The QANTAS Industrial Dispute: A Case of Lose – Lose Bargaining

The QANTAS lockdown has grounded 108 planes and cancelled thousands of flights

The recent case of QANTAS suspending all flight operations over the weekend, and issuing a lockout order against staff engaged in a long running industrial dispute is an example of poor leadership and crisis management.  If we remove the political rhetoric that will inevitably flow through this debate and look at the impact of the union led industrial actions of the past few months, and the management response that resulted in the lockout over the weekend, we can see quite clearly the failure of leadership to navigate a clear path through the bargaining process.  There are a couple of issues that I would like to tease out of this industrial dispute, and I am going to attempt to do so without taking a strong perspective on either side of who is right or wrong. I will look at the consequences of the approach to this dispute and perhaps look at what can be learned for the future.

An industrial dispute is in essence a negotiation, and in any negotiation there are always and inevitably issues of conflict that need to be resolved using the issues of cooperation.  Politically this can be framed as a battle between the workers and management, but another way to view this industrial dispute is instead to look at all the actors involved as stakeholders. Everyone involved in this dispute is a stakeholder with a vested interest in the successful resolution of this dispute. The key stakeholders as I see it are; the Management (lead by Alan Joyce), the Board (lead by Leigh Clifford), the shareholders, the workers (represented by a variety of unions), and the flying public, who just want to use their consumer rights to get the service for which they have paid. All of these stakeholders have an interest in this dispute, and yet there really have been only three parties engaged in the discourse of negotiation and bargaining, while the remainder have been collateral damage. The shareholders and the public have been penalised by this event and I will demonstrate how.

Industrial disputes involve a variety of negotiation tactics aimed at achieving a softening of a position to reach a compromise. Traditionally, this has been through claim and counter claim, then strike and sometimes lockout. Most industrial bargaining avoids the highly antagonistic stage of strike and lockout, but it can reach this point, and has done in the case of QANTAS. In today’s society, there is an added challenge of managing the news feed through traditional and instant (Twitter, facebook etc) media, to effect public opinion and community support for either the workers or management. Invariably as in all disputes such as these there will be those in favour of management and those in favour of workers.  The problem for QANTAS in this case is that the public is also the consumer.

Is QANTAS about to fly into the Storm?

In the recent past, since the demise of Ansett, QANTAS has held in most cases around 60-70% of the air traffic in Australia, with Virgin, and the otherfeed in international airlines taking the rest. Most polls demonstrate public opinion of this strike and counter action by QANTAS show that the public is split fairly evenly around 50-50, give or take a few percentage points. Joe Public is angry and many have emphasised their loss of trust in the QANTAS brand, management, and strategy. If these people take up their threat to not use QANTAS again, then QANTAS will see a direct impact of their lockout in perhaps a 10-20% drop in market share.  This is directly due to damage of the brand……this is not however only attributed to the management lockout. It is also attributable to the union strike action.

This industrial dispute is being conducted along the lines normally seen in non-mass consumer industries such as the Patrick Waterfront dispute, heavy industry or mining. In these disputes, the public is not the direct consumer, and so the total damage to the brand is minimal as it relates to the bottom line over time. The difference for QANTAS is that IT IS A MASS CONSUMER BRAND, and so its actions directly affect all of its consumers. Consequently this is a lose-lose bargaining approach from both management and unions which will ultimately result in lower market share, increased competition, lower revenue, increased costs and less jobs. Lose- lose…..and of course lower share price.

QANTAS CEO Alan Joyce

The other key stakeholders that have been abandoned in this argument are the shareholders, due to the cynical actions of the board and management. At the end of last week, the board and management went to the AGM asking for a large pay increase for the CEO; Alan Joyce, and set out the perspective of management on the dispute. I have not read all the transcripts, nor was I present at the meeting, but I have not seen anything to suggest that the Board detailed the likelihood of a lockout.  In terms of corporate governance, I believe this to be appalling. If shareholders had known this action was going to take place, which went from $15million loss a week to $20 million loss a day, would they have granted a pay increase to Joyce? Would they have re-indorsed the board?

Ultimately, this case is an example of poor leadership and management, which may cripple the brand in both the short term and the long term…..the risk now for QANTAS management, is that the arbitration at Fair Work Australia could award greater rights to the workers than QANTAS management would have accepted had they pursued a more conciliatory approach to bargaining. If that occurs, then QANTAS, will have increased their cost burden, and successfully lowered their revenue, and brand value. Whatever the result, QANTAS has seemingly lost the spirit of Australia, and may have lost the consumers of Australia.

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