Management Changes Within British Airways

Introduction

Air travel industry is considered an outsized industry throughout the world. This industry has experienced major growth in the last 50 years due to general improvement in technology. The outcome has been a firm decline in fares and costs, which has encouraged traffic growth. This demanding traffic has made the industry grow at a speedy pace. However the speedy growth had its swindles in terms of the changes that airline industry had to go through. Organizations in the industry went through drastic and somewhat dramatic changes in the past one decade. This decade saw the businesses going through change management programs to gain and keep competitive advantage in the industry. This particular dissertation is focused on the case study of British airways and the change management program that it went through in order to gain competitive advantage.

British Airways is one of the highest earning airlines in the world. It is famous for its culture f leadership, virtues and employees welfare. Chief Executive of British Airways plc, Bob Ayling started extensive change management programs in the organization in the late 90’s. These programs were started despite the fact that BA was earning record profits back then. Some of these changes brought positive changes in the organization, however most of the changes were perceived negatively among the employees. The negativity eventually led to strikes and low morals. (Balmer et al., 2009) These problems were majorly blamed on the poor leadership of Ayling, as well as the change management programs that the company went through. Ayling, on the other hand argued that these change management programs, including cost cutting and outsourcing of major departments, were indeed necessary for long term benefit of British airways. (Harvey and Turnbull, 2006) The introduction part will now focus on defining history of British airways as well as focusing on Ayling’s change management programs and its effects on the organization as a whole.

Post Merger

Following the merger of British European Airways and British Overseas Airways Corporation which bent British Airways, the company had many problems and issues.A  One of the issues met by the company is in terms of cultural perspective. The outcomes of culture become mainly apparent in mergers, acquisitions and cross national operations, where not only dissimilar organizational cultures but also organizational cultures entrenched in different national cultures meet.(Carleton and Lineberry, 2004)A  Research indicate that when workers from dissimilar cultures interrelate and, especially, when one culture is required to adopt the procedures and policies of the other culture, upsetting tensions come out.A  And this occurred between the staff of the two merging industries (BEA and BOAC).A  This issue can be explained as (Betancourt and LA³pez, 1993). Another issue or problem faced by British Airways was it’s “forced management system”?.A The company put into practice a very inflexible management system which made the system of conversant with rules.A  Likewise, another issue was incapability of the management of the new organization to satisfy and see the requirements of their consumers.A  The organization gave importance on its limited management concentrates and approach on preserving its various routes which resulted in unsatisfied consumers.A 

These conflicts and issues had a very negative outcome on the new organization.A  British Airways earned the reputation of being the most disreputable company after the post merger.A (Carleton and Lineberry, 2004) In addition, the company could not handle the increased burden of flights and customers. In the late 80’s the company was rated as most unpunctual airline and customers were advised to avoid travelling on it. (Eckel et al., 1997)

Management changes within British Airways:

In order to modify its reputation, British Airways decided to go for ‘CHANGE MANAGEMENT’. Businesses, companies, and working organizations have incorporated change into their work system in order to be aggressive and be more competent to satisfy customer or clients needs.A  (Hayes, 2002) The Conservative party Prime Minister Margaret Thatcher selected John King in early 1981 to be the Chairperson of British Airways plc. During the management of John King, he forced changes resulting in several routes bring axed as well as selling off the cargo planes and service. The company also cut 20,000 workers as part of the change process.A  In 1982, Colin Marshall became the Chief Executive Officer (CEO) of British Airways plc. In this period, British Airways produced its first additional profit which was the outcome of the cost-cutting actions implemented by John King. Colin Marshall decided to pay attention to its customer service in order to ensure that company carries on making profit. Marshall hired Consultants to collect data about workers and customer attitudes. The outcome of this evaluation showed that there is a significant gap between what was delivered by BA staff what the consumer actually required. Another management plan was the transformation of the system from staff- oriented to customer oriented through the formation of “customer is king”? environment within the company. (Heifetz and Laurie, 2002)

Marshall also investigated that the workers had an internal problem in terms of having a harmonious and good working relationship; therefore, he decided to generate more unity among the British Airways workers by putting into practice the Staff Development Initiative which anticipated the long-term and inherent cultural development and change in British Airways. The program was intended on having more efficient staff members who could offer excellent and quality service to its consumer. (Pine and Gilmore, 1998)

This cultural education training lasted until the late 1990s; it created the awareness for the workers to do their job according to customer’s requirements. Marshall also started Awards for Excellence in 1987.A  The goal of this initiative was to award high performers and inspire the workers to always do their best in offering services.A  For the duration of that year, Brainwaves, a proposal system was also launched. The change process imposed by Marshall was in co-operation with Lancaster University to provide MBA course for its workers. This was the part of the cultural education training by British airways to make its workers more efficient. (Prokesch, 1995) Furthermore, the organizational structure of British Airways was also modified to a much slimmer and flatter structure. Five sections of the organization started direct reporting to the Chief Executive Officer and eleven profit centers were formed. This structural replacement aimed at improving staff communication and integration. The performance-related pay was also brought in by the management. The change process also comprised major investments in ground facilities, planes, and Information Technology. (Grugulis and Wilkinson, 2002)

Putting people first program

The management also started a program for its staff called “Putting people first”?. The program was focused on training the staff become more customer oriented. It was a one day seminar delivered by consultants hired by British airways. In the start the program only included staffs that were directly in contact with the customers. However with the passage of time the program was extended for all employees. The program covered the topics of being a winner or loser, owning the problem, being attentive and empowerment. (Street, 1994) With this help of this program staff was given a chance to become involved in decision making. They were encouraged to make any suggestions that could improve the customer service. This was followed by training the staff to own the problem rather than putting blame on each other. The whole trainings program helped the company dramatically, staff turnover reduced to a great level and customer satisfaction increased. (Tushman and O’Reilly III, 2006)

This successful implementation of this program led to several other training programs being launched by BA management and staff. These programs included “A day in the life”? and “to be the best”?. These two programs also met success and British airways started seeing itself getting ahead of the industry.

Winning for customer program

This program was launched in 92/93 by the company. It was completely focused on listening to customer’s views and making changes in the company accordingly. This program was basically a loyalty program for customers as well as gaining feedback from them. (Dowling and Uncles, 1997) This program was also somewhat successful as it gave the company insight into company’s service from customer’s eyes.

Managing people first program

Another program launched in the same era was “managing people first”?. This program was focused on increasing trust among employees, emphasizing the importance of leadership and feedback. (Bruce, 1987)The program brought in positive changes among the employees. They started trusting each other and delivering the job with more efforts. The leadership aspect of the program helped the managers understand their employees better and leading the organization into better changes.

The history of British airways clearly stated that a culture of change existed in the organization. These changes were perceived positively by the employees. These changes also helped the organization get on the top back then. In the case study section of the dissertation, change management programs and its consequences by Ayling will be discussed to understand and analyze that scenario.

Research question

The primary research question of this research study is,

“To explore the extent to which change management is necessary for a firm to achieve sustainable competitive advantage”?

Additionally, the secondary research question is to examine the change management initiatives previously taken by British Airways to attain competitive advantage and profitability.

Research aim and objective of this study

The main objective and strategic aim of this piece of study is to explore the role and significance of Change Management in this era of globalization and changing market needs by taking the case study of British Airways in specific.

To understand “what”? went wrong and “why”? it went wrong in the leadership of Ayling

Analyze the data and come up with findings regarding change management programs

Conclude if change management is necessary for a firm to gain competitive advantage

Literature Review

The process and practice of globalization and developments with the new technologies are merely few stimuli which continually compel business organizations to transform. Business organizations must be considerate and prepared of the vibrant inner and exterior environment in which they manage their operations. “The great challenge facing organizations today is change: employing, retaining and – most prominently – developing managers, and effectively managing organizational change”?. (Brandenburg and Binder, 1999)

There exist three different verities of change which an organization can experience. These three according to him are smooth incremental change, bumpy incremental change and discontinuous change. In the first variety the organization go through a smooth transition and such a change process is perceived by its managers as inherent to the organization. In the second variety there may be oppositions to it, however according to him it is more like the movement of the continents, where faults are generated and bumps are created. In such a case the created faults readjusts the process and a balance is created with time. (Grundy, 1998)

The third and the last variety is a discontinuous one, in which the change process is abrupt. This abrupt change could be in the strategy, culture or the structure of the organization. During the process of change there can be people who may resist it. This resistance in general comes from the individuals, who may oppose individually or as a group. The rationale behind this is that the individuals do not want to come out of their current state. As an example someone might already have convinced himself that he has already got what he wanted, so why to accept the new things? Or there might be some heavy investments involved which may be stop to proceed.

What does managing change means?

Change management is a planned activity intended at getting the best results from the transformation process. It is about managing the changes that are outcomes of the selected approaches. This is done in such a way so that the results and effects go along with the organizational framework.

Devising a strategy is also the part of change management. Such a process and procedure is unique and specific to a certain organization. It is rare that a process devised for an organization do fit to the other. Although this can happen, however the probability is quite low. The procedure for change management and the measures that are element of a specific approach are exclusive and exact to a particular organization. Every organization has its own needs; their resources and circumstances differ, culture changes, relationships and clients requirements become specific, and their ambitions, objectives and aims may differ(Mullins, 2007). It is about discovering options and selecting pathways. (Horton, 2000)

According to George Bernard Shaw “Development is unattainable without change and transformation, and those who cannot change their minds cannot change anything.”? Managing change means a systematic procedure of taking into consideration the global circumstances disturbing an organization; in addition to specific state of affairs within the organization. The change management technique scrutinizes the existing environment and procedures with high attitude to firm culture, organization design, communication, job design, personnel, infrastructure, knowledge and skills. The most important and significant meaning of change management is the term referred to as the ‘task of managing change’. The term itself is used in two contexts. Firstly, it means to make changes in an intended and systematic manner. Secondly, this refers to as managing the reactions for the implemented processes. The acknowledgment of the requirements for timely adjustment to external stimulus has evolved the concept of the learning organization; an organization which is capable of continuous adaptation to the environment. At last, change management refers to an area of constituency of professional performance and the connected body of knowledge that has grown up inside and around the issues. There are several ways for change management, as an example, consulting firms offer a range of services to smooth out the process whereas the business schools recommend training in its theory and practice. (Kouzes et al., 1987) (Kanter, 1989)

Approaches to change Management

The planned approach to change management is tightly linked to managing and recognizing the procedures intended to make organizations more progressive. All these procedures attempt to offer smooth transition and attempt the productivity with the least confrontation. ‘Change plans’ formulate the tangible outcomes, guide decision making, help to control the procedures and provide protection around uncertainties. There are six change management approaches to deal with this resistance and reaction. (Hayes, 2002)These six approaches are as following

Communication and Education:

The most significant ways to prevail over conflicts and resistance is through prior education and awareness. This helps in beforehand observing and perceiving the intensity of the change by the work force. The result of this will lead to suppression of rumors and uncertainties involved during the phase.

Involvement and Participation:

Wherever the initiators do not have the entire data and information they require designing the change and transformation and others have substantial power to oppose. When workers are mixed up in the change attempt they are more likely to involve in the transformation rather to oppose it.

Support and Facilitation:

Where people refuse to give in to change due to regulation problems, managers can set off possible resistance by encouraging workers during complex times. Managerial support facilitates employees compact with anxiety and fear during an evolution period. The source of resistance is likely to be the unawareness. Thus support and facilitation approach is connected with condition of counseling, special training and time off work.

Agreement and Negotiation:

Within an organization somebody or some group may drop out during the transformation process. Managers can fight resistance by giving incentives to workers who are not in opposition to the change and the transformation process. This agreement and negotiation approach will be suitable where those resisting change are strong enough.

Co-option and Manipulation Approach:

Somewhere there are other procedures which are too exclusive. Schlesinger and Kotter proposed that an effective management technique is to co-opt with counters of change effort and transformation process. This frequently involves choosing leaders of the resisters so that instead of opposition they lead to a contribution in the process.

Implicit and Explicit Coercion:

Implementation speed is a necessity but should be used as a final option. The process should be made as smooth as possible however the managers can clearly or perfectly compel workers into tolerating change effort by making clear that resisting change can lead to firing, losing jobs, demotions or transferring employees.

Framework of change

This idea is about the procedure for change management and transformation process, presenting proposals and getting feedback for change. This is further than a beginning step to the real action of accomplishment. There is requirement to comprehend how considered choices are completed and proposals are evaluated within the.

The framework of change management used throughout this thesis is presented in Error: Reference source not found.

This model investigates further how organizations make the movement from the current to the future state. In particular, we will look at the ‘Three Step Model’ developed by Lewin based on unfreezing the organization, moving and sustaining the change. (Lewin, 1980)

CULTURE

The first section culture of the change management framework include authenticating the case for change and transformation process and how the shared service/BPO initiative will add to comprehending the organization's premeditated goals, and readiness of both employees and organization and assessing the capacity to incorporate change. Impending blockers must be recognized and articulated with agreed-upon approaches and strategies thus the initiative is not disrupted.

ORGANIZATION

The second section wraps the design of the new world, comprising the operating model, role definitions, organizational structures, governance and competency frameworks, and decision-making frameworks. Realistic steps should be used to design effective and realistic interfaces between the retained organization and shared service/BPO capacity.

LEADERSHIP

The third step in the wheel aims to simplify how the firm will be led, and to furnish the leaders to carry out their leadership roles. Specific and detailed activities comprise how the leader ship team will work together both during implementation of shared services/ BPO, defining the role of the leadership team, and consequently, and the roles and responsibilities of individual leaders. Achievement like this may identify the requirement for coaching and/or training of leaders and potential leaders.

PEOPLE CAPABILITY

The fourth step of the cycle of change management framework intends to ascertain the competencies and skills necessary and how to gather those requirements, comprising gap analysis, skills audits, career planning and job and role definitions. Participation of talent who will lead the new firm is key to the success of this movement.

EXECUTION

The fifth step of the cycle of change management framework ensures freedom of the new form. It comprises hard deliverables in the form of milestones, project plans, budget analysis and progress reports, and soft deliverables in the shape of stakeholder’s management and communications.

CONTINUOUS IMPROVEMENT

The sixth and last step of the wheel of change management cover up life post-change and comprises processes and frameworks (e.g., balanced scorecards, performance management, and reward alignment) to determine the success of the changes, and means to make sure that opportunities for advance improvement are acted upon in a timely manner and identified.A 

Significance and benefits of Change management in the Organizations:

Benefits of Change Management:

ACCEPTING ENVIROMENT

It is significant for the organization to assess, understand, and measure the dynamics in its exterior environment such as government, society and customers in order to predict and set up an appropriate relationship with these assorted performers like society, customers and government. Hence, managers by deliberating the subject of change management can better be ready to understand anything is going on in this environment. This is a major significance of change management in business organization.

STRATEGY FORMULATION & IMPLEMENTATION TO DEVELOP COMPETITIVE ADVANTAGE

It is very important to knowing the collision of change an inappropriate level on its own interior dynamics, ‘where the main objective is to seek competitive advantage’. This is the significance of change management in business organization.

EMPLOYEES

The employees are the beneficiaries of change process. One such continuous apprehension of senior managers is to make organization highly consistent; therefore workers ought to be high performing and trained one in today's twitchy competitive new world. There is need of trained, reliable organization and high performing work practices. This is significance of change management in organizations.

TECHNOLOGY ISSUES

Technology is realized as the engine of development in today's new world. May be the greatest challenge for modern organizations is the integration and acquisition of technology in its approach, structure and procedure. As such the apprehension of top managers is how to avoid and mitigate organization being outdated and how to absorb and cope the collision of communication technologies and changing information which have determinedly influencing consumption behavior and production process. This is another major benefit of change management in the organization.

Significance of Change Management Implementation

The peak five well recognized approaches of change management and significance of change management in the organization, which, when implemented properly, permit organizations to decrease risk and increase IT effectiveness and efficiency. The practices comprise of:

Producing the top bottom approach to endorse the requirement for a culture of Information technology change management process that implements a zero tolerance approach to illicit changes across the whole enterprise. It will create significance of change management inside and outside the organization.

Examining and monitoring the number of unintentional outages frequently to avert illegitimate changes and maintain maximum control on information technology variations. It will also create significance of change management in the modern organization.

Put into practice risk mitigation changes executed and authorized by identifying well-defined change preservation windows and implemented them. The significance of change management will explore through it.

Determine change success rates and using them as standard for key information technology management performance gauge. This is one of the major significance of change management.

SWOT ANALYSIS OF BRITISH AIRWAYS

British Airways is engaged in air services operations both in international and domestic airfreight. It provides various services ranging in commercial flights service for passengers around the globe, cargo freight and mail services and other auxiliary services. British Airways primarily runs its business in Europe and in United States. Located in Harmondsworth, Middlesex, it employs 42, 755 people in all its departments. British Airways facilitates flight reservation and booking using the online net services in which customers can easily access. Trying to appear competitive and maintain its integrity as one of the best airlines which emphasizes quality customer services, BA strives to create high-end terminal facilities and other services involving comfortable of customers while onboard. BA reaches out to 570 in about 134 countries. Such magnitude of operations offers customers with variety of destinations with world-class services that cater customers ranging from explorers to executives.

Strengths

British Airways’ strengths include the first-rate new fleet of aircrafts purchased to accolade comfortable traveling of passengers. This move was made to counter the wretched state of travel and complaint received by the previous fleet used by British Airways. The magnitude of Airways’ operations allows them on pro over their competitors by servicing to a wider variety of customers. Moreover, on the level of knowledge and skills, BA operational research claimed that analytical skills performed by the members of the company and employees become its strengths. The strong customer focus develops expertise in customer areas while in purchasing high-end software for air services and wide selection of it strengthens the company’s business orientation.

Weaknesses

One of the many weaknesses on organization’s business and services is the lack of marketing strategy that will help reinforce its competitive standards, more so, to win customers loyalty. Despite the great infrastructure hosted the company, BA needs to carry out better market schemes to attract more customers. Hence, competitive package for customer service must be afforded in order to make the airline more attractive to its clients, prompting an opportunity of earning large revenues. Furthermore, on knowledge and skills management, limited knowledge of simulation software and simulation development, knowledge lost through high level of internal staff moves, teams adopt solution approaches aligned only to their skills, and lack of involvement in choice of software and difficulty to enhance specialist airline software are weaknesses which the company must be aware of.

Threats

The threats are not necessarily be found outside of company’s environment but can be an internal. Internal threats as seen in management centralized and bureaucratic system and all poor decision-making. Moreover, the company’s focus on national and local problems pose a threat since much more problems which it neglect found in the global scheme. It neglects the global problems instead focusing deeply on the national and local level. The global problems greatly offer tremendous threats if and when companies will ignore such. Moreover, globalization can be an opportunity and strength but can also be a threat if not to be keen and vigilant of its tricks and treachery. Further, rapid changes on technology and customers’ behavior can also be a threat if mistakenly interpreted and remedied.

Opportunities

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The availability of immense services and products pose an opportunity to utilize them properly. The global changes can be an opportunity to work with while ignoring certain opportunities can be a weakness. In BA, virtual reality could provide a new use for simulation, obtaining network software and share expertise through special interest groups are opportunities which can be utilized and used to further enhance the company’s business. Technological trends provide ample opportunities to various business domains, however, if it will be taken for granted, opportunities can be a threat or weakness. Maximizing the global trends is a great opportunity to hold on to.

Methodology

The proposed methodology for this dissertation is case study research. Case study research is a common and popular method of conducting research in the field of social sciences. In this methodology, an event, individuals, or group are investigated and explained. This in depth investigation focuses on defining the particular instance in either descriptive or explanatory manner. (Hartley, 2004) The methodology is not merely storytelling; rather it describes and explains the event in much detail so the reader could understand the reasons for that event/instance. The case studies are building with multiple sources of data and evidence. They are usually focused on one aspect of the organization rather than the whole organization itself. (Merriam, 1998) Case study method is quite useful if one wants to understand and estimate the impact of a certain event. It is important to understand that case study methodology can only be used when rich amount of data is available so the case can actually be built using it. (Eisenhardt, 1989)

Although it is quite popular method of conducting the research, it has its weaknesses as well. Researchers have criticized it because they feel that this method lacks reliability. The reliability is questioned when case study is build using the secondary data. This criticism states that the research cannot be relied on as it lacks researcher’s own research efforts, and the case is built on the research that was already available. (Stake, 1995)However there are more strengths to this methodology than weaknesses. The method is particularly praised due to its usefulness in providing a holistic view of an event or phenomena. It is also admired due to multiple sources of data and evidence that are used to build case study, as it provides multiple insight into the phenomena. (Gillham, 2000)

Types of case study

Researchers have devised and explained several categories of case studies. One of the popular models used to explained categories of case studies is by Yin. He defines these categories in terms of the number of event and single or multiple methods of analysis.

Type 1: Single case design and single unit of analysis

Type 2: Single unit of analysis and multiple case designs

Type 3: Single case design and multiple units of analysis

Type 4: Multiple case designs and multiple units of analysis

Yin has also devised three types of case study,

Exploratory: Used for new topics and reveals the facts about a certain event. This type of research is normally the first one and sets direction for future research. Researchers agree that this research is more related to What question rather than the Why question.

Descriptive: This type of case study research focuses on a clearly define problem or research question. Its focus is on How and Who question

Explanatory: the last type of case study research is explanatory, which focuses on Why question. It is usually build in exploratory and descriptive research and tries to find out preseason for an event’s occurrence. (Yin, 2008)

This particular research will be built on using explanatory case study method. As we already know what happened in British airways due to change management programs, however we need to search the question of Why it happened?

Sources of Data for case study

In order to build up a case study, data needs to be collected. This data gathering can either be primary or secondary. The primary data can include interviews, direct observations, and participant’s observations. On the other hand secondary data can include documentations, archived records, and published papers (Yin, 1993)

The writer will use secondary data in this research and will avoid usage of primary data. There are several reasons for this, which are given below,

There is a rich amount of secondary data available on this particular event. The change management programs at British airways and Ayling leadership happened a decade ago, and a lot of research has been done in this regard. The explanatory case study will be build on those researches, some of them are explanatory, and descriptive. Others include published papers, newspaper articles and web based resources.

Another reason for avoidance of primary data is that the event happened a decade ago and it will be very hard to find people who would like to talk about it now (interviews, questions). Since the event is in the past, researcher cannot conduct primary research by being part of it (direct observations, participant observations)

Usage of secondary data allows the researcher to include the research that has already been done on the particular topic. Previous researchers, which have gone through the scrutiny of reliability and validity, will save the writer a lot of time.

The last but certainly not the least reason for avoidance of primary data is the nature of research question. The research question is focused on all the events that occurred in past, as well as reaction and consequences of those events. Now the research question is focused on analyzing the events and its consequences and building a explanatory case study. This can only be done using the secondary data.

data gathering and analysis techniques

In order to collect the secondary data the writer plans to use these sources,

Published papers on British airways change management programs and its consequences

Web based sources including British airways website, online articles, and other documents

Books written on change management, and British airways

Newspaper articles

The data will be analyzed using the analytical models such as SWOT. This model is used to assess Strengths, weaknesses, opportunities and threats of a particular event, project, organization etc. (Hutt and Speh, 1992) The SWOT analysis will help determine the environment that surrounded British airways during the change management programs.

Once the data has been collected, and analyzed using the SWOT tool, it will be compared with the literature of change management. The implication of change management at British airways will be compared with the theories that exist in literature.

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