Air India and Tata cultures apart; will they be happy together?

Tata may have been the progenitor of aviation in India and of Air India but the two companies stand cultures apart. Tata's tie-up with AirAsia Berhad seems to be crumbling primarily due to the marked difference in the ideology of the two groups.

AirAsia is a high-risk, profit-driven and ruthless organisation. On the other hand, Tata culture is more benevolent and is invested in its employees. Research has shown that 30% of mergers fail due to work culture issues.

Over the years, since Air India was taken over by the government and converted into a public sector undertaking, service to the public stopped and vested interests took over the agenda of running the airline.

Each chief executive who has taken over the reins has been remotely controlled by the aviation ministry. Important appointments have had the approval of the ministry so much so that even daily functioning is dictated by it.

The government hasn't walked the talk after giving the slogan, "the government should not be running airports or airlines" since all top positions in the aviation sector are occupied by bureaucrats. The question which comes up logically is, who is running the airports and airlines?

An Air India Dreamliner. Image courtesy: Facebook/Air India

Cultures in aviation are like in any other organisation. A strong organisational culture as displayed by IndiGo leads to meteoric rise, profits and a motivated workforce. The merger of Air India and Indian Airlines was an eye-opener of how dissimilar work cultures can lead to the failure of the merger process.

In 2007, the merged company had more than 30,000 employees, that is 256 employees per plane. This figure was twice the global standard.

Also read: Why is Tata so keen to buy national carrier Air India?

The merged company was spending almost one-fifth of its revenues on employee pay and benefits whereas other airlines spend almost half of this cost. The employee-to-aircraft ratio stood at one-to-120 in 2015, which is still more than the global average of 100 employees per plane.

There were differences between the two companies in terms of work culture, areas of operation, compensation, working conditions, entitlements, etc.

The merger resulted in massive discontent and frustration among the employees. There had been wide differences in the pay and benefits of the employees of Indian Airlines and Air India.

These factors caused low employee morale in the organisation. In addition to the above, the existing organisational culture, which was built upon an HR culture, HR philosophy, leadership style and an unionised working style, was the root cause for the organisation’s debacle, resulting in a failed merger.

The debt-ridden Air India has been in the ICU for many years now. There have been umpteen efforts to improve its work culture and weed out red-tapism, but unfortunately, the employees did not change the way they would function.

Also read: Air India going the Tata way after nearly 70 years?

Such is the work culture that even under the threat of closure, each employee is looking at the other one to change rather than making a collective effort.

In such a scenario, there is going to be a large-scale resentment among the employees when the new management takes over and tries to implement new processes and enforces a brand new culture. The culture shock is what will take a toll on the functioning of the airline.

The plane that JRD Tata flew for the first time, carrying mail from Karachi to Bombay. Image courtesy: Youtube/Vistara

The Harvard Business Review (HBR) has some suggestion for mergers. "In addition to negotiating price and other financial terms, organisations discussing a merger need to negotiate culture. Leaders should start by conducting a cultural assessment to understand how people, practices and management reflect tightness or looseness in both companies.

Also read: Why Air India failed to sell twice before and what's working now

"They should determine the pros and cons of their current levels of tight-loose, as well as the opportunities and threats posed by merging cultures. How might sacrificing some discretion for structure, or vice versa, enhance or harm each organisation? Above all, they should identify areas for compromise: Tighter organisations need to identify domains where they can embrace greater looseness, and looser organisations need to think about how they can welcome some tight features. We call these flexible tightness and structured looseness, respectively," the HBR says.

A great number of resources need to be invested in communicating with the employees, training them and setting a new work culture. A prolonged merger or takeover will succeed instead of a rushed one where the balance sheets are merged and the work culture is not paid much attention.

Captain Amit Singh is a training and safety expert with over 30 years of experience in the commercial air transport industry. He has been associated with two startup low-cost carriers and has hands-on experience with their needs and challenges. He has been a part of the senior management at IndiGo and Air Asia India. Captain Singh has been speaking at international fora on training and safety. He is also the author of mindFly the Human Factors blog.

(This article first appeared in avobanter.com)