Neil Buck: The Ryanair holiday disaster – A warning for business leaders

Ryanair hit the headlines for all the wrong reasons last week, and it’s fair to say that the debacle has had a serious impact on the public’s perception of the budget airline brand. Thousands of journeys were cancelled, leaving thousands of passengers disappointed and angry, all due to the company messing up the planning of its pilots’ annual leave.

Boss Michael O’Leary has apologised ‘unreservedly’ for what he described as ‘a mess of our own making’.

But what exactly caused the chaos? Well, Ryanair said that a change to its holiday year from April to March, to January to December, had resulted in more annual leave needing to be allocated to its pilots within a tighter timeframe in September and October. The bottleneck of leave requests has clearly placed immense amounts of pressure on the business, to the extent that operational requirements can no longer be met. No pilots at work meant no flights!

Further cracks in Ryanair’s people management practices also came to light, with claims emerging that the business was losing huge amounts of its pilots to competitor airlines. Norwegian, which is building a new base in Ryanair’s home airport in Dublin has confirmed that 140 pilots have joined it from Ryanair this year.

Ryanair’s boss is known for his cocky comments, and usually brushes off negative publicity, claiming that customers will always return to enjoy the low fees that their competitors just can’t offer. Indeed, he may be right as cheaper flights will always talk louder to passengers in the long run, but this massive operational cock-up and incidental PR suicide attempt will cost his company dearly in the meantime and is this chaos one step too far for people to brush it off?

It’s evident that there are poor people management processes in action, that the HR team and the business leaders aren’t communicating effectively, and that the business faces some very serious costs as a result of the mistakes – in terms of cash, for sure, but also in terms of its reputation.

It’s a stark warning that how you manage your people doesn’t stay behind closed doors. O’Leary commented that he expects to pay out around £22 million in compensation and other costs – with some industry analysts predicting that the final sum will be much higher. In the latest update, O’Leary has tried to rectify the problem a little by offering up to £12,000 lump sum to pilots (£6,000 to First Attendants) to do more shifts, although the terms means it won’t be paid until next November and only after a certain number of flights – so it’s more like a golden handcuffs rather than a bonus payment).

As a result of all this, I expect the pilots (and their unions) will use their strengthened position as leverage to negotiate better T&C’s, therefore putting O’Leary on a backfoot, when it all could have been avoided.

This scenario ably shows what an impact good, or as in this case bad, HR management practices can have on a business. It’s proof HR does have a real commercial value to business – do it right and it will save a business money in the long run. Guaranteed.

The bottom line here? Lose control of your people practices, and the consequences can be dire.

What can we learn from the Ryanair issue?

1. PLAN – Carefully plan if you are thinking of changing your holiday year dates. Sufficient and proper planning to assess the potential annual leave crunch and come up with some kind of rota for who is on holiday and when, in order to ensure that staff are still able to use their annual leave entitlement in the allocated time without having to affect production or service. If it was determined ahead of time that business demands and work scheduled would not permit all of the annual leave to be taken within this timescale then some staff could perhaps be allowed to carry over any outstanding entitlement to the next holiday year. This would avoid the situation of having to let staff take their annual leave over a very short period, and thus prevent a bottleneck that affects production or service causing cheesed off customers and a public relations fallout like Ryanair suffered.

2. SCHEDULE HOLIDAYS – No matter what size business you run, there will always be a problem if too many employees need to take leave at the same time and it takes careful planning throughout the year to ensure that there is no end of year crunch with employees needing to use or lose their annual leave. Give reminders, monitor the holidays, address any potential issues ASAP before it’s too late

3. HOLIDAY BOOKING PROCEDURE – Have a thorough holiday booking procedure so that whoever is managing it is able to deal with holiday requests, identify where there may be too many people requesting time off at the same time and follow a strict first come-first serve policy when accepting or rejecting holiday requests. Most employers tend to allow no more than two, maybe three, employees to take time off at any one time and it is acceptable to have this kind of restriction. It is also within the power of employers to dictate when employees are permitted to take their annual leave to ensure that sufficient cover is available for the amount of work that they have on. What times of year are particularly busy where you may wish to communicate it that holidays are restricted during this period?

4. EXIT INTERVIEWS & ACT FAST – In terms of losing your staff to competitors, you need to quickly assess why this is – what are they offering? Can it be addressed. Is it a lack of investment in training? Is there a poor manager? Are they motivated enough? Is it about money or benefits? Can you compete or do you have to find a way to compete if the same type of staff leaving aren’t as easy to replace? Conduct Exit Interviews with leavers (I sometimes do them for clients for obvious reasons) to find out what improvements you could possibly make to prevent staff leaving. Haemorrhaging staff to a competitor is never nice and will hurt in many ways so stopping the exodus quickly should be a priority.