This case describes the challenging strategic decision about downsizing in Delta Airlines where 2,000 employees were laid off in 2011. According to Freed (2011), the layoffs have been undertaken as the high fuel prices have sliced the Airline’s profits in half; thus having 70 percent of the earned money cover for fuel alone.
II. Alternatives to the problem
Among the alternatives to having layoffs are the following:
In times of great crisis where many of the airlines are choosing to downsize, expansion can help gain more profits in the long run since the competition is slowly depleting.
b. Cut down on unnecessary expenses
Since the problem is the rising fuel expenses, those in charge of Delta Airline’s budget can lessen the unnecessary expenses and focus more on the company’s needs (such as fuel) for the time being. Through this strategy, the leaders of the company may decide to cease additional cut and hiring bonuses, unnecessary travel, overtime, and raises. They may also delay for the time being the non-essential system and equipment upgrades for those matters that are not urgent. Office perks may also be reduced such as losing the momentous office parties and the giveaways.
c. Offer unpaid vacation leaves
An extra vacation time for the employees may improve productivity since employees will have more time to rest, and it will as well benefit the company since this will reduce costs on paying the full salary.
d. Consider a virtual office for administrative positions
Having virtual employees will allow the company to keep only the vital staff onsite and would allow those who work on administrative duties to work remotely. This move can reduce internet and software expenses; thus, allowing the company leaders to have more communicating time with their employees since the virtual set-up will require regular monitoring.
The best strategy that Delta Airlines may use would have to be the expansion. It was said that one of their competitors in the business, namely Southwest Airlines had kept a no layoffs policy in the midst of the 9/11 crash. During this period, Southwest Airlines has even chosen to expand thus eliminating competition in the market since many have chosen to close down during the tragedy. Southwest Airlines has kept their employees at the top of their priorities (Kneale, 2009). In fact, when all competitors chose to layoff their employees, they have chosen to widen their horizon gaining an exceptional profit in the long-run (Visser, n.d.). Had Delta Airlines emulate such a move, it would have gained the chance to keep the 2,000 employees.
The strategy may be best evaluated using calculating the profitability of the project. Since through this effort, the company may get an overview of the costs and gains that were associated with the expansion. Another thing to consider would be to measure the time and all the effort it has taken to commence and complete the project. Having to know the time allotted for the project can give the leaders an idea if having to give more time could profit or cost the company more than it should have given.
Community Futures Stuart Nechako. (2014, July 11). Business Expansion: Measure & Evaluate. Retrieved from http://www.cf-sn.ca/business/business_expansion/measure.php
Freed, J. (2011, July 27). Delta 2Q profit falls 58 pct; 2,000 take buyouts - Yahoo News. Retrieved from http://news.yahoo.com/delta-2q-profit-falls-58-pct-2-000-132030189.html
Kneale, K. (2009, February 12). You're Probably Doing Your Layoffs All Wrong - Forbes. Retrieved from http://www.forbes.com/2009/02/12/layoffs-workforce-planning-leadership-management_0212_kneale.html
The Wall Street Journal. (2015). What are Alternatives to Layoffs? - Management - WSJ.com. Retrieved from http://guides.wsj.com/management/recruiting-hiring-and-firing/what-are-alternatives-to-layoffs/
Visser, C. (n.d.). Organizational Resilience in Times of Crisis - Strategy & Administration - Article - ManagementSite. Retrieved from http://www.managementsite.com/494/Organizational-Resilience-in-Times-of-Crisis.aspx#How%20did%20Southwest%20Airlines%20stand%20the%20test?
Wilson, A. (2010, March 15). In Defense of Downsizing | The Weekly Standard. Retrieved from http://www.weeklystandard.com/articles/defense-downsizing