Employee Relations of British Airways - Essay Example

?Introduction British Airways was formed when the British Overseas Airways Corporation and the British European Airways merged. Since then, the company has had several issues and problems which results from different factors which include; the imposed management system of the company. The Company’s system is known to be hierarchical and inflexible. In addition, the company is obsessed with status differentiation which is clearly portrayed in the company’s staff uniform. British Airways is also known to be rules-oriented and this contributes greatly to the problems faced by the airline. British Airways concentrates mainly on its management approach which is considered to be inward-looking. Moreover, the company also focuses on the retention of its different routes and the outcome has been unsatisfied customers. Under the management of Bob Ayling's, British Airways faced industrial action, the employees were protesting against cost reduction which was aimed at improving the airline’s profitability. Subsequent to the earlier strikes and the cost reduction plan, the morale of workforce deteriorated resulting in continued unrest since then. In 2005, the union members protested against the decision to leave out a group of workers, replacing them with the agency staff when the company failed to renew their contract. The company incurred a lot of costs due to this and several passengers were disrupted. In October 2006, the company faced dispute which resulted from a check-in Christian worker putting on his faith’s visible symbol. In 2007, the cabin crew planned a strike action, they were protesting against the salary changes. Later it was withdrawn before it took off. According to Books Llc, (2010), British airways and the union Unite relations have continued to be turbulent, especially in 2009 and 2010. It manly resulted from the proposed changes of the cabin crew working conditions as the company was facing the global financial crisis. On December2009, a strike ballot was conducted regarding the working practices changes. It was supported by many especially the Christmas 2009, planned action. However, the industrial action was declared illegal by the court. On February, a re-ballot was held. The negotiations that were ongoing did not stop the strike action which took place in March. The company punished the staff involved through the withdrawal of the travel perks. Today the company is still faced by different challenges and has been trying to find a lasting solution to this. Competitive nature of the business and the rationale behind management proposals British airways is ranked as the ninth airline worldwide with regard to the total number of passengers it can carries. The airline network in the international market is considered to be the strongest. This is because as compared to other airlines, it operates in several destinations internationally. British airways has its base at London Heathrow which is the best location. This location is known to be central to the European air travel and is the leading business hub. The airline connections to various destinations globally are convenient and timely and this is the company’s main advantage of being situated at London Heathrow. Some of the company’s operations which are short haul have been moved to London Gatwick. This came up as a result of the increasing air traffic in Heathrow. In both the international and the domestic market, the company is faced with competition. The company’s main competitors in the domestic markets include airlines like Easy Jet which incur lower costs. In the international level, it has to face several giants which include Lufthansa and American Airlines. British airways main business in both the international and the domestic routes is to provide air services that are scheduled to passengers and cargo. The scheduled passenger service and cargo service of the company are separate divisions that operate in an independent way. The scheduled passenger services contribute a greater percentage to the company’s profits unlike the cargo services known to be a venture which is less profitable. Power and conflict British airways cabin crew has been forced to strike by the different situations facing them. They have found it necessary to participate in strike mainly to be able to guard their jobs together with the airline’s future. Striking has been their last resort. The existing conflict in British airways has resulted from the following; first, cuts in staffing levels imposed by the management on November 2009. The crew perceived this would cause damage to the airline’s stand as the best premier carrier. On the Euro- fleet, the staffing levels were reduced from four to three. On the other hand the long-haul crews staffing levels have also faced reductions which are estimated to be one to three. According to the Unite members these reductions has caused severe problems on the airline services. The avoidance of this dispute largely depends on the readiness and willingness of the British Airways to put in adequate effort in the search of a settlement which is negotiated. The airline is required to begin by bringing back the offer that was made during negotiations for further discussions. Unite therefore, will give members a go ahead on whether the British Airline’s proposal should be rejected or accepted. Unite is willing to bring the striking to end only if members will be consulted. They have also vowed to remain firm on the decision of the crew. Hence, the fate of the company greatly depends on the action taken by British Airways representatives. In most cases British airways has been using bullying tactics. For several months staff have been bullied and intimidated by the company’s management under the leadership of Willie Walsh. Another conflict resulted from the new sick pay policy. The company’s staff was forced to report to work when they are sick. Different changes with regard to pay and various working practices were offered by the British airways cabin crew as they are willing to make sacrifices. Through this offer, the airline would be able to save over ?100 million, which is the total amount saved by the company through the reductions of 1000 crew from the flights. The crew was prepared to accept the reductions in their pay and even to compromise on the crew compliments and accept fewer crews on given routes. However, British Airways macho management was not ready to compromise its enforced changes and was not willing to put the crew’s offer into consideration. They denied all these proposals; in fact, they walked away severally from the talks held by the two parties. Unite has been committed in putting in effort to ensure that the strike does not occur. The cabin crew of the company is well trained and ranked to be among the best. They are proud of their jobs and try hard to work hand in hand with the management in order to boost survival of the airline. Emergence of TU British Airways staff is represented by trade unions. The pilots are represented by BALPA, a number of cabin crew are represented by BASSA, and the rest of the company employees are represented by Unite the Union (Towers and Terry 2004). BA contract terms and perks lost The company’s employees who participated in strike later received letters informing them of the permanent withdrawal of the travel perks which were heavily discounted. Earlier before the strike began the staff had been warned by the company’s chief executive. The staff was informed that those involved would lose their privileges. This move was mainly purposed to act as a lesson to other Unite members who were contemplating in getting involved in the organized strike. According to the British Airways spokesman, the cabin crew was well informed about the consequences of participating in the strike. The employees travel offers is not a contractual perk and it can be withdrawn from the staff at the company’s own discretion. British airways justified this move by highlighting that their normal operations and customers were negatively affected by the industrial action which took place. Hence, they incurred addition costs which resulted in massive losses. Currently, whenever it is possible, all the British Airways employees together with some of their family members and friends get flight tickets with 90 percent discount. In addition, those who have been employed in the airline for more than five years are also eligible for free tickets to different destinations covered by the company’s flight. According to the Unite spokesman, this move clearly portrayed the company’s bullying and disdainful approach to the workforce. The cabin crew however, remained firm and insisted that they would not be intimidated. They remained committed in challenging this move in every way possible. On the other hand, Willie Walsh the airline’s chief executive vowed that the flag of the company will continue to fly high regardless of the challenging actions of the Unite and all its members. Collective bargaining British airways and the Unite relations have continued to be turbulent, especially in 2009 and 2010. It manly resulted from the proposed changes for the cabin crew working conditions as the company was facing the global financial crisis. Considering the large unionized workers, the company has adopted collective bargaining on regular basis as it seeks to attain a lasting solution to dispute (Clark et.al. 2002). The company revised the contract offer of all the staff who participated in the strike action. It has chosen to reinstate the travel perks which had been stripped from the crews. The company posted proposals on the Unite union website indicating the restoration of the travel discounts which the crew had lost. It also indicated that an independent arbitrator will be involved so as to rule the future of all the staff who had earlier been dismissed during the dispute. The airline had to compromise its earlier stand where they had insisted that those involved in the strike will lose all their accumulated benefits. The earlier statement indicated clearly that the disciplinary actions taken against the staff were not to be negotiated upon. According to a recent proposal the company is committed to improve the industrial relations through different ways. Among these is a review which will be conducted by a third party which is mutually recognized. The state-funded Advisory, Conciliation and the Arbitration service will offer support to the third party. This group will also make the final decision regarding the disciplinary cases of sacked and the suspended staff. The main aim is find a solution that will be fair to the company and the staff. Management style In British Airways the traditional style was known to be bureaucratic, distancing, highly segmented between functions. The company’s management style was mainly characterized by low personal feedback, neglect of subordinates, depersonalization and hierarchy (Harvey, 2007). However, the company has had to adjust its style of management in search of a lasting solution to different disputes facing it. The organizational structure has been flattened. In the revised style the following have been considered to be necessary to empower employees. These include; coaching, training and supporting the company’s staff. The top management of the company has also introduced different ways to establish trust between themselves and the employees (Bamber, 2009). Conflict management systems have been established to help both the company and the staff to be able to prevent and resolve existing conflicts. The airline has also tried to understand the staff personality in order to end dispute. In addition, the company has considered staff participation to avoid the continuity of the crisis. The company also tries to understand the employees’ objectives in order to have a common goal and be able to dissolve the current conflict. Recently, the airline signed a joint partnership with the company’s four major trade unions; this initiative was led by Amicus and the Department of Trade and Industry. Its main focus was to eradicating workplace harassment and bullying in the company. The management has also been greatly involved with communication and training on various aspects of this issue. BA reputation, employer branding, consumers The story concerning British Airways industrial action has been publicized severally. The appropriate resolution to the company’s disputes seems to be taking quite some time. The British publics have little sympathy for the airline in the face of several challenges in the employment relationship (Honey, 2009). The cabin crew together with the Unite members has been involved in different strikes. For example towards Christmas, they responded to different cost-cutting measures and the coverage of crew earnings on media. All these have impacted British Airways and the airline’s reputation as an employer in a negative way. On July 2003, the company’s reputation was also affected when the airline customer service workers based on the company’s Heathrow hub went on strike. Among these were the check in and the ticket- desk staff who were against an automated swipe-card system being introduced. This system was purposely put in place in order to record the attendance of the employees. Several flights had to be either cancelled or diverted and this left most customers stranded at the airport. Even though the staff returned to their work stations after a few days, disruption persisted as the airline tried hard to reposition the aircraft and the crew. At the time the dispute took place, it was considered to be the busiest period of the year. In addition to this, the company was facing serious challenges which included; economic slowdown globally, impact of the Gulf conflict and the SARS outbreak in Asia. In an academic report established for the largest trade union in the UK, British Airways management has been warned of the possibility of the company’s employer branding and its profile with consumers being impacted negatively by the ongoing dispute with the cabin crew. In most cases, with regard to the contact with the airline, cabin crew remains as the customer’s closest contact. Professor Martin Upchurch who is based in Middlesex University Business School stated in the article prepared for the Unite that the airlines image will damage by; rooted bullying culture and authoritarianism that is intentionally organized by the company’s top management. Professor Upchurch adds that there is a possibility that the crew’s morale will affected negatively by the unending dispute. He insists that British Airways have to portray an appropriate attitude towards customers in order to compete for business passengers through high quality service. The Terminal 5 disaster in the British Airways has affected the company negatively. The airlines brand will be ruined for several years as a result of public relations storm that resulted from mismanagement and even strategic circumstances. The company is a branded house which is considered to have an outstanding brand architecture mainly for; employer branding, brand strategy and even for the service business. However, the company has been greatly affected by its susceptibility to crisis. The problems at the company’s terminal 5 impacted the company’s brand greatly. The hit was estimated to be a hundred percent worldwide. The Damage was on the brand equity. Reassurance and reliability is known to be central to the company’s positioning. Considering the terms of branding there is a difference between contradictions and inconsistency. All these situations left the company in the face of negative coverage and passenger experience with no hope of brand equity in the coming future. In the face of this, the company’s chief executive, Willie Walsh expressed his confidence that the situation was great and that there was possibility it would be better. This also interfered with the company’s brand; he is viewed as having misunderstood the whole scenario yet still boasting to be on the right track. HR planning competitive advantage and competitors Passengers expect to be provided with services of high quality from the cabin crew who are skilled, professional and friendly. British Airways make profits through premium with high pay and business passengers. Due to high costs incurred from the dispute, the company opted to reduce on-board food and other different amenities. Those in the first- class section are sometimes served with their third choice meal only. Moreover, there are shortages of several requirements which vary from the cutlery to the duvets. The on-board atmosphere has been affected by the dispute which involves the cabin crew. Today the airline is no longer ranked among the best business to work for. The company has been exposed to great competitive risk by its management strategy. The company’s market share has greatly reduced as most premium passengers have moved to other better airlines. According to Mitchell and Coles (2003), the continuous strike has caused airline like the virgin Atlantic and the BMI to report rise in their bookings. The big question is whether British Airways will manage to win back their customers in case the dispute is extended. The markets in which British Airways operate are highly competitive. They face direct competition in the routes they operate from different airlines. BA competitive advantage is its market positioning which is strong globally together with the company alliance, network and the customer base which is diverse. Workforce engagement, security, psychological contract For several years British airways has been known to be a profitable flag carrier. The employees were proud to be associated with the company and were fully engaged. However today this is not the case, they have become disengaged and in most cases, they are involved in destructive dispute (Locke, et.al. 1995). This dispute may weaken the company’s relations for several years to come. The company’s boards were affected severely by the loss of their staff loyalty. During an annual meeting the company’s shareholders jeered and heckled the chief executive and all the board members of the company regarding the dispute. When the economy was faced with insecurity and instability due to the recession several companies focused greatly on cost reductions. British Airways also took part in this and the workforce reacted against this move. These measures on cost reduction could have been viewed in a different manner had the board under the leadership of Willie Walsh managed employees in an appropriate way. Through this, the company could have saved a lot of money lost through strikes. Apart from the cutting of cost and reduction of the crew who were in the long haul flights, the workforce was also concerned with the customer service deterioration and the union Unite which focused on the creation of staff apartheid. There is a possibility that this resulted from the newly recruited workforce being given unattractive contracts as compared to that of the current staff. Psychological contract refers to beliefs of individuals that are shaped by the organization. It concerns on-exchange terms between the organization and the workforce. Violation of psychological contract arises when employee’s expectations are not met. The case of interest with regard to the Psychological contract is the British Airways and the Trade union Unite case. While reacting to the cost reaction plan which had been established by the British Airways, a strike action was called by the Unite. This case is considered to be of major interest because it relate to psychological contract. According to psychological contact, employee’s responsibility is to assist the organizations in the making of profits. Managers in appreciation to the workforce effort will provide proper working conditions and respect them (Gill, 2009). This was not the case in British Airways; instead the company was incurring huge losses. This clearly reflects that the Unite was mainly focused to maintain the relevance and the social contract which the union had with its members. The Unite did not bother to get involved with the financial problems that were facing the company. The implication of the social contract is that the union will get support from the workforce when a strike action is called, and the employees will also be supported by the union in different issues. Conclusion British airways is ranked as the ninth airline worldwide with regard to the total number of passengers it can carries. The airline network in the international market is considered to be the strongest. However, British airways and the unions which represent the staff have had turbulent relations. Employee’s performance has greatly been affected by the dispute and through this the company has incurred high costs. The company has utilized different ways to address the crisis. These include collective bargaining utilized in seeking for an appropriate solution which will be fair to the company and all the staff. An appropriate management style which gives room to the employees has also been established. The dispute has had a great impact on the organization. It has affected the company’s reputation, employer branding, consumers, the company’s competitive advantage, the workforce engagement and the psychological contract. The company’s customers have shifted to other airlines like the Virgin Atlantic and the BMI in search of better services. This has greatly reduced the company’s initial market share which was extensive. Continuous strike action has affected the company’s reputation, several flights have had to be either cancelled or diverted leaving most customers stranded at the airport. This crisis has greatly challenged the company’s survival in the current competitive market and its future remains uncertain. Bibliography Bamber,G 2009, Up in the air: how airlines can improve performance by engaging their employees, Cornell University Press, New York. Blyton, P, Turnbull, P 2004, The Dynamics of Employee Relations, Routledge, London. Books Llc, 2010, British Airways: History of British Airways, British Airways Destinations, Openskies, Rod Eddington, British Airways Cross Controversy, General Books LLC, Campbell, D 2010, International Dispute Resolution, Issue 2010, Kluwer Law International, Netherlands. Clark, P, Delaney,J & Frost, C 2002, Collective bargaining in the private sector Cornell University Press, New York. 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