Growth and Scalability in Operations BY gvgg Critical Analyses Employee scheduling is undoubtedly the most common and one of the most well known problems that managers face. In most cases the problems arise due to changing shifts, no scheduling template suited to specific needs, and high turnover rate. The problem that NetJets face in similar in nature but the root cause is a bit different. Sudden changes in flight schedules can be closely attributed with changing shifts and scheduling conflicts can be understood as no standard scheduling template which suits both NetJets objectives and the union’s objectives.
Since no information is provided about the turnover rate, I would assume a turnover rate higher than the industry average because of the tough work life balance and uncertain monthly schedules. Given the current scheduling issues NetJets face, it is surprising that the nation’s fourth largest domestic air carrier working on flexible flight scheduling, is still able to meet customer requirements and be profitable. But, is this model sustainable in the future is the question.
With other fractional ownership companies ramping up their businesses, such competitive threats oupled with the employee scheduling problems can create difficulties for NetJets going forward. NetJets does not operate on a standard airline model of having centralized crew members with fleet operating on high-demand areas as hubs. The company makes more than 35. 000 hotel room bookings and more than 130,000 airline tickets each month for its employees.
This is a significant cost and therefore the primary objective of maximizing ‘productivity’ in the employee scheduling process seems Justifiable. Customer experience of flying in a NetJets plane is the main value proposition NetJets has alongside ease and time savings. The crew, including the pilots therefore has several duties with respect to picking up passenger luggage, replenishing on board provisions, cleaning the compartments, engaging the customers etc. in addition to their main duties.
Keeping up employee morale and taking care of employee satisfaction is therefore an important aspect of the scheduling process. The second objective to improve ‘quality of life’ of the crew members also seems Justifiable. The third objective, which is taking care of ‘seniority’, seems to be a bit off-track to me. In the kind of work environment NetJets crew perates, scheduling employee time based on seniority does not give incentive and motivation for other crew members to work efficiently.
I would assume that NetJets also hire experienced staff and in that case the total number of years of work experience a crew member has might not be the same as the total number of years of experience at NetJets. This therefore has the potential of giving rise to subjectivity in the operational definition of seniority, leading to confusion and dissatisfaction. The problem though is that in a unionized atmosphere, which prefers seniority, it is difficult to get rid of the system completely. NetJets is sure to face huge people issues if it get rid of this policy.
Given the above situation, we would recommend the following: 1 . Introduce a wins the bid, which is not Just dependent on seniority but has other metrics to it. These metrics include – seniority (in years), seniority (in number of miles travelled), performance parameters etc. The weight to seniority (in years) can be maximum, which can cater to the needs and objectives of the union, but with relative weights to other parameter, the Junior employees can have a chance in winning the bid. The parameter and metrics though, need to be decided and finalized after enough eliberation. . Offer letter clause: It is obvious that even with the above system, the crew with Just 1 or 2 years of experience will not be able to win a bid, given the heavy weightage to seniority. To manage this, a clause in the offer letter stating that in the first two years of service, they will be allotted the day offs based on availability and based on what they bid for. Since NetJets pays its crew much more than what the competitors pay, we do not think that this will deter quality crew from accepting the offer. . Bidding for days off before putting up schedule: It appears that in the resent system, the schedule for the next month is put out 15 days before and the pilots and the crew members are asked to bid for days off after that. Such a system has a potential to bring misaligned intentions into play. Senior people can misuse their seniority to annoy a fellow Junior staff member, creating further discontent and confusion. To reap maximum productivity, the staff needs to act like a team.
Asking the crew to submit their preferred days off before the release of the next months schedule will bring in more objectivity to the bids as now number of same day bids would reduce which is easier to manage. . 18 day fixed schedule with multiple bidding: NetJets did start an 18 days fixed schedule, under which a crew member will be paid more than what others are paid (shown in the table below), but they will have to work 3-4 days more than their counterparts. They will know their schedule 15 days in advance, which will not change for the entire month.
So they can plan their month way in advance. Since these people have advantages way more than what other people have (but for the 3 days of extra work, for which they are paid anyways), we propose that this schedule should be awarded based on a bidding system with the arameters mentioned in point 1 . Also, this should be one of the parameters included with a heavy negative weight, meaning that if a person has such a schedule, he should be less likely to win in bidding for days off.
We understand that seniority is one of the things which the union rates highly and getting rid of that will raise many eyebrows, eventually reducing productivity. But, the fact that on average, a pilot with 10 years of experience earns $30,000 per annum more than a pilot with 5 years of experience, and on average a first officer with 10 years of experience earns $1 5,000 ore than a first officer with 5 years, takes care of the rewarding a senior employee. It is to be noted that NetJets pay overtime rate, extended day rate, and extra pay for holidays, which depends on the hourly rate.
This hourly rate is much more for a senior employee than for a Junior employee. The union should be taken into confidence with these figures and for the new scheduling system based in weighted averages of several parameters as mentioned in point 1 . Proper communication with the union needs to be established before executing the new system. The aim for NetJets should be to have more people in the 18 days fixed schedule and on 7 off schedule. Having more people on the 18 days fixed schedule will surely add hiring more crew members.
A specific number of people still need to be kept in the 1 5 day flex schedule due to high uncertainty of the customer demands. With this new system, there will essentially be a bidding process on two things – bid on type of schedule and bid on days off. While we propose that bid of selecting the type of schedule should exist to have more objectivity in the entire process, yet, such bids should not be very frequent, twice a year seems good to us. This will ensure that NetJets knows how many crew members are in each schedule type.
There are a few risks involved here, the biggest of which is getting a buy in from the union and management. As mentioned earlier, union buy in can be obtained as the two objectives that they have are still intact. Moreover, the senior members of NetJets’s crew are paid a lot more than the Junior members which needs to be shown and communicated. The new system does not change anything but brings in the objectives of the union in line with those of the management. Dissatisfaction of the employees will reduce which is good for union, as they will have to handle lesser number of issues.
From the management’s perspective, having a push towards the 18 days fixed schedule will surely increase costs in terms of salaries but essentially the cost will be reduced by hiring less number of people. Moreover, the productivity will increase as the employees will be more satisfied as each person will have some say on their day offs. There will be no issues related to training or infrastructure because of the change in policies and therefore convincing the management will not be a problem. NetJets might need to invest in technology to manage the new database of bidding based on the key finalized parameters.