Case Study Analysis

Principles and Practices of Management

Submitted By: Ayan Banerjee Reg. No: 11104591 [Date] 25-June-2013

ACKNOWLEDGEMENT
I have taken efforts in this project. However, it would not have been possible without the kind support and help of Miss. Sheetal and all the previous faculty members specially Mrs. Maneet Kaur and Miss Gagandeep Kaur. I would like to extend my sincere thanks to them. I am highly indebted to them for guidance and constant supervision. I am also thankful to Miss. Sheetal for providing necessary information regarding the project & also for her support in completing the project. I would like to express my gratitude towards my parents for their kind co-operation and encouragement which helped me in the completion of this project. Thank You.

CASE STUDY
People Express:
Behavioral approach to management, generally based upon the conclusions drawn from the Hawthorne experiments, proposes that productivity increase when the workers are recognized as important members of the organizational family. That is what people express did. Every employee was given a share in the ownership of the company and lifetime employment security was offered to all. People express become a classic example of organizational success and managerial effectiveness. Donald Burr was the founder and chairperson of people express. He has been credited with building a humane kind of organization where employees were given a great deal of freedom of operation. Since every employee was a part owner of the company, there was no class distinction between the managers and the workers. Managers helped workers in carrying out their duties, pilots helped out in handling the baggage and passenger comfort was given the top priority. Every Employee was given the opportunity and encouraged to know the company well. Even Top executive rotated from job to job to learn the major aspects of the business. People Express was expanding its operations very fast, within 5 years of its formation; it acquired frontier airlines and become the fifth largest airline in the country. Since the infrastructure and operational resources didnt match the fast expansion. People Express experienced its first losses and with it, its managerial style changed. It changed from participative style of management and a family type organization to a more traditional style. Donald Burr took charge of the airline and began dictating policies and it became risky for employees to speak out, which was the one of the ordinal architects of life time employment at People Express. Lori Dubose was fired when she started asking questions and speaking critically about some aspects of operations. Similarly, another director of the company, Harold Parety who was told to report work at 6.00 a.m. and stay until 9.00 p.m., irrespective of whether there was enough work for him to do or not felt it to be an insult to his integrity and quit his job and formed his own airline. Eventually People Express declared bankruptcy because it could not generate enough revenues to meet the operating expenses and other debts.

Summary of the Case:

In this case, the particular organization used to give more important to the people. Thats what the word People Express came from. Previously Donald Burr, CEO of Peoples Express, gave equal rights to all the level of employees in the organization and it was the reason for becoming a benchmarked company in the short period. But the company failed to recognize the present situation and they implemented traditional business strategy to the company. In this case, we can observe, with the lack of decision and managerial style of the company, which became the reason for bankruptcy and finally collapse of the company.

Problems and Solutions

1. Do you think that the change from participating management style to classic one contributed towards the final collapse of People Express? Explain your reasons.

Yes, we can say that change from participating management style to traditional style is one of the main reasons for final collapse of the company. But it is also possible to survive in traditional management style with new managerial planning. When management style get changed from participating to classical one, all the strategy, policies, regulations of the company get changed, even employee of the company was no more the part or owner of the company, and employees do not have the right to participate in decision making, and most importantly there was no more job security which we can see from the example of Lori Dubose. There are some other reasons also: Donald Burr failed to understand the company present situation in business and his newly implemented traditional strategy. Donald Burr not considered any opinion from his employees, when he adopts the new traditional management style. The company failed to upgrade his facilities like infrastructure and operational resources.

2. Why do you think Donale Burr changed his managerial style? Was he justified in firing Lori Dubose because she disagreed with his managerial policies?

The changing of the People Express to traditional management style was absolutely wrong. Donald Burr thought that because of the employees, company was incurring losses which was actually a wrong assumption made by him. Donald Burr was not ready to take any risk further, so he immediately changed the management style without conducting any proper research and planning which proved to be biggest blunder.

His decision of firing Lori Dubre because of the disagreement she made with the managerial policies was not justifiable. According to the People Express management style, employees have the right to speak and giving opinion to the company. But under newly adopted management style, all the rights of the employees in decision making were removed. Moreover not a single instruction were given to the employees about traditional management decision policy by Donald Burr.

Conclusion
People Express, which was one of the benchmarked airline company of the world get collapsed due to wrong decisions and lack of planning techniques. It is very essential for every company to take a view of all the employees as the situation of the market is not the same as compared to a decade ago. Lack of infrastructure and use of outdated technology are not the primary reason for the fall of the company, primary reasons were poor managerial skill and lack of human resource management.

My opinion is that, company can adopt the same People Express management style but with adding some more policies and regulation to it. But entirely changing the management style to traditional management system proved to be the biggest blunder made by the company.