British Airways Leadership Structure - Essay Example

?Introduction: British Airways is the official airline of the UK. It is one of the most respected carriers in the world with a history going back to the early 1970s (Campbell-Smith 7). It is a classified as a public limited company. Based on the number of international destinations, international flights and the size of its fleet, British airways is the largest airline in the UK. Its fleet size stands at 233 planes at the moment with additional planes on the way. Compared to other UK companies that trace their historic back to the 1800s, British Airways is relatively new player in the UK world. It came to be birth after the formation of a board in 1971 by the leadership of four carriers, namely BOAC, Cambrian Airways, Northeast airlines and BEA. The next move in the realization of British airways came in 1974 when all these airlines merged to form the now famous British Airways (British Airways 7). In 1981,the airline was privatized by a conservative government. The reason for the move was the expectation that it would perform better as a private company. The conservatives government that made this move a head to overhaul the leadership by applying Lord John King to head the new company (British Airways 7). . British Airways Leadership Structure . At the top of the company is chief executive officer. He reports to board of directors. The board of directors has the prerogative of making all the strategic decisions concerning the company’s management (Brown 1998). The Chief Executive serves as the implementing force for the director’s decision. The chief executive and the board of directors constitute what is called the strategic apex in leader ship. Under the strategic apex are leaders of various departments such as logistics, finance, and human resources. All these officers play a very significant role in the operations of the company, and report to the strategic apex from time to time. As a leading air line in the UK and one of the largest in Europe, British Airways is under a lot of pressure to perform at a high level. The effort that the company has put in raising the standards of its services has been largely successful. The aim of this examination is to identify the innovation and change actions that the company has hitherto utilized to achieve and maintain a high level of performance. It is vital to reiterate the fact that British Airways is multicultural as far as its workforce is concerned and this not to be forgotten in the analysis of change and innovation. . Research Method: The line of research was careful examination of information available on British Airways website. Information that guided the collection of information sought to gather information on company traditions. Employee treatment , the way the company handles changes in the external environment as far as air transport is concerned the management traditions, the workforce attitude towards the management and remuneration policies. As an outsider analyzing information that I have obtained, I had no bias in my analysis. . Overview of change and innovation in light of BA: It is essential that business entities ensure that there is perfect harmony between their internal environment and external influences (Bamberger& Meshoulam, 2000). This therefore calls for a calculated scenario where the speed of response to external pushes and pulls is equal to changes in the external conditions (Hayes 2007). Companies always adjust their strategies when confronted by shifts in their immediate environments. This adjustment is what can be described as innovation can be defined as a set of changes made within a business entity that have an impact ( Hamel 2007). BA has experienced a number of changes in its immediate environment that have called for major changes in its internal structure ranging from remuneration policies to areas of investment. The extent of success of the responses or the innovation the company has undertaken will be discussed in later stages of the paper by exploring the different milestones achieved by the company. For example, BA remained profitable from during considerable period of last decade1, increased the overall passenger turnover over the period of time, while at the same time expanding into new markets. Hofstede points out that for an organization to realize maximum potential , the culture of its employee and environment must be taken in to account (Hofstede 2003). There are five major strategies that are utilized in innovation. A company can be offensive, defensive, dependent, traditionalist or opportunist (Goffin & Mitchell 2005). There are times when it is advisable to take an offensive innovation. Offensive strategy works well when the company is expecting a rival to venture into a particular field in future ,and therefore chooses to do it first. BA moved elevate the services of its business class passengers before most airlines in Europe so as to let them follow (British Airways 37). There are also times when an opportunist approach is the best (Grant 2002). The inclusion of internet technology services was an opportunist venture by BA since an opportunity arose and incorporating it into the business proved fruitful. BA has exhibited a carefully calibrated response to change by using the most suitable response strategies. The reason as to why BA has not chosen any specific strategy, but has instead selected the best for each situation is the difference in nature of business circumstances. In addition service elevation and internet adoption, the plane to merge with Iberia has been hatched as a response to the merger between Air France and KLM. This is a defensive strategy. The reason for adopting this is the desire to remain competitive and relevant in the face of pressure from a more energized and emboldened business atmosphere( Goffin & Mitchell 2005). The adaptation of the internal technology by BA was opportunistic because it suited the time. This flexibility has enabled the company to respond to each circumstance in specific way. Thus making it effective as opposed to picking one or two strategies that cannot allow for the best possible response (Grant 2002) Evaluation of Key Drivers . Change is always happening within and without the organization. This is true, not just for BA but all companies. The trick is to learn their amplify the response by use of amplifiers or attenuate the change. All these are done to match the happening outside the company to the happening within the company. There are several reasons as to why a company may want to respond to change and undertake innovation. These are the elements that drive change within an organization. There are several approaches that can be employed in the examination of the operations of BA such as system model. But the PESTLE model seems the most appropriate as it covers all areas that are relevant to the nature of business conducted by the company. PESTLE stands for political economic ,social, technological, legal and environmental factors that drives the innovation undertaken pursued by BA. The following is a preview of how these drivers interact with the micro climate of BA. . Political Factors: There is no time in human history when politics was concluded far from business particularly and economic in general. The move by the conservative government of 1981 to privatize BA had political overtones. The company has had to adopt policies that do not rub the political class the wrong way such as succumbing to the pressures of employee unions just to avoid political trouble for the sitting government.( Campbell-Smith & Duncan.1986) This is especially true given that it is the carrier that have the British flag. Other factors may include the overall taxation policies of the government which can effectively increase the cost of operations for the firm. (Osborne,2008) Economic Factors: The air transport sector is highly affected by the current state of global economy. Changes in oil prices the stability of the money market, the availability incentive in the front of loans with low interested rates as well as wellbeing of the customer pools has a profound impact on the policies of BA. . Social Factors: Social factors may affect the firm owing to the fact that world has now became a global village and people from different parts of the world tend to travel different places. The overall increase in the living standards of the people therefore there may be changes in the way BA perceives its target market. Further, changing ageing structure, preference to travel different places, early retirement trends may critically affect the way people travel and this may directly have an impact of BA. Technological Elements: If there is an area that has called for alertness and well reasoned out response and innovation. It is the technological sector. The rapid nature of the shift in technology has been a reason due to which many firms went out of the business. BA has had to unable innovative steps from time to time so as to maintain a competitive edge in air transport. These technological changes that have acted as driving agents for innovation within BA include. Emergence of new aircraft , the inclusion of modern technology in planes that support safety and entertainment as well as communication devices that make air transport much more convenient. Legal Factors: There is no way through which a public limited company can escape the law. British Airway is subjected to numerous laws both within and without the UK. This is of because of its several international distinctions and business interests. For example in the administration of Cornair, a franchisee of BA in South Africa. The parent company has to follow the legal setting of South Africa (British Airways 7). Legal elements affect BA in the area of taxation, hiring of staff, formation of trade union and flight destinations. Environmental Factors: There are several issues that affect air transport in a globalized business structure. Competition from other carriers such as Air France and American Airlines as well as Delta is one of the major environmental issue. There is also the rise of risks that include terrorism and climatic concerns that have triggered protests from climate change groups around globe. . Hofstede’s culture: small & Large power distance and collectivism & individualism According to Hofstede the tradition and culture of a setting greatly affect the dynamics in an organization that works within that setting (Hofstede 83). As a company that employees people from different cultures the effect of culture on change and innovation is undeniable. This is owing to the fact that diverse workforce can contribute culturally divergent ideas suited at different niches of the market. This invariably can allow firms like BA to customize its product offering according to the cultural dynamics of the market in which they operate. The employees have to either be exposed to the traditions of the company through training or be allowed to function in their own way. BA has allowed employees who work within their countries for retain their cultural identity even other changes are made within the company. The south African franchise has employees who are operating under the South African culture (British Airways 2). In terms of individualism and collectivism BA has a thorough program that allows the employees to learn the core value of the organization. The point is not to strip the employees of their view of life but to make it clear that whether and employee is seeking personal success within the organization or the success of others as well, the interests of the company have to be understood and defended at all times, since it provide the framework within which the individual and collective goals are pursued.(Bristish Airways 5) .It is not just the employees who are from different back ground in BA. The customers served by the airline are also from different countries and therefore different cultures.(Hofstede 82). This is something the airline cater from time to time as it operates in different cultures. The justification for this is that customers who are given what they are used to feel appreciated and therefore find reason to patronize from to time. This is beneficial to the airline (BA 9). An example is the presence of middle East Meals served in planes flying to the Arab countries (British Airways 32).BA is multicultural and therefor is under obligation to cater for the needs of not only the multicultural clientele but also the employees. The employees will do their best and the clients will patronize the company’s service more and this will lead to smooth operations and more profits.(Hofstede 83) BA Strategic Human Resource Management: An evaluation: . The Strategic Human Resource management of BA displays excellent fluidity and flexibility. The reason for this is that allows for the most appropriate responses to challenges and changes in the environment as they arise(Grant 81). Rigid regulation in human resource management cannot allow for adjustment in case of a different set of circumstances. Given the challenging nature of air transport that has come with suicide terrorism and other complications, being flexible and fluid allows the company to respond in the best possible way in specific circumstances (British Airways 7). This is owing to the fact that travelling by air has increased the overall risk perceptions of the travelers and as such air transport is becoming a low priority for the passengers travelling specially on low distance destinations. Being flexible therefore allows firms to become more responsive to such changing market dynamics. (Fantazy, Kumar & Kumar, 2009). The Human resource management sector is linked to the strategic policies of the airlines. This is a winning position proposed by Gunnigle and Moore in their paper( Gunnigle and moore 63). The flexibility and fluidity of BA can be seen in the speed with which new security personnel is added to deal with rising cases of suicide terrorism. No strict of inflexible personnel hiring procedure are allowed by the company. Note that new security arrangements were never part of the normal airline security before. If the Stafford Beer viable system MODEL is employed in the examination of BA(Beer 36), and this analysis is done to the entire company. Policy , which is system 5, would constitute the top decision makers such as the board of directors of BA. These are the people who make the major decisions that run the company. Intelligence which is system 4 would comprise the departmental directors. These are the people who are responsible for creating the much needed link between the outside environment and business (Hilder 37-38). System 3 which is control would be made up of logistic expert and engineers. These people have the responsibility of guiding the actions of the coordinating team. The middle level heads are part of system 2, which is basically the general Human Resources segment and other members of the coordinating team, while the attendants and other employees who make work effective are part of the first system (Espejo&harnden 67-69). Implementation can be seen in terms of the people on the ground who carry out the functions that are geared towards the meeting of the needs of the consumers of (Espejo & harnden 67-68). These people include the sales and marketing officials who go to the ground to sell airline to the public and the other members of staff who serve in planes and airport. Coordination and control are two areas of the VSM model that are performed in an overlapping manner whereby the people in charge of policy can perform control activities in the same manner that people at the level of implementation of BA activities can carry out control tasks (Carnall 89-90). The amplifiers or the people who increase pace to match the external atmosphere, who are mainly the decision makers such heads in each division of the airline are working as required. Attenuator or those that reduce the pace for company health as well as transducers whose work is to break coded information into understandable bits, who in this case fall under system four, are working optimally in BA. The end result is a smooth flow of information, and the resultant negative feedback loop. This enables the company to react in appropriate ways to change in its business environment. Again, the planned merger with Iberia is a sign of the ability to respond well sue to working systems. The major driving elements that constitute viability namely, intelligence, policy, planning, coordination and implementation are all crucial in the operations of BA. BA has task focused human resource strategy (Stace and dunphy 264). This means that the focus of system 2 is the business unit. The pursuit of the goal establishes in 1981 when the company was privatized turned focus into profitability (British Airways 8). Examining BA using the Bamberger and Meshoulam human resource archetypes shows that the company outcome focused and keen on the internal labor market. This therefore qualifies it as high commitment due to greater outcome based control under which managers tend to focus on the intellectual capabilities of their employees with focus on actual results. (Bamberger, & Meshoulam, 2000) The reason for this is that company is always eager to better it services as a mean to profitability , and this is only possible through retention and developing already employed workforce(Bamberger and Meshoulam 127-129). BA Human Resource approach is to show their role in supporting the business strategy and providing value (Wright et al. 2001). Regarding to Boxall and Purcell BA human resource strategy can be matched with the ‘best-practice’ approach and is primarily based upon four sub-sections: selection, training, appraisal and pay .Other Macro-Elements of Human Resources that are relevant to BA operation in its responses to change and innovation include the external phenomena such as technology shift as well as market instability as already mentioned earlier under drivers(British Airways 7). Technology changes have pushed BA into a complete overhaul of its mode of operation. Personnel have had to undergo training so as to be acquainted with the new technologically advanced system inn planes as well as air strips and airports (Boxall&Purcell 78-79). The money market troubles such as the recent credit crunch have also forced the company to look into its structure from time to time so as to come up with ways of managing with a lean but efficient structure. . Internal conditions: Employees’ Strike and their Impact on BA Human Resource policy: Due to favorable regulations, the overall influence of labor unions has increased over the period of time therefore employees have adapted different methods of registering their protests in order to achieve increase in their pay and other compensation. As the Strength of labor unions has gone up, employees of various companies have downed their tools from time to time as a way of advocating for improved pay. This had an impact on the way concerned companies craft their human resource policies. During 2009 Christmas period, 12500 cabin crew members went on strike asking for improved working conditions . The steps the company has taken to deal with strikes include the change of remuneration policies where by employees are paid competitive salaries, the adoption of flexible promotion policies whereby if an employee improves his or her qualifications by experience and education, they are given promotion, and the extension of medical and other forms of insurance to the employees (BA.com, 2010). The competitive salaries are the salaries which are given to other employees in the market in similar organizations whereas flexible promotions will require the firm to promote employees based on their performance rather than on time based criteria. The maintenance of a lean staff that is well paid is a major human resource focus by the airline. This is meant to avoid too many workers who cannot be taken care of , thus leading to strikes. (Boxall & Purcell 154-155). Articulation of Human Resource challenge & introduction of change: Change has been accepted as an in evitable part of the BA as an organization.(Marriot 56). There is no uniformity in the manner of change that the company experiences. This is where Grundy’s three varieties of change come in. According to Grundy, a company can experience three types of change, though it is not necessary that a firm goes through all three changes at the same time or in different time periods. The first type of change is the smooth incremental changes. This is change that follows a slow and predictable pattern that does not give the management a hard time to understand. Once it sets in, it follows the same path and therefore the only problem that can occur is the inability of the company to come up with solution. Otherwise the clear path that this form of change follows makes it easy to deal with (Grundy 24). Smooth incremental change has been witnessed in BA in the manner in which its employees have been affected by the slow and smooth inflation that began in 2008 and only took a rapid trend in 2010. Grundy second Variety of change is the bumpy incremental changes. This form of change has moments of stability and sudden shift in momentum. It is a hard form of change to deal with and the company is required to be ready al all times for this form of change. This is the form of change that catches most organizations unawares. The changes in oil prices as it relates to air transport is one of the bumpy incremental changes that BA has had to deal with . Oil fits in the bumpy incremental change due to its unstable prices. This bumpy incremental change could cause redundancy in a level of uncertainty. When conducting the redundancy approach, the employment law should be considered carefully. In the case of BA, the attempted redundant employees have rights to get redundancy pay and consultations. (Beardwell, Holden, Claydon 2004 and ACAS 2004). The union and management relations are also considered as vital in this stage. (ACAS 2004)The third and last type of variety of change that Grundy advise organizations to look out for is the discontinuous change (Grundy26). This form of change is characterized by sudden movements in whatever direction. An example of this change is the technological shift that has assumed the trend of progressing rapidly at some points and then slowing down at times. All three forms of change offer opportunities for BA to expand as a business entity, but this opportunity is not without threats. . Managing change: Air France merged with KLM and produced a mega operator. To handle this level of change in the market, BA plans to merge with Iberia, the official Spanish carrier. The aim is to ensure that it is able to deal with competition from merger between Air France and Iberia. . The rise of internet technology and BA’s response: BA was not ready to the rise of the internet however; this was not reason for the company to be left behind. There was immediate response from the management to incorporate the new technology in both advertising as well as communication to customers. This has been a largely successful response to change. Personnel with deficiencies are continually given training to bring them up to date with new information technologies that are used by the airline. BA Response to change: Using the four strategic archetypes of strategic Human resource management (Brewster and Larsen 409-410) BA can be described as a guarded strategist with a Wild West approach (Fig1). This explains why it has been able to realize high integration with high developmental levels. Mintzberg 56-57) the justification for this is the fact that BA has been upfront in taking bold measures in service expansion and modification. The Planned merger with Iberia is the evidence, as well as the move to incorporate modern technologies in its operations. The guarded nature of its moves is the reason the company has been able to realize growth. it is a business reality that investment that is done without care can only succeed to a certain level while investment that is done with care is guaranteed provided that there is stability in the market(ORLIKOWSKI and HOFMAN). It is also important to note that the Brewster and Larsen model is not the only one that can explain the way in which BA has managed change in the past. Improvisational change management model is also evident in the way the company has handled the rise of new flight technologies. Developed by Orlikowski and Hofman, this model is all about responding to emergent change, anticipated change and opportunity based changes with careful improvisation of the human resource management set up (Orlikowski and Hofman 89-91). Besides that, the element of strategy is vital as it leads to measured decisions and visionary actions as opposed rush moves. The element of wild west has to do with the willingness to take investment risks when returns are likely to be high. The investment and management move that BA has made justifies this claims. The privatization of the company in 1981is one bold move that it caused to devolve the administrative function to the line managers .it helped that the certain responsibilities forced managers into becoming accountable for staff performance. Also the intended union with Iberia is another adventure (Boxall &Purcell 83-84). . Assessment of success: BA has achieved tremendous success through the responses it has accorded change. Company’s financial performance has improved with consistent increase in the revenue and profitability of the firm. 2The fleet has grown to 233 with more orders on the line (British Airways). The new technologies in air transport such as in flight passenger entertainment as well as online marketing have been adequately used for the company’s progress. The privatization move of 1981 brought in new management with an eye for profitability. Staff training has enhanced personnel pool credibility (Storey 57). The planned merger with Iberia, the official airline of spain, is a move in the right direction because it will enable the company to compete with other large airlines that are enjoying the economics of scale. The merger is long overdue since the Air France-KLM merger has already taken place. But there is always room for improvement. Conclusion:. BA has done well in handling change through calculated innovation. The rise of internet technology is an example. Firm has adapted a careful policy of having a diversified base of customers and employees to achieve greater level of success over the period of time. (Marriott 1988). Geert Hofstede’s model for large vs. small power distance and individualism vs. collectivism are carefully considered during moments of strategic change management with an aim of keeping business growing (Hofstede 84). Other changes that have been handled well include the need for leadership and new business strategies that led to privatization in 1981 and response to the money market troubles and turbulent oil prices. The planned merger between Spanish official carrier, Iberia and BA shows another calculated response to competition. The fact that the company is ready to make this move shows its capacity for business adventure. The qualifies it as a Wild West member in Brewster and Larson categorization. The cautious nature with which investments are made by the company that have led to growth inn fleet size bring out the image of a guarded strategist ( Brewster and Larson 409-410). Recommendation: British Airways require a more pro-active and innovative HRM approach to deal with the changes. The overall time lag involved in the merger of BA with Iberia and Air France with KLM may therefore do not allow BA to outcompete others. Thus the rapid response to the potential merger can provide an strong competitive advantage to the firm. The airline should also ensure that there is a steady flow of personnel who understand the principles that the company has followed that have led to current level of success. It was suggested that managers should be trained to know the meaning, objectives and benefits of performance management, the responsibility of manager in appraisal process and the basic opinions of balanced scorecard,. It also need to emphasis the transition of appraisal from control perspective to development perspective. (Bratton and Gold 2003). Redundancy issue should be cleared for employee and managers should explain redundancy issue to every employee who every will be redundant or not. It is best practice that individuals who are to be made redundant are consulted (ACAS 2004). REFRENCES: ACAS (2004) ‘Redundancy Handling’, ACAS Website: http://www.acas.org.uk/publications/b08.html#1 [accessed on 15/11/2004] Bamberger, P. and Meshoulam, I. (2000) Human Resource Strategy: Formulation, Implementation and Impact. Sage :London. Beer,S (1985). Diagnosing the system for organizations, Chichester: Wiley. Bratton, J and Gold, J (2003) Human resource management theory and practice, 3rd edn, Palgrave Macmillan, Bath Brewster Larsen (1992). Organization Archetypes. International journal of human Resource Management, . 3 (3), pp.409-434. British Airways. (1947) British Airways Annual report and accounts. London: British Airways Board. BritishAirways.com Boxall, P. and Purcell, J. (2003) Strategy and Human Resource Management. 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