Case Study Of Jet Blue

Building any company from the ground up is difficult, but building an airline from the beginning is an enormous undertaking. From decisions on what routes to fly, the types of airliners to use, and the prices to charge, the founders of JetBlue Airways had their work cut out for them. The human resources department of any company is one of the most integral parts of a business. Without the right people to do the right job a business is doomed to fail. What goes into finding the right people for the right job? What must be considered during recruitment and the interview process? From the start, companies must be mindful of federal employment laws. JetBlue, like most other employers, is subject to federal employment laws.

When recruiting potential employees, interviewing possible employees, and even when offering salaries to these potential employees, JetBlue must be conscious of these laws. While all federal employment laws must be abided by, the three that will be discussed here are: 1). Age Discrimination in Employment Act, 2). Americans with Disabilities Act of 1990, and 3). Pregnancy Discrimination Act of 1978. All three of these laws deal with discrimination. What exactly is discrimination? Discrimination is when a person or a group of people are shown favoritism over another person or group of people based on any number of characteristics. These characteristics can include, but are not limited to, age, sex, race, religion, or national origin.

The Age Discrimination Act was crafted to stop employers from discriminating against people over the age of 40. Other than asking if a person is over the age of 18, it is illegal for a company to ask the age of the applicant. During recruitment, JetBlue cannot post a help wanted advertisement that says “no one over 40 will be considered.” According to Mondy and Mondy (2011), book Human Resource Management, it is permissible for age to be a qualification of the occupation. For any airline, as a job qualification for pilots, commercial pilots must retire at the age of 65 (p.58). Except for the pilots, JetBlue cannot discriminate against a person because of their age. Legally if a pilot applied to the airline at age 64, met all the qualifications for the job, and was determined to be a good fit for JetBlue, it would be illegal to not hire the pilot based on his age alone.

The Americans with Disabilities Act of 1990 (ADA), is also a law that prohibits discrimination. A person that is qualified and able to perform a job has the right to reasonable accommodations. It would be illegal for JetBlue to ask during recruitment if a person is disabled. It is allowable to ask a person if they are qualified to do the job and if they are able to perform the job. For example, a person that is blind would not be qualified or able to be a pilot, but if this same person was applying for a position as a customer service representative (CSR), it would be illegal not to hire them based solely on their disability. The ADA would require JetBlue to make reasonable accommodations for this person to work as a CSR. The Pregnancy Discrimination Act of 1978 protects woman who are pregnant from job discrimination.

JetBlue cannot ask a woman applying for a position if she is pregnant, has been pregnant, or even if she plans to become pregnant. As long as a woman can perform a job, it is also illegal to force her to take a leave of absence. This act also states that if others who have been on disability leave can return to their jobs when they are able, then so must women be allowed to return after a maternity leave (Mondy & Mondy, 2011, p. 56). But in the reverse, if it is company policy never to let anyone return to work after a disability leave then women cannot be allowed to return after a maternity leave. Allowing for an exception to the new mothers would be discriminating to the others that would not be allowed to return.

While recruiting people to come to work, JetBlue used several internal recruitment methods. Employee referrals are one such internal recruitment method. Dave Barger, the President of JetBlue Airways, believed “…happy pilots were a great source for recruiting their friends from competing airlines” (Gittell & O’Reily, 2001, p.12). An employee referral would be an advantage because there is no cost involved to JetBlue for the initial recruitment. Word of mouth job advertising is also advantageous because you have professionals recruiting other professionals, and often times the employee performs a sort of pre-screening.

This word of mouth type of recruiting can also have disadvantages. One disadvantage is that friends tend to stick together. If one friend decides to leave JetBlue for a perceived better opportunity, the other friend may also follow. This can lead to losing multiple employees at the same time. Another disadvantage to employee referrals is that often times this limits the diversity of the company’s workforce.

JetBlue also used external methods of recruitment. Media advertisement is an external method of recruitment. When looking for reservation agents, an advertisement was place in a Salt Lake City newspaper (Gittell & O’Reily, 2001, p.6). The advantage of recruiting from an outside source is that the applicant pool tends to be more diverse and the number of applicants can be large. A disadvantage to media advertisements can be the cost, not only of the advertisement itself, but also the cost of the manpower to review all the applications. While the applicant pool may be larger and more diverse, often times too many people apply that have little or no experience, are extremely underqualified, or perhaps have been chronically unemployed.

During the interview for pilots and mechanics, JetBlue used a behavioral interview process. “The behavioral interview is a structured interview in which applicants are asked to relate actual incidents from their past relevant to the target job” (Mondy & Mondy, 2011, p. 153). During this type of interview an applicant may be asked, “Tell me about a time that you exceeded a customer’s expectations.” The purpose of this type of question is to see how the interviewee handles different situations. Another type of question may be, “Tell me about the worst day at your last job and how did you handle it?” This type of question can help to identify weaknesses and strengths of the applicant. By using a behavioral interview JetBlue felt it was important to hire employees that are the best in their fields. They also felt it is also important to hire people that fit in with their culture.

This culture had been built on values identified by the Principals of JetBlue. “Ann Rhoades”, Human Resource Vice President, “placed enormous importance on hiring the right people. ‘To me, hiring is the most important thing you can do if you know what you want to look like.’ ” (Gittell & O’Reily, 2001, p.6). Once hired, all employees face a performance appraisal (PA). Most companies use the PA as a basis for wage increases and promotions. The performance appraisal system can be influenced by different factors. The three main influences are governmental, unions, and the internal environment of the company. The government influences the PA system by mandating laws to prohibit discriminatory practices. This mandate limits what personal factors can be considered during the PA. Just as with hiring, a person cannot be discriminated against during a PA.

Labor Union can also influence a PA system, usually by insisting that seniority should be the determining factor of advancements in careers and salaries. Often times, written into the Union contract are the provisions of how PA is conducted and how and when salary increases occur. The disadvantage to promotions and salaries being increased based solely on seniority is that an employee can be rewarded for mediocre performance. Positive cultures within a company lead to more constructive evaluations and negative cultures have negative impacts on evaluations (Mondy & Mondy, 2011, p. 212). A company that promotes from within uses that PA to determine the competencies of the employee, where more training is needed, and perhaps when an employee would be better suited in a different position.

Properly executed, a good PA system can be a very strong asset to a company. Poorly executed, a PA system could hurt the company but not recognizing the potential of some employees. One type of PA system is the 360-degree feedback evaluation. The 360-degree feedback evaluation provides input from different sources within the company and can also include feedback from outsources such as customers. The intention of this type of evaluation is to have a better-rounded appraisal. There are several advantages to a 360 evaluation. Since the feedback is coming from several sources, this often gives a more objective review. If a poor review was received as the result of a different type of evaluation, often times an employee feels it is because the manager “has it out” for them.

The 360 evaluation can give the employee a realistic view of how their work and behavior is viewed by others. By doing this an employee can accept more accountability for their weaknesses and strengths. Because the 360-degree feedback evaluation is deemed more objective, it also fairs better in a court of law. For example, a person that has been terminated from a job may bring a lawsuit against the company for wrongful termination. With the 360-degree PA, different sources contribute to the review. If a majority of these evaluators rank this terminated individual the same or closely the same, then a Court of Law is more likely to determine that the review has substance. Although not discussed earlier, another Federal employment law that all employers must be diligent to follow is the Equal Pay Act of 1963.

The original law was enacted to protect women from being paid less than men who worked in the same position. There are exceptions to this law. Some of those exceptions can include pay increases based on levels of quality and quantity of work, seniority, and even merit based pay increases (Mondy & Mondy, 2011, pp. 52-53). There are factors that can influence the amount of compensation offered to an employee. The first factors to be discussed are the employee-related factors. These internal factors can include the skill of the employee, education level, experience, and if the new employee is going to be a member of a union. A new hire that has years of experience flying a commercial airliner will have a higher compensation package as opposed to someone that just received a commercial pilot’s license. A person that has earned a master’s degree can expect higher compensation than a person that has an associated degree in the same field.

A person that has attuned their skills and works as a journeyman in their trade is going to be compensated better than an apprentice. The more experience, the more education, the more skill a person has can reduce the amount of time and money a company has to invest in training a new employee. Just as with recruiting, hiring and performance appraisals, age, sex, race, religion, or national origin cannot be a determining factor of the amount of compensation an employee is to receive. The next factors that can determine the level of compensation an employee will receive are external factors. One such factor is the company itself. Is this company a start up? Are they finically stable? What are the compensation policies of the company? The size and value of the company also influences the compensation of the employee.

A Human Resources Manager of a multi-billion dollar company is likely to receive better compensation than an HR Manager of a company that is only producing a million dollars in profit a year. Another external factor that can determine the level of compensation an employee is to receive is the job itself. The requirements of the job and job description are often used as part of this determination. A job that calls for technical knowledge or degree is going to compensate better that a job that only calls for general knowledge or high school degree. A neurosurgeon is going to be compensated more than a family practice physician. The last external factor, to be considered here, that determines the amount of compensation an employee is to receive is the condition of the job market. If the job market is growing and there is a need for individuals to fill available positions, those occupations will be compensated better.

Compensation for jobs that are often saturated with available employees often has a lower pay. Jobs located in major cities, like New York, Los Angeles, and Chicago, are going to pay more than the same jobs located in Hope, Indiana. The difference in compensation can be attributed to the cost difference to live in these major cities as to the cost to live in a smaller town. Compensation for a job goes beyond the dollar amount an employee is paid. Compensation also includes benefits that an employee receives. Some benefits are mandated by the government. These benefits include Worker Compensation, in case of injury on the job and unemployment compensation, a benefit that is paid if the person becomes unemployed. JetBlue offered many discretionary benefits to their employees. One discretionary benefit offered by JetBlue was the payment of a shift differential (Gittell & O’Reily, 2001, p.6).

A shift differential is an hourly increase in pay for those employees that work an evening or night shift position. In JetBlue’s case these shift differentials where paid to dock workers and CSR’s. For example, a dock worker who works an evening shift may be paid $1.00 more an hour than a dock worker who works the day shift. An employee that works the night shift may be compensated $1.50 more an hour than a day shift worker. Companies often have trouble filling positions on the evening and night shift and use this pay difference to entice workers. A second type of discretionary benefits that JetBlue offered some employees was stock options (Gittell & O’Reily, 2001, p.6). A stock option is an agreement that an employee can purchase stock in the company at an agreed time for an agree amount. For example, an employee can purchase up to 100 shares of stock for $24.00 a share after 5 years of employment and after those five years the stock is worth $56.00 a share, the employee can profit $22.00 a share.

However there are risks to stock options. If the same employee has fulfilled their five years of employment and can purchase the stock for $24.00 a share and the stock is only worth $23.00 there is no benefit to the employee. Pay in lieu of benefits was also offered to some employees (Gittell & O’Reily, 2001, p.6). This discretionary benefit is an increase in hourly pay instead of receiving other discretionary benefits like medical benefits. Pay in lieu of benefits is used to entice younger workers, like college students. Often times college students are still covered under their parent’s health insurance until a certain age. Offering a health insurance to a college student, that already has coverage, is really no benefit at all. To compensate something else of value is offered instead. The human resources department of any company can be its strongest asset. From recruitment, hiring, promoting, and retention of employees, the human resources department of JetBlue Airways had their work cut out for them.

Not only did they have to be mindful of governmental rules and regulations, they also tried to keep the best interest of the employees and the company in mind. The wide array of discretionary benefits offered to the different groups of employees is one way JetBlue tried to set itself above other companies. The amount of compensation paid to JetBlue employees is another way that the company took care of their employees. Still in operation, JetBlue seems to have accomplished its goals, “with our friendly service and hassle-free technology, we’re going to bring humanity back to air travel (Gittell & O’Reily, 2001, p.2).

References
Gittel, J.H and O’Reilly, C. (2001). JetBlue Airways: Starting from Scratch. Harvard Business School, Boston, M.A.: Harvard Business School Publishing
Mondy, R. W., & Mondy, J. B. (2011). Human resource management (12th ed.).Upper Saddle River, N.J.: Pearson Prentice Hall.