabad

Prepared for:
Ma’am Jaweria Tariq
Faculty of Management Sciences
International Islamic University, Islamabad

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 ACKNOWLEDGEMENTS

All thanks to Allah Almighty, the benevolent and compassionate, who blessed us with

the power and capabilities with the help of which we are able to successfully complete

our task. It is our pleasure to also thank those people who made our report possible. We

feel ourselves indebted and highly grateful to honorable Ma’am Jaweria Tariq to

enhance and polish our skills and knowledge under a qualitative supervision. We are also

thankful to the Floor Manager Mr. Abdul Jabbar and HR manager Mr Abdul Jabbar

Fida of Askari Bank Ltd. for his help and providing us necessary material which was

required. We are thankful for his encouraging response and guidance to make our report

as a real learning experience. We are grateful for all we have learnt from him.

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Table of Contents

Serial No Topic Page No

1 Synopsis…………...………………………… 2
Executive summary ……………………….. 3
2 Introduction of organization……………....... 4
3 Description of problem……......................... 6
4 Problem Description……………………….. 8
5 Data Analysis………………………………... 9
6 Conclusion and recommendations…….. … 9
7 Implementation of programme…………….. 10
8 Benefits……………………………………. 12
9 References…………….…………………... 13

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SYNOPSIS

Topic
The topic of our case study is the causes of losses to Pakistan International Airlines
(PIA).

Purpose
The purpose of doing this case study is to find out any HR related problem that has
occurred in any organization we have analyzed the problem of Pakistan international
airlines and suggest remedies for it.

Scope
Pakistan International Airlines (also referred to as PIA), is the national flag carrier of
Pakistan and the national airline operating passenger and cargo services around the
world. It is now suffering losses but it has the capacity to earn profit and contribute
towards the GDP of country.

Method
We get the information from net by using several search engines such as Google,
yahoo, msn, answers etc. We also visit airport for getting information and interviews.

Source
We get the data from primary as well as secondary sources. In secondary sources we
get most of the data from internet and newspapers also providing sufficient
information about current situation of the organization.

Fact and figures

Major facts and figures that causing loss to Pakistan International airlines are,
Overage employees, De-motivated employees, Lack of experience, Lack of training
facilities, Low scale advertisements and awareness, High salary of staff, Political
element, Overstaffing.

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Executive Summary

Pakistan International Airlines is the national flag carrier and was established in 1955.
It not only provides transportation services, but its operations extend to providing
cargo services and courier services also. Pakistan International Airlines serves two
markets – Domestic and International. In the domestic sector, it has out performed
itself by stretching its networks to areas where other airlines do not fly to. In the
international market it faces severe competition, especially due to the fact that these
international organizations are providing fares much lower than Pakistan International
Airlines. Internationally also, Pakistan International Airlines is encountered with a
severe and strong challenge with many renowned international names. Pakistan
International Airlines faces competition with not only international airlines but also
with local airlines on the various routes to the Middle East and the Gulf.
Due to fierce competition and rising oil prices, international aviation industry
regulations and some internal factors such as human resource issues of over
recruitment, de-motivated employees, mismanagement of resources both in case
of manpower and other resources, aged fleet, corruption and lack of
accountability PIA is facing a deep financial crisis. It is losing its market share both
in international market and domestic circuit. The present case study is written about
the current situation of PIA and future plan of action for PIA.
The case study comprises of three sections. First section introduces the organization
and gives an overview of Pakistan aviation industry. The second section focuses on
determining the problems areas and describing it. The third part of the report calls for
the immediate changes that are required to make in PIA in order to take out some
better performance from the national flag carrier.

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Introduction of Organization
Pakistan International Airlines (also referred to as PIA), is the national flag
carrier of Pakistan and the national airline operating passenger and cargo services
around the world. Its main hubs are Jinnah International Airport, Karachi, the Allama
Iqbal International Airport, Lahore and the Benazir International Airport,
Islamabad/Rawalpindi.
Pakistan International Airlines PIA can trace its beginnings to the days when Pakistan
still was not a nation. In 1946, Muhammed Ali Jinnah, also known as Quaid-e-Azam,
realized the need for an airline network for the forming country. He called upon the
help of an experienced industrialist Mirza Ahmad Ispahani. Orient Airways,
registered in Calcutta, was formed on October 23 1946, In February 1947, three DC-3
airplanes were bought from a company in Texas, and in May of that year, the airline
was granted a license to fly. Services were started in June from Calcutta to Akyab and
Rangoon. This was the first post war airline flight by a South Asian registered airline
company.
Two months after this service began, Pakistan as a nation was formed. Orient
Airways began relief flights to the new nation, and soon after, it moved operations to
Karachi, where it began the important route from Karachi to Dhaka. In addition, their
initial domestic route in Pakistan was established, from Karachi to Lahore to
Peshawar, and from Karachi to Quetta to Lahore.
The government of Pakistan, realizing the operation was failing economically, asked
the airline to merge into a new national airline that the government was planning. On
March 11 of 1955, Orient Airways merged with the Government's proposed airline,
becoming Pakistan International Airlines Corporation. During the same year the
airline opened its first international service, under the PIA name, from Karachi to
London Heathrow Airport in London, United Kingdom, via Cairo International
Airport in Cairo, Egypt and Leonardo Da Vinci International Airport in Fiumicino,
Italy using Lockheed Constellations. The DC-3s continued operating the domestic
services in Pakistan.

The most important element of any airline service is the aircraft itself. Currently PIA
has 43 aircraft in its fleet.

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Pakistan Aviation Industry
Air Transportation is a fast growing industry, highly capital intensive, highly
sensitive.

Current Airlines of Pakistan

• Pakistan International Airlines

• Aero Asia
• Air Blue
• Shaheen Air International

Cargo Airlines of Pakistan

• Pakistan International Cargo

• DHL Cargo Pakistan
• Royal Air Cargo
• Star Air
• TCS Couriers

Market Size and Market Growth

The total market size for the year 2006-2007 was 14.199 million passengers as
compared to 14.615 million passengers for the year 2005-2006, therefore resulting to
a decrease.

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Defining the Problem
Problem is the PIA is getting losses for many years. No serious effort is done to
get out it from losses. During the last year Pakistan International Airlines (PIA) has
stained a loss of PKR13.4 billion ($207.5 million). Operationally, it was also
blacklisted by the European Union during the year, which hit its bottom line along
with its prestige.
Losses for the year have widened slightly from a loss of PKR12.76 billion recorded in
2006.
Pakistan International Airline is currently ranked amongst the top 20 airlines of Asia.
It has the capacity of becoming on top of the list. But due to certain reasons its market
share has been decreasing both in the domestic as well as in the international market.
Although it is still occupying a strong position in the domestic circuit being the
national flag carrier but the current position is threatening for the national flag carrier.
During the last four years the company has beard the accumulated loss in excess of 30
billion rupees, while its total debt is almost reaching 1 billion $. The expenses of the
company are increasing but the profits are decreasing. Pakistan International Airlines
is currently facing a loss of approximately 40 million Rs. per day.

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Problem Description
According to our research the company is having the problem in the following areas.
The problems for Pakistan International Airlines include:

• Over recruitment:
Pakistan International Airlines is a large organization with 18,043 employees. Its
fleet comprises of 43 planes. Its operating planes are just 33. It means round about
525 employees per plane. The industry average is being between 150-250 people.
This describes the position of the company clearly. This drives the cost of the
company further. On these airports, airport staff is in a greater number as
compared to passengers.

• De-motivated employees:
Pakistan International Airlines is a company which is constantly going in loss.
Higher number of employees and the company already going in loss de-motivates
the employees. The employees do not feel secure themselves in the company and
try to move to other successful organizations. Also certain issues such as
centralized decision making and salary issues also de-motivate the employees
taking their attention away from their job.

• Nepotism and Political involvement during recruitment and selection:

Pakistan International Airlines being the government organization has the strong
influence of the politicians and government officials. Reports say that Mr. Tariq
Kirmani was appointed chairman PIA due to being a friend of Prime minister.
Similarly Mr. Kirmani appointed his own friend Director MIS at a heavy salary.
Selection and recruitment is not done on merit. Current deputy managing director
is another example of this who was a pilot by profession and now deputy
managing director still flies some hours a week to keep his license on.

• Lack of experience relating to aviation industry for the top management:

Look at the background of former three chairmen of PIA. Mr. Tariq Kirmani was
from PSO, Mr. Zafar Khan was from PTCL and Mr. Ahmad Saeed was from

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Service industry having no experience of aviation industry. What could they
contribute to the organization with no such knowledge?

• Low scale advertisements and awareness:

A common Pakistani may even not know about Pakistan International Airlines.
No advertisements and awareness to the organization’s brands in such a modern
era of marketing. Cricket stars and sportsmen are hired on heavy salaries but with
no profit to the organization. Pakistan International already being an ethnic airline
is just confining itself to its own country. No such efforts to enhance the brighter
and soft image of the nation as well as airline are made.

• Lack of training facilities:

Although PIA is running a training and development department in Karachi but it
is in sufficient to feed such a big organization with almost 18000 employees.
Special skills such as engineering, technicians are lacking. If they are there, they
are not delivering.

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Data analysis
Through facts and figures it has been analyzed that 20% employees are not
happy with the salary package. 60% employees admit the political influence on
working of PIA. Majority of employee suggest that proper training is needed to make
the organization successful.

Recommendations and suggestions:

• Needed better functioning of human resource and administration department
• Management is needed to perform it responsibility professionally. Reducing
costs and trying to achieve more market share by combining the organization.
• Marketing department must deliver in order to create a strong figure for the
organization. It must be responsible for creating more sales and getting more
market share. Providing awareness about the good characteristics of the
organization. Getting information on related field and report to the top
officials.
• Better and modern functioning of training and development department
• Need for accountability.

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Implementation of program:

Human resources and administration department

Pakistan International Airlines is a huge company with over 18, 000 employees. A
human resources and administration department is working but it is needed to be
work efficiently and according to the standards. If it would have been working
properly then there would not been 525 ratio of employees per plane.
Jobs must be designed by this department. Each and every position must be clearly
defined. From the chairman to a sales agent and even further down everyone must be
clear about his responsibilities. He should be held responsible for his job.
International standards for recruitment must be adopted. Right number of persons
must be appointed for a specific job. Proper advertisements for each and every job
must be done. So that as many talented candidates can come in front. PIA’s
manpower should be combination of youth and experience. Both the age groups shall
be included in order to gain profitability.
Rewards and incentives must be attached with the performance. Similarly there
should be a check if an employee is not fulfilling his or her responsibilities. Job
security must be done so that employees feel secure within the organization and
remain loyal and committed to it, work for its benefits. Employee participation in the
decision making must be enhanced.
For the top level management such as chairman or managing director people having
aviation industry experience must be hired. There should be no political or
government influence during recruitment or selection. Merit must be considered at
first.

Management issues:
There should be no compromise on discipline. Discipline should be the key factor for
the organization. Policies must be clearly defined. Goals and objectives should be
determined for the organization as a whole and individually as well. Management
must assure that each and every person is committed to his job and the organization is
going towards the achievement of its targets. Management should ensure the
punctuality of flight, in flights services and their standard must be world class. Safety
and maintenance issues for the planes must be strongly checked. Management’s

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perspective should be to increase the profitability and ensure the good image of
Pakistan. Security and safety of cargo must be ensured. It must be
management’s responsibility to ensure services to the passengers both in plane and at
airport as well. The management must talk to the government on route rationalization.
Only those routes must be held which are profiting or which can provide profits in the
future. The management needs to bring all the available resources in use and bring the
modern facilities, softwares and information to the organization or at least report the
need to top level decision makers. Management should be done by objectives, both
short term and long term. Short term objectives to increase the profit and market share
by reducing the costs and expenses. Long term objectives must be image building,
providing state or the art equipment and fleet to the organization and creating
corporate culture and value in the organization.

Training and development department:

Training and development must function properly. It must prepare the employees for
the upcoming challenges and threats in the industry. Both the airline’s staff and other
employees of the organization must be well equipped with the latest techniques and
skils used in the airline industry. Engineering department plays a vital role in this
regard. A lot of money can be saved if engineers and technicians are well equipped.
No need to go abroad for maintenance and over hauling of the planes.

Accountability:
There should be proper check and balance in the organization. Everyone should be
held responsible for its responsibilities. There should be proper audit of each and
every department of the organization. If found any mishap, the responsible people
must be punished.

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Benefits
 By applying the modern techniques of management, management will
focus on its objectives and goal in an efficient and productive manner which
will reduce the expenses and focus on the achieving the profit.
 By properly marketing itself PIA will present a better image to the world. By
clearly describing facilities and projecting its image it will help in growing
market share
 Training and development of employees will prepare the employees for
current tasks and for future challenges.
 By removal of old employees it creates an opportunity for fresh energetic
candidates to show their performance. It also causes to reduce the cost because
their salaries have been increased very high.
 By the publication of magazine the awareness of the people about PIA
increases. It increases the number of passenger that increases the revenue.
 Timely decisions are possible by decentralizing the decision making power.
 By appointing employees on permanent basis the sense of ownership will
increase. When employees are secured about future they can focus on their
work more efficiently.
 By giving the importance to the suggestion of lower level management and
their participation in decision making, they wok with responsibility and tried
their best for the organization.
 Reducing the HR budget by clearly defining the job and designing the jobs.
So right number of people and required number of people will work. A proper
performance and reward system will induce employees to work effectively,
efficiently and remain loyal to the organization

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References
http://www.piac.com.pk/
http://en.wikipedia.org/wiki/Pakistan_International_Airlines
http://www.answers.com/topic/pakistan-international-airlines?cat=biz-fin
http://news.bbc.co.uk/1/hi/business/1561315.stm
Mr. Ashraf(air traffic controller) 0344-7868287
Mr. M. Nasir(salary Maintainer) 0333-2386892

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