Resolving the Qantas crisis

Were it not so serious, the Dickensian nature of the conflict between Qantas management and its staff would be a source of amusement. It is, however, no laughing matter. In moving to shut down its entire fleet indefinitely, the Qantas board broke one of the cardinal rules in big business: never bet the business. Never. Ever. This rule reflects the fact that large businesses are a very valuable collection of brands and capabilities typically built up over generations. In the case of Qantas, over four generations.

The Qantas brand is Australia’s only global business brand and has become a symbol of our culture. The organisation that represents it has very deep and valuable aviation expertise. In combination, these two things – the brand and the capability – represent the franchise and are a major source of value for shareholders and the Australian community at large. It is completely unacceptable for a board or a CEO to put this franchise at risk by a single act, or series of acts.

Qantas may be flying again in the short term but the company’s recent actions, and its approach generally to industrial relations, have caused immeasurable damage to the Qantas franchise. One must ask what sort of fractured logic (or perhaps temperament) is driving this approach?

There are two views on Qantas that mirror the position of the combatants and represent what author John Ralston Saul would call ‘competing certainties’. One certainty, espoused by the company, is that its survival in an increasingly competitive arena depends on major labour cost reductions that can only be achieved through imposed structural change. This has become a blunt, ‘crash or crash through’ strategy.

The other certainty, espoused by the unions and staff, is that these changes will destroy the business. This is a classic dilemma with the ‘facts’ supporting both sides of the argument. It is true that the labour costs of Qantas’s competitors in Asia, such as Singapore Airlines, have fallen sharply in recent years. It is also true that the structural changes proposed, involving the transfer of activities to Asia and the use of international pilots, will alter the very nature of the airline, perhaps to the detriment of its engineering and pilot culture, and safety record.

Such dilemmas are not typically resolved through either-or approaches. Nor will a bureaucratic umpire resolve them. The parties need to find a third way based on a ‘both-and’ approach. We need a genuine attempt at reconciliation – a new deal – not competing certainties. To date, neither party has been committed to this.

The starting point for a new deal might be a high level working group comprising representatives from management and staff, with a mandate to find constructive solutions based on recognition of the following principles:

Principles for a New Deal at Qantas

Commitment by the company:

• Qantas accepts that the primary responsibility for finding a workable solution rests with the management and board, not with the staff or their unions
• Qantas accepts that a workable solution requires the active goodwill of employees who are not viewed merely as expendable resources
• Qantas will be completely transparent with staff in discussing strategies for a viable future, including strategies for all the group brands, and is willing to consider constructive input from staff
• Qantas has a genuine desire to maintain the character of the airline and translate this character into meaningful points of difference in the market
• Qantas acknowledges that the primary objective is to enhance productivity and revenue, not cut jobs or reduce remuneration

Commitment by the staff:

• Qantas staff, and their unions, recognise the need for significant change that may ultimately result in fewer jobs and changes to pay and conditions

Commitment by both parties:

• Agreement that head to head conflict is not the solution
• Agreement that the goal is ‘engagement in common cause’ – a genuine partnership between the company and its people to achieve both commercial and employee objectives
• Agreement to work together harmoniously and in good faith while the solutions are being developed

If you think that the above is unrealistic, think again. So-called ‘realism’ has produced the current mess. New deals are not founded on conventional wisdom, as the renaissance at Air New Zealand is showing us. In his famous ‘New Deal’ speech in July 1932, President Roosevelt uttered some words that could have been written for the task at Qantas. He spoke of the need “to be honest and to avoid all hypocrisy or sham, to avoid all silly shutting of the eyes to the truth” and went on to say, “Let us all here assembled constitute ourselves prophets of a new order of competence and of courage.” Amen to that.

Christopher Tipler is a Melbourne-based management advisor and author of Corpus RIOS – The how and what of business strategy. His web site corpusrios.com contains more material on this and related topics.