Change Management Project in British Airways - Case Study Example

Change Management Project in British Airways Change management is common in many corporations. It has been known in different companies for a long time and it is common in organizations that are willing to introduce change into their processes such as work tasks and culture (Wysocki 2010, pp. 23). Change management is defined as a set of processes employed in an organization to ensure that there are considerable changes being implemented in a very systematic, orderly and controlled way to bring about overall change in an entire organization. One of the companies that are known to have embraced change management in the past is British Airways. Faced with issues of culture and organization of work resulting from its merger, the airline’s leadership opted for and completed a change management project. This project revolutionized the company and put it on the track of great success. Currently it is one of the leading airlines in the UK and the world (Rath 2012). This paper presents a critical review of the change project in British Airways. The discussion will relate the organization’s change management issues to theory and practice of change management, leadership and strategy. Principles of Change Mangers of organization must bear in mind that different people react in different ways to change. They also need to understand that the fundamental needs of each of the persons must be met. Another principle is that change can bring losses and everyone must be ready to pass through the loss curve Carnall 2002, pp. 56). Managers should also realize that the expectations of all people should be met in a manner that is realistic. They should also deal with the fears of all the people. Role of management in organizational change Managers have he responsibility of spotting out those processes and behaviors that do not help the organization and develop new ones that can be more effective in the organization. After the managers have identified the changes they should do estimations of how the changes will impact on the organization and staff. Management should also do an assessment of how employees react to the changes that have been implemented and seek to understand these reactions. Managers should always provide their workers with a lot of support in times of change. They should also assist the employees to accept the changes and adjust effectively after the implementation of the changes (Barjasic 2010, pp. 34). Organizational Background British Airways is the UK’s flag carrier airline. The airline’s headquarters are in Waterside. The airline is based at the Heathrow Airport in London. It has its second hub at Gatwick Airport followed by the one at London City Airport. British Airways is the largest airline in the United Kingdom based on international flights, fleet size and destinations. In 1971the British Airways Board was created to offer management to the airline companies BOAC and BEA (Williams, Woodward & Dobson 2002, pp. 54. Others were two smaller airlines; Cambrian Airways and Northeast Airlines. In 1974 all these airlines collapsed into one big airline called British Airways. This merger brought together 215 aircraft and 50,000 members of staff. This was seen as overstaffing in the company and they resulted in the creation of multiple levels of management that were not compatible at all. Problems also arose due to the cultural differences that existed between the original airlines and the distinctions of ‘class’ that staff members were creating amongst themselves. When the middle oil crisis started and reduced the market it caused so many losses to the overstaffed company. The company was also left struggling with about 20,000 redundancies and a poor reputation in service provision (Axelrod 2010, pp. 21). The company was unable to take remedial measures because of the union. By 1980, a downsizing of the fleet was implemented which brought the number of aircrafts down to 174 although this did not stop the company from losing money. The rate of loss was so high at £200 pounds every minute. The company was getting support from the government and therefore it did not have internal pressure to bring change and welcome outside competition. By 1981, the company seemed to be failing because of the many million pound losses it was making. It earned itself the bad reputation of a major international airline with the worst services. The management saw change but only in the change of staff culture. British Airways remained a nationalized company for 13 years and come February 1987 the government privatized it (Rath 2012, pp. 80). Main problems after the merger After its formation following the merger, British Airways was confronted by a number of issues and problems (Cole 2003, pp. 54). The biggest problem was caused by the difference in the culture of the companies coming together. When people from organizations having different cultures start working together and one group is required to follow the culture of the other group, tensions erupt. This was the case with British Airways when the employees of BOAC and BEA were forced to come together. The problem was basically a class in the cultures (Wysocki 2010, pp. 20). Another problem was the imposition of a management system in the company. British Airways executed a management system that was very inflexible, preoccupied and based on hierarchy. This system created differences in status which was also displayed through the uniforms. The company was also not used to operating with rules. The new management could not effectively identify and address the needs of the customers. The company was putting emphasis on its inward looking management approach and maintained many different routes and this made customers not to get satisfactory services. Change Management in British Airways British Airways is one of the companies that have managed to use change management to bring change in the way they handle their issues. The corporation applied the concept of change management in order to systematically deal with change. At the formation of British Airways following its merger, the company was not doing well (Barjasic 2010, pp. 34). This resulted mainly from the status and cultural differences among the employees of the companies that came together in the merger. Leadership was absent and the company did not have the much needed competence to handle emerging problems. To be able to deal with the dilemma of leadership, Lord King was appointed the new chairperson following a decision made to that effect. He went on to appoint King Marshall as the CEO. These two leaders were aware that there was need for change. They realized that the company had a lot of inefficiency in its operations and that valuable resources were going to waste. There were differences in cultures, customer needs were not clearly identified and attitudes in the corporation needed to be changed (Harigopal 2006, pp. 43). The two leaders therefore took significant change management steps and devised different programs and strategies to handle the problems at hand. These leaders based their operations on the five principles of change management. They ensured that employees were fully supported during the entire process of change and that everyone’s needs were well taken care of. Therefore, a very successful change management project was implemented that made the company escape the crisis and become a very strong player in the airline industry (Beer and Nohria 2000, pp. 45). Change of direction In 1979, Thatcher’s conservative government decided to put the airline on privatization. During those times the airline market of Europe had gone through major developments and many of the airlines were owned by their respective states. The process of privatizing the airline was started. The airline took 8 years to go through the entire process and to get established as a successful commercial body. This process involved a lot of culture change and cutting down of costs. The company applied various models of the process of change. They applied theory O through which they focused on culture and behavioral change (Ventris 2004, pp. 63). They also applied Theory E through the cutting of costs. Theory E calls for change on the basis of economic value. Theory O is the implementation of change on the basis of the capability of the organization. A company can decide to apply theory E and O is a certain sequence. Theory E strategies of change are the ones that carry the biggest importance. This approach places legitimate concern on the shareholder alone. Change must be implemented with a lot of incentives, restructuring, drastic lay offs and downsizing (Carnall 2002, pp. 78). A manager who uses Theory O believes that if he puts his exclusive focus on the price of the stock, then harm could befall the organization. This is a softer approach to change whose goal is to develop corporate culture and the capability of employees through organizational and individual learning. This theory involves changing, getting feedback, reflecting and implementing more changes. Any company that enacts this strategy has a robust long held psychological contract with its employees based on commitment (Cole 2003, pp. 45). Due to company restructuring the number of routes served went down. The company closed the college of air training and the catering operations were taken to contractors outside the company and they divested property interests. The airline appeared to be a class of travel for peasants that showed that it was bowing to pressure from trade unions. However, internal studies revealed that managers of specialized communications between departments had very poor performance on their jobs and that the airline was suffering from bankruptcy. The company was considering huge changes in management in order to change poor service reputation. This was basically the change management which incorporated change in the systems of work so that the company could gain efficiency in its satisfaction of client needs (Rath 2012, pp. 92). This was the basis on which Lord King was appointed as the company chairman with King Marshall as the Chief Executive of the company. Therefore, the initial change occurred in terms of leadership change whereby the chairman and the CEO used their authority to make changes in the organization at a later date. When the chairperson took office, he discovered that there was a lot of inefficiency in the company. To improve on the profitability of the company they opted for restructuring the entire organization and they picked on change management plan as the most appropriate way of doing it (Rath 2012, pp. 34). Change Management Measures The change that was deemed second most important was that which happened at the group level. This was in terms of operational change which was made to respond to the concern of inefficiency in the company (Williams, Woodward & Dobson 2002, pp. 65). The company implemented measures such as the reduction of staff levels and cutting down production costs in a process of fine tuning. The company began the process of reducing workforce in a systematic way. However, prior to this, through the change management leadership of the chairperson, Lord King provided reasons as to why the company should be restructured and privatized so that employees could get ready for the changes the company was going to have. To investigate ways of enhancing customer service, the company established a steering group. They stated that the company needed to put customer service to the forefront because it was the main cornerstone on the market (Cole 2003, pp. 113). The steering committee had to recommend two courses of action and this brought a difference in the manner of making decisions in the company. The company was given a marketing policy group to re-organize it. The company implemented a number of courses of action which were aimed at putting people first. The program was meant to enhance the image of the company so as to achieve the highest customer care standards and to change the attitude held by employees towards the internal and external customers. They began another program called “managing people first” to cover the managers and the contact staff. The company leadership identified the rigid company culture that was inward looking and dominant at the top of the hierarchy of the management of the company. After this the Chief Executive made appointments for members of the new top management team. The team was tasked with the role of strengthening a culture that puts the customer first in the operations of the company. As a result of the changes effected there was transformation in the management, the strategy, culture and operations on a very big scale. These changes were done in an organizational and strategic manner. An audit company from outside did a two way audit which covered customer perception of the services on offer at British Airways. The employees working on the frontline were then given the authority and the needed information to handle customers. This process involved the elimination of management layers in the management structure (Wysocki 2010, pp. 88). Marshall restructured the personnel function and the huge task a head was tackled through the creation of a human resource department. In order to change the old image of British Airways, the company improvised the two major image fronts of the Chief Executive which were basically the livery of the company and customer contact staff uniforms. Changing the external image was not going to be enough and therefore proper change necessitated the change of attitudes inside the company. British Airways contracted Time Management International to design a training program that would help the company respond to the issues raised in the audit (Axelrod 2010, pp. 14). The logical and final step was to create a link between pay and performance. As part of the process of change management, the company recruited very strong leaders. They defined the segmentation policies very clearly and this was done in good branding programs. Every action in the company’s efforts to implement change management was classified under planning or revolutionary change and evolutionary or incremental change. Evolutionary change is useful in the short term into the medium term while revolutionary change is useful in the long term (Carnall 2002, pp. 48). These changes were effective in the delivery of excellent service to clients and customers started receiving quality treatment with relationships being established between the company and the customers. This made the company to rise to the level of becoming the largest airline in the United Kingdom. Analysis of stakeholder’s For the company to continue working with the stakeholders smoothly through the change process, the leaders gave their time and support. The Chairperson and the Chief Executive were the agents of change that the organization had. The strong support from the top managers and the unending training reduced the hard impact of change in culture and the organization. Marshall took part in some management and staff programs and used 20% of his time on these programs. Employees received 2 days while managers got 5 as part of the program for change in organizational culture (Barjasic 2010, pp. 86). Approximately 40,000 workers went through the program and it was supported by way of compensation and evaluation in form of bonuses. The style of leadership was democratic. The company also supported measures such as Total Quality Management implementation, action groups, educational seminars, updated performance and the staff newspaper known as British Airways News (Harigopal 2006, pp. 23). Success of Change Management The changes were meant to make the company to compete with others in the airline industry and remain operational on the market. The changes the company adopted made it more customer oriented by putting the customers first in delivery of quality services. The changes also made it possible for the company to develop proper relationships with the employees and the employees to forge good relationships with the clients of the company (Lundy & Cowling1996, pp. 78). In order to have proper management of change, the company adopted Lewin’s Model. They made a strategic assessment by adopting three steps in the model. The first step included unfreezing in which the forces of change were reduced significantly. It also maintains behavior, helped in the identification of the need for change as well as the points that were to be improved. Strep two of the model the company adopted movement for the development of new behavior and attitudes that could facilitate change implementation. In the last step British Airways adopted re-freezing so as to make change at the new level more stable. Its influence was to be felt through the provision of support to mechanisms. The company also introduced its strategy is the best way and in the business spirit. The management is forward looking especially in its selection and implementation of strategy over time. They employed four different types of strategy control. These are premise controls, special alert control, implementation control and strategic surveillance (Ventris 2004, pp. 19). Operation control system has an example in that the operational strategy factors have faith in the number, type, organizational structure, size, workforce selection, location, management style and buying decision. The list also has information systems, quality control, inventory policy, improvement methods and production planning among others. The human resource strategy in change management focused on factors that include the areas that are important in the success of the company. These include recruitment and selection, development of careers, appraisal of performance, training and development, and compensation designing. The costly and time consuming investments that came with change brought their returns when British Airways won the 1989 award of the best airline in the world. This is a very prestigious business traveler award. Following the drastic changes, the company became more competitive especially in the UK market. Implementation of human resource management and the strategies developed became the basis on which the company built to become a strong competitor within the airline industry (Lundy & Cowling 1996, pp. 12). British Airways reduced its costs by way of savage labor cuts, focusing on major strategic business areas and reducing the size of the business. All the changes introduced by the company and its programs brought about a spectacular management structure. The company reduced the overall age profile for the team and those with entrepreneurial skills are the only ones that were picked. The airline succeeded majorly due to its strategies of marketing. Some of the campaign that made the company rise from its difficulties were “Advertiser of the year,” “We take more care of you” promotion, “fly the flag” and red eye advertisements among others. British Airways employed Kurt Lewin’s three steps model but they had both negative and positive effects on employees, the organization and its structure. The first step was to unfreeze the pattern of behavior existing at the time to prevent resistance to change. It actually had an influence on individual behavior. The company downsized employee policy and curtailed employee incumbency (Ventris, 2004, pp. 43). It reduced the levels of hierarchy and gave power to operating people so that decisions started percolating fast. This brought about improved performance. Top management changes and the company went for a different culture that prioritized marketing. The model introduced training programs as well. The second model brought change to internal structure. For the company to make change more stable by putting these systems in the pattern of behavior they introduced a new appraisal system. They put emphasis on delight in customers and the integration of the whole team in the hierarchy. They introduced image building exercises with uniforms, aircraft refurbishing, a coat of arms for the company and popularized a tag line called “we fly to serve”. Through this they employed the servant leadership theory which requires that leaders prioritize the needs of customers among other people (Beer and N. Nohria 2000, pp. 54). Conclusion This paper has discussed change management as a project that British Airways undertook in order to make the company a successful one as it is today. The company leadership led it through very hard times by employing change management in the corporation. Change management helped the company to deal with problems resulting from the merger. Such problems included culture issues and management structure which was bad because of the large size of the company. The leadership embraced privatization and downsizing as some of the steps in the process of change. British Airways is still a major global airline but with a declining reputation. This could be resulting from the decisions that management of the company has taken. The management has taken such decisions in the past because of the difficult times and hard business environment that all airline companies exist in. The management looks forward to the implementation of new strategies and programs for the company by way of marketing communication so as to improve the image. The management knows the need for leadership and competence in entrepreneurship which can deal with all problems the company is facing. For the airline to become successful again the management should try to identify all the problems facing the airline. They should find solutions to these problems and implement effective programs of change management. Bibliography Axelrod, R. 2010. Terms of Engagement: New Ways of Leading and Changing Organizations. Berrett Koehler Store. Barjasic, I. 2010. Drivers of Change and How Leadership can affect the Organization. Routledge. Beer, M. and N. Nohria. 2000. Cracking the code of change. Harvard Business Review (May-June): 133-141. Ventris, G. 2004. Successful Change Management: The Fifty Key Facts. Continuum International Publishing. Carnall, C. 2002. The Change Management Tool Kit. Cengage Learning. GRIN Verlag. Cole, G. 2003. Strategic Management: Theory and Practice. Cengage Learning. Harigopal, K. 2006. Management of Organizational Change: Leveraging Transformation. SAGE.  Lundy, O. & Cowling, A. 1996. Strategic Human Resource Management. Routledge. Rath, S.P. 2012. Managing Change in British Airways: Strategic HR Intervention for Bureaucratic Trend Change. International Journal of Social Science Tomorrow Vol. 1 No. 9. Retrieved on 24 April 2013 from http://www.ijsst.com/issue/993.pdf Williams, A., Woodward, S. & Dobson, P. 2002. Managing Change Successfully: Using Theory and Experience to Implement Change. Cengage Learning. Wysocki, R. 2010. The Business Analyst/ Project Manager: A new Partnership for Managing Organizations. John Wiley & Sons. ORDER a custom essay Read More