Managing Organization Change - Qantas Air - Article Example

Managing Organization Change Name: Course: Tutor: Date: Introduction Qantas Air is the leading airline of Australia. It has a long history that can be linked to the development of civil aviation in Australia. The airline began with fragile biplanes that carried one or two passengers in open cockpits, but over time with changes in technology and effective management of change, it has grown into a world-leading airline that boasts of the most prestigious aircraft including the latest Airbus A380 that can carry 450 people at a go. In fact, Qantas was the first airline to sign a contract with Airbus to acquire the Airbus A380. According the airline’s website, its success story is largely linked to human endeavour, not solely on changes in machines. A few determined individual were able to overcome formidable obstacles to form the company as the Queensland and Northern Territory Aerial Services Ltd (QANTAS). The growth of the company has been attributed to its staff that are loyal to customers and effective management of change within the organization to deal with different challenges in different times. Thus, in the company’s own words, “the story is about the people who have created its exciting and productive history - its staff, its customers and the excellence of its business partners and key suppliers...” (Qantas). The success of organizations lies in change. Change is an inevitable component of organizations’ success strategies and emanates from pressure from both within and outside the organization. The need for organizational change could be instigated by shifts in the market structure, technological development and government policies (Fryer, Ellis & Egbu, 2004). The changes that may occur include new attitudes to work, as well as industrial conflict. It is therefore imperative that any effort to change an organization must take into consideration both internal and external forces (Fryer, Ellis & Egbu, 2004, p. 174). In recognition of the aforementioned points, this paper aims to evaluate the current changes at Qantas Air in its bid to maintain it position as a leading airline in the Asia pacific region and the world at large. The essay identifies the company’s business environment and also identifies the nature and need for change and proposes change strategies that could be reasonably considered by the airline. Relevant theories and models are used to illustrate this. In addition, the challenges that managers at Qantas are facing as they implement their change strategy are addressed. In relation to this, the paper also highlights how the current changes might be dealt with by applying appropriate corrective strategies. Qantas’ business environment and pressures for change The aviation industry is probably one of the most competitive business environments. Thus, in order for an airline to be successful, it must position itself as an effective change implementer. Qantas has not been left behind in this regard going by its continuous investment in technology and staff training. According to Thomas (2005), organizational change is instigated by some problems; these problems might be perceived or real. Essentially, management is required to facilitate the sort of change that is desirable to an organization. This can be summarised by analysing the physical symptoms of a given environmental problem, visualizing the human behaviour that causes or exacerbates the symptoms, explaining the problems in terms of extant natural systems (i.e. what needs to be done so as to fix the problem) and coming up with a human and social system explanation of the problem and the changes that are required (Thomas, 2005, p.301). The current and future challenges to Qantas, and which call on to the company to implement a series of organization changes include maintaining operations and world class products while also building a viable and aggressive position as a world class airline. Current dynamics to change Qantas currently focuses on a strategy to increase its flight capacity in order to serve more customers. It aims at being in a position in which it generates a positive spread to its cost of capital through a series of measures. The first measure is to develop the company’s portfolio so as to offer the most competitive business models throughout all major segments and markets. The second measure is to extend reforms so as to achieve permanent unit cost reductions and efficiency improvements in all fields of the business. Finally, the third measure is to diversify the company’s portfolio in order to grow and smooth the earnings profile of the Qantas Group (Qantas). Qantas Group’s other pressures that have necessitated the current trend of changes include the need to achieve creditable performance despite increased costs and competitive pressures, managing capacity to match demand by driving revenue as well as efficiency improvements, and offering new services to strengthen the international position by orienting growth towards profitable and thriving markets. The company has also invested heavily in the modern Airbus A380 models as a customer perspective strategy. This is meant to offer and end-to-end customer experience. This paper will analyse some of the aforementioned with particular reference to how the acquisition of the Airbus A380 has necessitated a critical look at managing organization change at Qantas. As it can be noted, the need for change emanates from both internal factors (organizational) and external factors such as increasingly intricate and onerous client requirements and globalization of the world economy. These factors are discussed in depth by Fryer, Ellis and Egbu, 2004, p. 174). Organization change management theories and model related to Qantas’ operations Theory ZYX of successful change management Theory ZYX is a three-dimensional theory of managing change successfully. By visualizing this theory, change can be conceptualised in three dimensions. The three dimensions account for 99 percent of the success of the change that is implemented. This means that no time and energy is wasted on a multiplicity of other the factors that actually contribute to one percent of the success of the change. The result of Theory ZYX is a closed loop feedback system that begins from an initial picture of a vision – that is thinking through the available strategies, the desired results, proposed implementation, as well as the most important aspects of the nature of people involved in the change – that is getting feedback discoveries to vision development (Arora, 2003). Qantas can be said to have followed Theory ZYX because of its particular focus on concepts that will increase its popularity among travellers. Its point to survive the increased competition as well as increased operating costs can be seen in the decision to invest in modern aircraft such as the Airbus A380 which is a project that has been ongoing over the last few years. Other theories that are relevant to the change taking place at Qantas are listed next: a) Gersick’s (1988) group change theory: Groups do not develop in a series of set stages; rather, they proceed with not much happening until they recognize (almost suddenly) the need to move forward rapidly in a new way. b) Organization change theory (such as that proposed by Tuchman and Romaneli, 1985): Organizations do not evolve but are likely to undergo change through strategic leanings that call for significantly different models of operation. c) Biological species theory (Gould, 1980): Change arises after long periods of equilibrium and then through rapid and intermittent events of speciation (all theories cited from Burke, 2002, p. 62). It is important to find a linkage between the change at Qantas and the relevance of the aforementioned theories (a to c). Going back to Gersick’s (1988) group change theory, Qantas has over the years relied on generally smaller aircrafts as this was seen as the norm for many airlines. However, with the explosion in technology, a need has a risen for airlines to offer services that are tailor-made for customers. This is made possible by the use of modern aircrafts such as the Airbus A380. Qantas was the first airline to use the giant aircraft and the project is still ongoing. Going by the organization change theory proposed by Tuchman and Romaneli (1985), the point that organizations do not evolve can be contested on the basis that many organizations do not usually look like what they were in one or two years after they are formed. There is usually some kind of change taking place. Going by the history of Qantas as highlighted in the introductory section, it can be opined that in some way, organizations do evolve. Nevertheless, the most important aspect of the organization change theory with reference to Qantas is that organizations undergo change through particular orientations that necessitate significantly unique forms of operation. This has been witnessed over the period Qantas has ventured in expansion activities as a means taking stock of the global airline competition. Within a period of less than ten years, Qantas has been able to boost its fleet of aircraft by acquiring the latest and most sophisticated ones. This has meant taking very new approaches in managing the airline’s activities including crew operations – a point that is definitely in agreement with the organization change theory. Also related to this is the point that organizations behave like species of organisms - being in equilibrium over long periods then suddenly undergoing speciation to change their images (Bloch & Madden,1995; Karakas & Kavas, 2009). This by all means can be likened to what is currently happening at Qantas as the Group strives to meet the demands of the market while also ensuring that it does not run into losses, that is by minimizing costs of operation. Change at Qantas: focus on investment in the Airbus A380 29 November 2000 was a historic day for Qantas. This is the day when the change of acquiring the sophisticated aircraft Airbus A380 was initiated. The change was instigated by the new challenges facing the aviation industry in this century. These include escalating costs resulting from fuels and distribution cost, a falling value of the Australian dollar, and efficiency pressures. The changes was also necessary due to declining yields as noted by the group, caused by increased competition and the impact of liberalisation on market access (Qantas 2008). Qantas also faced challenges due to the new concepts of alliances among airlines as well as globalization which necessitated a new move so as to get access to major hubs. As a result, the Group had to embark on a thorough replacement strategy by acquiring Airbus A380s to take the position of the older Boeing 747 Classics and the Boeing 767–200s. But this did not come without challenges since the Group had to ensure that fleet flexibility was maintained. By acquiring the Airbus A380, Qantas aimed at attaining new efficiencies, including superior performance, fuel efficiency, and better utilization of airports. It was projected that the efficiencies would be attained by a significant increase in capacity coupled with a significant decline in operating costs. But as well there is the issue of the initial cost of acquiring the new Airbus A380s. These aircrafts are pretty expensive, and even though the move promised a lot of benefits, the gains would only be realizable in the long term. Relevant change models All the three organization change models are applicable to the case of Qantas. These are Lewin’s change model, the positive model and the action research model. They all describe the phases by which planned changes takes place in an organization, as was the case of Qantas. The emphasis of these models with respect to organizational change is that change is preceded by a preliminary stage (that is unfreezing, diagnosis or initiating the inquiry), which is followed by a closing stage (that is refreezing or evaluation). In addition, the three approaches highlight the application of the knowledge of behavioural science, encompass the organization members in managing the change process to a certain degree, and recognize that any form of interaction between a consultant and an organization amounts to an intervention that may well have an impact on the organization. Nevertheless, Lewin’s change model can be distinguished from the other two in that it focuses on the overall process of planned change as opposed to highlighting the specific organization change activities (Allen-Meyer, 2001; Cummings & Worley, 2008, p. 29; Adams & McNicholas, 2007). As it can be noted, the change that was initiated some ten years ago has several implications to the Group and the corollaries are still felt to date. As with all the change models, any interaction between an organization and a consultant (in this case Qantas and Airbus) amounts to an intervention that has several implications to the organization. This point cannot be disputed. The action research model and Lewin’s model differ from the positive approach model with respect to the level of involvement of the participants and focal point of change. The two models emphasize the role of the consultant with considerably limited involvement of members in the change process. It is therefore wiser to consider all these models under a combined form as the general model of planned change (Tushman & O’Reilly, 2002). The general model of planned change takes into account the four basic activities that the members of an organization and practitioners jointly carry out in the process of implementing change. These activities involve entering a contract, diagnosing the impact of the planned change, planning and implementing the change process, and finally evaluating and institutionalizing the change (Cummings & Worley, 2008). The first set of activities in the planned change process involves the managers making decisions on how they actually want the change process to be. As with Qantas, the change programme involving the acquisition of Airbus A380 was initiated in the year 2000 and is still being implemented. The second step, which is diagnosing, involves studying the client system carefully. This can focus on analyzing and understanding organizational problems (this includes their causes and consequences), as well as colleting information about the organization’s positive attributes. The change at Qantas was necessitated by the need by the group to offer world class services and thus maintain its reputation as a world class airline. It was also based on the perspective that the airline would attract more clients by investing in modern aircraft. Challenges to acquiring the Airbus A380 The process of acquiring the airbus definitely was met with some challenges. The first one is that a cost of $9.6 billion had to be incurred as the initial amount, and the aircraft was the first of its kind (Qantas had initially been relying on Boeing 707s since 1959). Other challenges included step challenges in terms of new technologies to be used as well as the new designs. This was in addition to the requirement for detailed technical specifications, technical maintenance practices, and elaborate pilot training schemes and systems (Qantas, 2008). In order to cope with the challenges, the Qantas leveraged a new mechanism to drive the step changes. This included increasing the support facilities in airports in Australia, coming up with innovative in-hold concepts, and creating major new supplier relationships. Staff were trained to offer high class services in the business class of the Airbus A380. In addition, the airline trained more pilots, flight engineers and other support staff on how to handle the new aircraft. In particular, pilots were trained on new cockpit techniques such as fly by wire, while the other staff were trained to be familiar with the different characteristics of the Airbus A380 as well as their security implications. The most significant aspect of the aircraft has been the intelligent use of space (Qantas, 2008) Most of the challenges experienced by Qantas at the initial stages of acquiring the Airbus A380 still persist since this is a long terms project whose final result will be noted after a considerable period. For instance, the airline has to perform phased maintenance as it acquires more of the aircraft. As a new model its features changes with the latest purchases, implying that new training has to be implemented every now and then. There is also a pain chain barrier since the new acquisition is not the traditional Boeing that was the mainstay aircraft of the airline. Due to the change taking place, the airline has to incorporate new maintenance systems, IT systems and so forth. The airline has also invested in new tolls and new hangars to maintain the aircraft. In addition, there is often a need for interim arrangements to deal with new issues arising as a result of use of the new aircraft. Evaluation of the change at Qantas The changes at Qantas can be appraised in two ways: by evaluating the positive and negative aspects associated with the change. To begin with, since Qantas was the first airline to acquire and Airbus A380, it is better placed to acquire more since it was the first to realize the pros and cons of the giant aircraft. This is a good move since the airline earned a reputation as the first company to use the biggest aircraft in the world. With its track record of success, this was a boon to its productivity. This has been a phenomenal period for the Group since it comes at a time when airlines around the globe are bracing for tight competition in the industry. The idea to acquire the Airbus A380 is important because if the company had missed the first opprtunuity, it would have acquired them later, but not with the prestige associated with at the moment. According to Tushman and O’Reilly (2002), there is at least one point in history when an organization changes dramatically to the next level of performance. If the change is missed, the organization is likely to witness a decline. This can be likened to the biological species theory where rapid is speciation is involved. All the steps taken by the airline as mentioned above have aided its success in handling the change. One thing that can be said the native side of the change is the costs involved in carrying out the overhaul. In this tumultuous economic time it is difficult to say whether Qantas will continue to gain profit in the long run. The reason for this is that many airlines are now offering low cost services in order to attract more customers. This has significantly increased competition between full service airlines such as Qantas and the low cost carriers. The implications of sticking to operations as a full service airline are therefore yet to be seen with the new venture. Perhaps another significant change should utilize the Airbus A380’s large capacity to offer two tier services that cater for the diverse needs of different customers. This will not only facilitate another change, but will also ensure that Qantas surges forward in its bid to capture a larger market around the world. References Adams, C.A. & McNicholas, P. (2007) Making a difference: Sustainability reporting, accountability and organizational change, Accounting, Auditing & Accountability Journal, 20 (3) 382-402. Allen-Meyer, G. (2001) What’s in a name? Approaching organizational change, Strategy & Leadership, 29 (6): 4 – 7 Arora, N. (2003) Theory ZYX of successful change management: a definitive guide to reach the next level Knowledge CM, Inc., Sydney. 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