Change Management in British Airways (Case Study Sample)
UK largest international Airline, British Airways, is among the leading airlines in the world, with one of the most extensive route network, running internationally (British Airways, 2010). The income of the airline has been on the increase with the profits for the period between 2007 and 2008 being a total of £8,753, which translated to 3.1% more than the previous period. Throughout its operating years, British Airways has faced different challenges, as it is for all other companies in the industry. During the year 2007, the American economy experienced a crunch due to the bursting of the housing market. This was the beginning part of the 2008 economic crisis, or recession, which had global effects (Åslund, 2010). Like any other industry, the UK airline industry faced a major setback, British Airways being one of the companies and there was a need to implement changes for long company survival. This paper is an analysis of the changes implemented by the British Airways in the period between 2009 and 2011, and the challenges faced by employees and management during the change process.source..
Change Management in British Airways
Table of Contents
TOC \o "1-3" \h \z \u HYPERLINK \l "_Toc353214240" Introduction PAGEREF _Toc353214240 \h 3
HYPERLINK \l "_Toc353214241" Context of the change PAGEREF _Toc353214241 \h 3
HYPERLINK \l "_Toc353214242" Evaluation of the nature of such changes PAGEREF _Toc353214242 \h 4
HYPERLINK \l "_Toc353214243" The change management strategy PAGEREF _Toc353214243 \h 5
HYPERLINK \l "_Toc353214244" The challenges and difficulties in implementing such changes PAGEREF _Toc353214244 \h 6
HYPERLINK \l "_Toc353214245" Change management model PAGEREF _Toc353214245 \h 8
HYPERLINK \l "_Toc353214246" Stakeholders PAGEREF _Toc353214246 \h 10
HYPERLINK \l "_Toc353214247" Managerial challenges PAGEREF _Toc353214247 \h 11
HYPERLINK \l "_Toc353214248" Overcoming resistance to change PAGEREF _Toc353214248 \h 12
HYPERLINK \l "_Toc353214249" Managing change PAGEREF _Toc353214249 \h 12
HYPERLINK \l "_Toc353214250" Conclusion PAGEREF _Toc353214250 \h 14
HYPERLINK \l "_Toc353214251" Reference PAGEREF _Toc353214251 \h 16
UK largest international Airline, British Airways, is among the leading airlines in the world, with one of the most extensive route network, running internationally (British Airways, 2010). The income of the airline has been on the increase with the profits for the period between 2007 and 2008 being a total of £8,753, which translated to 3.1% more than the previous period. Throughout its operating years, British Airways has faced different challenges, as it is for all other companies in the industry. During the year 2007, the American economy experienced a crunch due to the bursting of the housing market. This was the beginning part of the 2008 economic crisis, or recession, which had global effects (Åslund, 2010). Like any other industry, the UK airline industry faced a major setback, British Airways being one of the companies and there was a need to implement changes for long company survival. This paper is an analysis of the changes implemented by the British Airways in the period between 2009 and 2011, and the challenges faced by employees and management during the change process.
Context of the change
Organization change is a useful strategy in times of crisis, or when an organization experiences performance gap. There may be other reasons for change but examining a good number of companies and institutions that have instituted wide-ranging changes, one notes that they mostly deal with the two issues. Companies may have good strategies in place but external and internal factors can lead to them failing. For example, management strategies can sometime contain inherent contradictions that create management spaces that in turn lead practices and identities that contradict overall aims and objectives of the company. The 2008 economic crisis, or recession, which had global effects led to the collapse of many companies.
An examination of British Airways company’s financial statements on the company’s website shows that it made a profit of £875 million that was quickly followed by a loss of £401 million in 2009 (Milmo, 2009). It was after the company’s midyear loss that it became apparent that change was indeed needed. Although the shortcomings faced by the company may have been because of a mix of both internal and external factors, change was still a necessary undertaking if the company was to survive. A rise in oil prices, for example, needed to be countered by cost reduction within the company’s operation, which could only be achieved through measures such as staff retrenchment or freezing any more pay rises. In other words, the company’s move to change was motivated by the need to survive. The airline industry has seen a steady growth from its beginnings in the early 20th century and with that growth challenges have also emerged. Traditional airlines such as British Airways have over time been forced to compete with low cost airlines that charge low fares. In addition to this, the global economic downturn has seen the companies experiencing lower passenger numbers especially in traditionally strong markets such as the United States (US) and the United Kingdom (UK).
Evaluation of the nature of such changes
The CEO of British Airways Mr. Willie Walsh suggested changes that mainly revolved around cost reduction. He asked workers to take unpaid leaves and to perform unpaid work between a month. To set a good example to the workers, Willie Walsh went without his monthly salary of £61,000. The first of the changes that the company did was to cut down on the number of staff. According to BBC (2009), the company started off, by a retrenchment plan, which would see 4900 employees losing their jobs. The thinking behind the retrenchment by the company was that the company was overstaffed and that the high number of employees was not commensurate with the costs. For instance, the company’s management proposed that the number of cabin crew for long haul flights are reduced from 15 to 14. This means that for a long time the company had been paying one extra cabin crewmember per flight yet there was no economic reason for the payment.
Apart from the retrenchment plan, British Airways sought to make further savings by freezing any future pay rises for at least two years. The Chief Executive of the company justified the pay freezes and the retrenchment plan by noting that the spike in global oil prices and the transatlantic recession had made the company’s operations at the time unsustainable (Plumberg & Johnson, 2008). He therefore warned that any resistance to the planned changes would lead to even more grave consequences such as company insolvency.
British Airways engineers agreed to a more efficient working system and managers accepted a reduction of salaries. To cut even more cost, cabin crew’s working hours were extended, meals were scrapped and only breakfast was left. Though the British Airways management personnel were ready for the change, the cabin crew was still resistant to change.
The change management strategy
The CEO of British Airways, Willie Walsh realized that with the economic crisis, there was a need to reduce the business cost from top to bottom. Introduction of a change is one thing and it a very different thing to ensure that the change strategies are implemented and managed (British Airways, 2010). For successful management of change, a leader leads in the establishment of a vision that is clear for the process of managing change. This helps in creating a picture of the outcomes which are anticipated and where this leads the organization. For new realities to be adopted effectively and to ensure the organization benefits from these changes, monitoring and evaluation is needed. This helps in the determination of how effectively the change has been managed and the benefits that it has brought into the organization (Graetz & Smith, 2010). It is also through this way that the organization realizes areas that need to be improved or even changed. Willie Walsh identified the problems that British Airways was facing and identified the necessary cost cutting strategies to assist the business in the recovery process.
The challenges and difficulties in implementing such changes
When implementing any form of change in an organization, leaders face challenges such as resistance from individuals, who do not want to change and acceptance from others. During his effort to turnaround the performance of the British Airways company, Willie Walsh received understanding from some of the employees, but faced resistance from others.
“Everyone knows that British Airways is in financial difficulty. Many of my colleagues understand this. Our pilots have agreed a pay cut. Our engineers have agreed more efficient ways of working. A third of our managers have accepted voluntary redundancy. And nearly 7,000 colleagues volunteered for salary reductions because they wanted to help this great British company in a time of dire need” (WALSH, Willie, 2009).
Walsh also faced a fair deal of change implementation challenges. Among the major challenges were posed by the cabin crew, as they were against retrenchment, and extension of working hours. The resistance from the cabin crew was strong and resulted in strikes (Samuel & Bridges 2010). Willie Walsh had to make sure that the strategies are implemented, and evaluated to ensure an increase in organization performance.
When Willie Walsh was busy planning the change strategies, the cabin crew unite union was busy organizing a counter action through a strike. They announce a 12days strike that was to start on December 22nd, 2009, and end on January 2nd, 2010. This was going to be a strike organized over the Christmas period, and would result in to more losses for the company that was trying to reduce loses. Faced with this challenge, British Airways moved to court and acquired an injunction to stop the strike (BBC, 2009).
When implementing change in an organization, it is important for the management to organize or prepare for change. This is can be through creating communication to employees on the need for organization change. Willie Walsh used the authoritarian system of organization leadership and did not offer the workers a chance to express their feelings about the changes (Dyer, 2010). Most of the opposition and resistance faced during the change process was due to the fact that there was no clear communication from the company to the employees on the effect that the economic recession would have to their jobs and salaries. The...
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