Organization Structure Between Hong Kong Aircraft Engineering Haeco And China Aircraft Service

1. Objectives

The intention of this report is to discover the organization structure between Hong Kong Aircraft Engineering Company Limited - HAECO and China Aircraft Service - CASL. Discover and study both organizations' approach to human resource management, motivation, communication, leadership, learning and knowledge management, it and culture and diversity. Within the report we utilize the theories and practices learnt from Management & Organizational Behavior to make the analysis and show the way the understanding of theory is relevant in practice.

2. Business Background

2. 1 HAECO - General Background

The Hong Kong Aircraft Engineering Company Limited (HAECO) is an integral company of aircraft repair, maintenance and overhaul services in Asia. It provides complete set of aeronautical engineering services to operators and airlines since 1950.

When the business has signed a 20-year franchise agreement with the Hong Kong Airport Authority, it was a fresh milestone and became the sole full services provider of the new AIRPORT TERMINAL at Chek Lap Kok, Hong Kong.

HAECO is a holding party in many aircraft engineering and interconnected companies in various countries, including Singapore and mainland China. HAECO through the years has expanded its business of Hong Kong SAR into Mainland China with the business of Taikoo (Xiamen) Aircraft Engineering Co. Ltd. (TAECO) at Xiamen, Shandong and Fujian TAECO Aircraft Engineering Co. Ltd. (STAECO) at Shandong. Recently, in Sichuan, a joint venture "Taikoo SIchuan Aircraft Engineering Services Co. Ltd. " has been formed. Also HAECO operates maintenance services in Singapore - Singapore (HAECO) Pte. Ltd. (SHAECO). In addition, HAECO has set joint ventures with unique Equipment Manufacturers (OEMs) in providing full care services to its customers.

The Swire Group, as well as Cathay Pacific Airways, provides management support and holds the major interests in HAECO.

HAECO also owns 45% shares of the (HAESL), Hong Kong company Aero Engine Services Limited is a joint venture with Rolls-Royce plc and SIA Engineering of Singapore, mainly providing overhaul service of Rolls-Royce Trent 800, 700 & 500 series and Rolls-Royce RB211 jet engines. 1

2. 2 CASL - General Background

China Aircraft Services Limited (CASL) is a jv company between Hutchison Whampoa (China) Limited (20%), China Airlines (20%), United Airlines (20%) and China National Aviation Corporation (Group) Limited (40%). CASL was founded in 1995 mainly to supply the services of aircraft cabin cleaning, line maintenance and ground equipment supporting services at AIRPORT TERMINAL Hong Kong.

China Eastern Airlines, China Southern Airlines, Air China and Xiamen Airlines have representations in the business through CNACG's 40% shareholding ownership of CASL.

Despite of operating in Hong Kong, CASL and China Eastern Airlines founded a jv company - Shanghai Eastern Aircraft Maintenance Limited (SEAM) offering aircraft ground equipment supporting services and line maintenance at International Airport Shanghai Pudong since 2003.

With the opening of its aircraft maintenance hangar at International Airport Hong Kong in May 2009, CASL is able to provide a superior degree of aircraft maintenance services to widen their airline customers in as well as aircraft heavy maintenance and line maintenance.

Now CASL has more than 1000 staffs with widespread encounters and wide-ranging of abilities. The business is fully pledged to providing the best quality of services with their customers in focusing on customer care, continuous improvement and technical development. 2

3. Organization Structure and Design

3. 1 HAECO - Organization Structure and Design

HAECO Organization Chart 1

In the formal configuration of an organization chart (b. ) must be divided between its members and diverse jobs interconnected to one another. The distribution of work and the combination of people should, whenever possible, be organized by reference to some general characteristic which forms a logical link among the actions involved. It is necessary to maintain a sense of balance among an importance on subject material or role at higher degrees of the organization, and specialization and concern for staff at the operational level.

(b. ) Formal configuration of a business chart 3

With comparing the Formal configuration of a business chart, more or less HAECO organization chart (a. ) is the same with it. In division by service, the contributions of diverse specialists are built-into division for an entire cycle of work. This form of blend is more common in the bigger diversified organizations like HAECO and may be used as a means of dividing departments into different sections.

In HAECO line relationships, power flows vertically downward through the structure - the chain of authority - for example, from the CEO to COO, director to managers, section heads, supervisors and staffs. There's a direct relationship among each other which responsible to only 1 person. Line relationships are united with the departmental division of work and organizational control.

Line managers have the responsibility and authority for all the activities and matters of their own department.

3. 2 CASL - Organization Structure and Design

(c. ) CASL Organization Chart 2

(d. ) Flat hierarchical structure

The grouping of width of control and chain of command determines the pyramid condition of the organization and whether the hierarchical structure is "flat" (d. ) or "tall". Also the pyramid represents the structure of authority. Broader spans of organize and few levels of authority result in a flat hierarchical structure (d. ), like CASL. Within a flatter structures that will have a lower managerial costs, good communications and a brief amount of the chain with fewer levels among the very best and underneath of the hierarchical pyramid. 4

Lateral relationships exist among individuals in diverse sections or departments, especially on a single level. These lateral relationships derive from discussion and contact that is to keep synchronization and efficient organizational performance. 5

3. 3 - Compare the Similarities and Differences of Organization Structure between HAECO & CASL


With comparing the organization structure between HAECO & CASL. Generally, both companies apply the basic configuration of the formal organization chart (b. ) that I mention before. In division by service, the contributions of diverse specialists (marketing, financing, production) are built-into division for a total cycle of work. This form of mixture is a common in well developed organization. In line relationships, both companies' authority flows vertically downward through the structure - the chain of authority - for instance, from the CEO to COO, director to managers, section heads, supervisors and staffs. Their managers must have the responsibility and authority for all your activities and matters of their own department.


When comparing two companies, we realize that HAECO is a "giant" aeronautical engineering services company since 1950 with the supporting of Swire Group. On the other hand, CASL is a comparatively "small" company since 1995. Most organizations necessarily engage a degree of decentralization arising from such features as a rise in proportions, the geographical separation of diverse parts of the organization, or the necessity to extend activities or services to remote areas. This is the now situation of HAECO Company. Along with the policy of decentralization HAECO Company make the advantage of decision to be made closer to the operational degree of work.

With the "small and flat" hierarchical structure company CASL, it makes the benefits of centralization. It creates for easier co-ordination and administration control; and more important is the simpler implementation of any common policy for the organization all together.

4. Approaches to Management & Organizational Behavior

4. 1 - Motivation

4. 1. 1 - Motivation of HAECO

HAECO knows that the development of its staff is the key item to the sustainable expansion of its business. HAECO places great highlighting on rewarding, supporting and motivating staff to develop their potentials. Furthermore, it offers equal opportunities to all employees, offering them a competitive reward and benefit packages. It tries to give a good environment that promotes diversity, safeguards safety and health, and encourages an proper work-life balance and long-term career growth.

By the idea of view F. W. Taylor believed that in financial needs motivation; peoples would be motivated by gaining the utmost and possible pay through working in the most productive and efficient way. Furthermore F. W. Taylor mentioned that, motivation was a comparatively straightforward issue - what the employees wanted of their employers above all else was high pay. 6, 7

(e. ) Maslow's hierarchy of needs model7

In the style of Maslow's hierarchy of needs (e. ); when a lower "need" has satisfied, it is no longer a strong motivator. The needs of the top level in the hierarchy become the motivating and demand satisfaction. Simply say people are only motivated by unsatisfied needs. 7

In HAECO not absolutely all people followed the style of Maslow's hierarchy of needs (e. );

These include the following

Staffs in the same degree of Maslow's hierarchy, the factor of motivation will not be the same. Staffs may found satisfaction in many different ways, for instance, their esteem needs.

From the view of Maslow, satisfaction is the key motivational consequence of behavior. However, job satisfaction may well not a necessarily lead to progress work performance.

4. 1. 2 - Motivation of CASL

(f. ) Herzberg's two-factor theory 9

In CASL, Herzberg's two-factor theory (f. ) can be employed; two diverse sets of factors affecting work and motivation. This led to Herzberg's two-factor theory of job satisfaction and motivation. One group of factors if missing then cause dissatisfaction. One set of factors are hygiene or maintenance, they serve to dissatisfaction. Another group of factors, if present, serve to motivate the individual to raised performance and effort. These factors are interconnected to job content of work. These are growth factors or motivators. The strength of the factors will have an effect on the feelings of satisfaction; no satisfaction, apart from not dissatisfaction. 9

4. 2 - Leadership

4. 2. 1 - Leadership of HAECO

HAECO emphasizes goals and objectives, work task and outcomes and mobilizes people toward a vision. It specializes in continuous improvement and quality orientation and the best service to the customers. It is striving to widen their vision by focusing on individual company on the stand-alone basis and developing the strengths and functions of the individual group companies to serve the clients. It promotes teamwork and responsiveness to customer needs. Its employees are competent and driven to perform the tasks at hand, achieve a high degree of production and get results or profits. Self-interest of followers may exist in companies.

HEACO pursues Transactional leadership which is based on legitimate authority within the bureaucratic structure of the business since it targets the clarification of goals and objectives, work task and outcomes. It creates a relationship of mutual dependence and an exchange process of: 'I will give you this, should you that'.

4. 2. 2 - Leadership of CASL

CASL promotes innovation to operate a vehicle future business success as it provides change as an opportunity for some other business and better services. Particularly when airlines come across the harsh business environment, CASL as a provider understands only impressive suggestions to create a fresh vision and better service practice so as to balance the interests of all parties and serve the airline most cost-effective. Its core values include Safety First, Positive Communication, Innovation, Resources Management, Improvement on Continuous Basis, Teamwork and Satisfaction of Customers.

CASL also pursues Transactional leadership with change element. It is commonly authoritative leadership. It mobilizes employees toward a vision. It works best when changes require a new vision or whenever a clear direction is required. For instance, using "include me" to lead employees. Employees are trained to be self-confidence, impressive and able to adapt changes.

4. 3 - Learning & Knowledge Management

4. 3. 1 - Learning & Knowledge Management of HAECO

HAECO formed a Technical Training Department since 1957. It is a department that in charge of provided all technical training and supporting needs within the Company. It also gives services to the airlines, business partners and other maintenance organizations. It always keeps the most updated standards of training materials as approved by the airline customers, regulatory authorities in the industry.

The scope of the training includes basic license and aircraft types training which covering the majority of the Boeing and Airbus commercial aircraft types.

Training is an activity of learning which means change of a comparatively permanent. Individuals may vary because of some short-term factors for instance alcohol or tiredness.

(g. ) Theory of operant conditioning B. F. Skinner

Skinner made an experiment on animals that showed the consequences of punishment and reward on animals learning. He proved a behavioral response would be learned as an incentive or reinforcement was given and S&R bonding would be broken with punishment.

In HAECO, it is a real undeniable fact that staffs are willing to have training because of reward such as a promotion. Whenever a punishment came then S&R bonding would be broken; for instance when a punishment like 'increasing of work loading and without promotion or higher salary' after training; nobody wish to have a training any more although some course are provided. 10

4. 3. 2 - Learning & Knowledge Management of CASL

CASL provides diverse training to improve and support their staff both technical and non technical skills. Supported by their own training professionals, CASL also ensures that working out is meeting the requirements of customers, aviation regulatory.

Some non technical training such as human factors, team development and business training are given for a permanent development plan.

As CASL was founded in 1995, equate to HAECO in 1950, CASL is a flash company in neuro-scientific industry. Their approach is now a learning organization thought as a place where company expands their capacity to create the outcome they desire. The training organization (CASL) sounds ideal; the picture that is an organization is open-ended and highly flexible. With the ability to transform itself continually and study from experience also always gets ready to take the advantage by changing of external conditions.

4. 4 - Human Resource Management

4. 4. 1 - Human Resource Management of HAECO

Talent Development

HAECO position the accent on staff's recruitment with a diverse range of specialized skills and talents. It operates diverse types of training schemes to teach staffs to be professionals or specialists in the aircraft maintenance industry. It aims to help staffs realize their full potential; also develop their career.

Base on the philosophy of human resource management (HRM); the function of training is to build up skills and knowledge, also to change the attitudes. It really is the most crucial potential motivator. This might lead to lots of possible benefits for both organization and people; for instance training can increase self confidence, commitment and motivation of staff. Furthermore training can provide a feeling of individual achievement and satisfaction, also widen opportunities for career progression. 11, 12

4. 4. 2 - Human Resource Management of CASL

After the opening of the new aircraft hangar in '09 2009; CASL has a great demand for professionals. Their Human Resource Management planned to recruit many technical staffs and engineers to meet their operational requirements. Also CASL will establish a technical training school, which training 100 technical staff each year.

CASL, CEO of Zhang Qian Hua Fei said that an excellent experience staff in aircraft maintenance industry is approximately 10 years to build up and training will help to build up the capability of new staffs this is the company long-term key to future expansion and success.

From the view point of HRM, training ought to be viewed as an investment in staff. That is important, particularly with time with the fast change of technological, social and structural change. Training also requires the support of line managers, finance, resources, skilled staff, time, and a supporting system. There needs to be a real commitment - from top of management just like the CEO of CASL has a 'real commitment' with their employees.

Training not to be think of any isolated activity, segregated from daily working.

4. 5 - Culture & Diversity

4. 5. 1 - Culture & Diversity of HAECO

HAECO is a leading provider of aeronautical engineering company in Asia. The Company's culture is operating in a competitive environment, wide selection of maintenance activities from cabin to technical servicing and aircraft release. The business provides services for about 80 airline customers and also handling about 90, 000 flight movements in a year.

The HAECO group has employed over 12, 000 staffs, of which 5, 700 base in Hong Kong.

For Kandola and Fullerton define diversity is a basic concept of managing workforce of diverse population of people. Diversity consists of non-visible and obvious differences that will include age, sex, background, disability, race, work style and personality. All these differences will create an environment that is productive also wherein everybody will feel valued, their talents will fully be used and thus organizational goals are met. 13

The diversity chart of HAECO group (h. ) demonstrates the way the business diversity it is.

The diversity chart of HAECO group (h. )

4. 5. 2 - Culture & Diversity of CASL

CASL is a power cultural company that depends upon a central power with the rays of influence from central throughout the organization. Nearly a power culture often within small organizations and relies on trust because of its effectiveness. Control is exercised from the one by selecting key individuals such as CASL's CEO. You will find few procedures and rules also little bureaucracy a similar with CASL company.

When talking about diversity it brings me to another word, difference. In CASL likewise with HAECO, people is the most crucial asset of company, they have different views and perspectives; bringing different behavior to the workplace as well having different customs, traditions and aspirations. Differences are also making many challenging in both company.

4. 6 - Information Technology

4. 6. 1 - Information Technology of HAECO

HAECO with a new network system H3C 10GE that help expand its business in Hong Kong.

Some background review, International Airport Hong Kong is one of the busiest airports around world. A lot more than 48 million passengers traverse every year, also around roughly 800 aircrafts are landing or take-off every day. The backbone of the IT communications is a data network rooted from a single vendor - H3C. It really is a highly developed 10 Gigabit Ethernet system. 14

The biggest challenge available of aircraft maintenance is completing inspection and repair tasks as quickly as possible so as to let the plane gets back into air because aircrafts generate profits as they are in the air, therefore airlines keen to eliminate unnecessary time on ground. Because of this HAECO uses information technology to monitor, support, and increase the process with no compromising safety or quality.

The need for a powerful management of technological change has been emphasized by recent developments in IT; information technology. The impact from it (such as H3C network system in HAECO) demands up-to-the-minute patterns of work organization, particularly in the regards to administrative work procedures. IT impacts the structure and formation of work groups also the nature of jobs individually.

4. 6. 2 - IT of CASL

Although CASL don't have the hi-tech network system like H3C in HAECO, it also employs technology such as using widespread computer system for all your admin work and informational transmission. Processes of the communication associated with computer systems are able to transmit information rapidly and direct access to international or other national offices. In addition with the developments of computer systems there is a working atmosphere appeared in CASL that is clearly a greater expectation of quick response.

An additional perspective is that IT in CASL undoubtedly transforms the work nature significantly, staffs may work more than before, such as utilizing their own home's computer to gain access to company's intranet to continue the uncompleted jobs. However, if staffs are often work remotely; there will raise a threat of mentally ill and potential problem under pressures. 15

4. 7 - Communication

4. 7. 1 - Communication of HAECO

HAECO consults staffs actively on the diversity of issues to make sure that staffs invest in sharing their values of the business. HAECO has three staff associations which represent staffs at different grading respectively. Meetings with staffs' representatives regularly to ensure that issues of common interests or mutual concern of are addressed timely. On the other hand, HAECO have a bilingual quarterly internal journal, hot news and newsletter for staff to widely read. Each one of these things can help the interaction among staffs of a group.

The level of interface between staff of your team or a group is influenced by the structure of communication channels. Research by Bavelas and study by another researcher such as Leavitt have resulted in a design of some networks' communication.

There are five types of networks' communication (i. ); chain, circle, wheel, y and all-channel. In HAECO, it appears to be a Y communication network. A Y network might be suited to simple problem-solving tasks that want little interaction between members. This network is more centralized with information flows all along a predetermined channel. The general staffs don't have the ability of 'say' to the very best. Like in HAECO the 'central'person is the staffs' representative which pass the messages as between. When the task comes with an excessive information loading or handling complex problem then your network will lead to inefficient and saturation. 16, 17

(i. ) Communication networks

4. 7. 2 - Communication of CASL

CASL knows the success of the assistance is not simply predicated on software, hardware or components. It's the people behind the services make all difference. CASL management understands positive communication this is the easiest way to connect their people and management can also increase their spirit and in the end their service quality.

In CASL, it appears to be an all-channel communication network. The all-channel or comcon network is a network that involves full participation and discussion; just like CASL management will usually make discussion with their employees. This network shows to a higher level of interaction among all the people to be able to solve complex problem. There is a moderately advanced of satisfaction for staff. The comcon network might not possibly build up under pressure; in that case it will either reform or disintegrate into a wheel network. 16, 17

5. Conclusion

The Hong Kong Aircraft Engineering Company Limited (HAECO) is a long historical company in aircraft engineering field in Asia; equate to CASL, it is a fresh brand company. They may have both similarity and dissimilarity in organizations' method of motivation, human resource management, communication, learning and knowledge management, leadership, information technology and culture and diversity. In conclusion the report by using theories and practices learnt from Management & Organizational Behavior to make the analysis and show the understanding of theory is relevant used.

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