British Airway’s Essay

A research report with a word lay out of 1,500 on British Airways (BA) transmute program that resulted in long-running industrial disputes between its management and crew members in 2009-2011. The contextual information near the BAs introduction of strategic changes why BA produced this change, explain market (rising fuel be etc.) British Airways is the UKs largest airline. Since becoming privatized in 1987, BA has continued to grow despite increased competition (Connell & Williamson, 2011).The UKs economic climate had a large influence to why the British Airways industrial occurred. In 2011, UK inflation was 4% on the previous year, comp ared to an average pay rise of 2.3% for the same period. This means that the cost of living was increasing at a much(prenominal) more rapid rate than peoples income. As a result, workers like BAs cabin crew put pressure on employers to raise pay. Additionally, lower disposable income means fewer than usual are withdrawing m nonpareily for on e-off purchases such as foreign holidays A lot of people are not touching their savings because they do not know what is round the corner (Giles, Groom & Bounds, 2011).Therefore demand for international flights is lower. Fuel accounts for 25% of British Airways total costs, therefore any fluctuations in the price of natural resources will have a huge impact on this industry. In 2011, after oil prices surged to $110 a barrel, BA informed passengers that they face rising fares (Groom, 2011). IAGs (BAs parent company) fuel costs were predicted to rise by 1.2bn to 5.1bn (4.36bn) in 2011 (Groom, 2011). However increasing fares would have mow the airlines competitiveness. Alternatively the company could remain profitable by reducing operate costs instead of passing the increases onto the customer.The airline industry has also been affected by social trends. Insurance costs have risen because of fear of terrorism and tighter pledge checks at airports (Barrows & Neely, 2011). Technologi cal advances have reduced demand for business flights, with companies using alternative communication systems such as teleconferencing in order to release costs (Shaw, 2011). As a result of these macroeconomic factors, BA felt that they needed to adopt an internal cost-cutting strategy to remain profitable. The dispute developed into a row over travel concessions removed from Unite members who went on strike, as well as suspensions and dismissals (Groom, 2011).The current environment of high unemployment increased BAs bargaining power as an employer (Conrady & Buck, 2012, 11). The union was powerless to stop the original cause of the dispute as BA removed at least one crew member from most long-haul flights, saving 63m a year (Groom, 2011). It has also hired 700 new crew members in its so called mixed fleet on certain routes, earning 17,000 a year on average compared with 29,000 for existing Heathrow cabin crew (Groom, 2011). This programme should yield 160m annual savings within a decade. fit in to Deutsche Bank, following the cuts, BA has the lowest employee costs of the major European network airlines at 22.9 per cent of sales in 2010 compared with 26.8 per cent in 2006 (Groom, 2011).Evaluation on the nature of such changes was it gradual, radical, top management, grass roots up scale, depth time scale. Apply the kaleidoscope model. On October 6, 2009 the airline announced plans to cut 1,700 cabin crew jobs and freeze pay. Union officials accused the company of attribute a gun to the heads of faculty and warned that they were prepared to fight the proposals. It wasnt until May 1, 2011 that the dispute was on the border of being resolved following a breakthrough in crucial talks aimed at ending the long-running row (Telegraph, 2011, May 12). The dispute lasted more than 18 months and led to 22 days of strikes costing BA 150m.Therefore this proved to be a costly process, and had it been resolved sooner, BA would have saved a lot of money and the brand w ouldnt have received as much negative publicity. However, analysts said the airlines savings on staff costs would far outweigh the losses from the strike and the outcome should reduce the likelihood of future stoppages (Groom, 2011). The unfreezing phase (Lewins model) of this change was a gradual, drawn-out process. clockAs this was not a company in crisis there wasnt a need to utensil change reactively, British Airways had time to achieve their long-run strategy. Scope British Airways did not require a transformation of the organisation as a whole. A realignment of the cabin crews operations and wage structure was the desired scope for this change. However, due to the industrial bring through taken by Unite the change had an impact organisation-wide.PreservationIt is important that BA preserve what makes British Airways, British Airways. This means they need to retain their brand identity, because this is one of their biggest selling points. It is also important to not destroy the business heritage and culture. theorise security for the remaining cabin crew will be at an all-time low. Key members of staff need to be reassured of their position so that BA doesnt lose these assets to competitors.DiversityThe change should not affect diversity between divisions. This means that the culture should remain consistent throughout BA, from pilots, to cabin crew, to administration staff. Capability The individual within the cabin crew will need to be capable of adapting to the new operational requirements and be able to eat up the change in pay structure. It is a managerial responsibility to help staff through this transition phase. The new BA chief executive, Keith Williams was praised for being strong, withstand and courageous in reaching the agreement. These are the sort of capabilities required by the managerial team.CapacityWith the savings made in the long-term, BA will be able to invest in training for staff so quality of customer service will improve. T he managers have shown devotion to this process by holding out for 18 months to ensure change was implemented. There must also be a number of people in the organisation with an adequate change capability.ReadinessThe workforce was not aware of the need for change until it was announced that there would be 1,700 job cuts. As a result cabin crew members refused to commit to making the personal changes required of them.PowerThe British Airways managerial team were the change agents containing the most power. As a tidy sum union, Unite also contained considerable power, and this caused opposition for the implementation of change. The change management strategy, if any, as outlined by the BA management have they addressed employee emotions or all focused on change process? The focus was placed mainly on the change process rather than employee emotions. The strategy appears to have been to implement the change at all costs.Throughout the 18 month negotiation process BA refused to give i nto the union demands. Despite 22 days of strikes BA continued to refuse the people what they wanted. They were accused of management bullying, press slanders, and legal gerrymandering. A big factor in the two parties coming to an agreement was BA agreeing to reinstate staff travel concessions, as stated by the Unite general secretary, Len McCluskey I am particularly pleased that travel concessions will be restored (Scott, 2011, May 12). However, this was used as a bargaining tool rather than as an empathetic gesture. Having said this, there were a few minor interpersonal strategies.The personnel change of BAs chief executive from protagonist Willie Walsh, to former finance director Keith Williams, contributed to the breakthrough. Union leaders described Keith Williams as a genuine and honest man, saying to cabin crew, he values you (Smith, 2011, May 12). This is evidence of showing personal compassion in order to reduce resistance. However, many workers were unhappy with the prais e he received. So if anything this strategy is likely to have hindered progressive rather than help it. BA also appointed an self-sufficing facilitator in the form of psychologist, Mark Hamlin to deal with the fragility of trust and act as a long-term relationship builder (Milmo, 2011, April 10).Long-term the hard screwball strategy employed by BA has left them with integrity and respect. This will help the company move forward and rebuild relationships. Good relations foil industrial action and hence operational interruptions (British Airways, 2010). The challenges and difficulties in implementing such changes as experienced by BA. Resistance/Acceptance. 93% of cabin crew voted for strike action originally. Through collective action and collective resistance they forced BA to change the terms. The resistance received enthusiastic support from wide sections of the working separate in Britain in form of donations from union branches and solidarity on their picket lines (Counterf ire, 2011, June 24).