TUI Travel- Management and Organizational Behavior - Case Study Example

Management and Organizational Behavior: Case Study of TUI Travel Task Organization structure changes After the merger of TUI AG and First Choice Holidays PLC, many changes were induced in the structure and culture of the organization. Post-merger, there was a reduction in the number of jobs. Most of the jobs went to the UK instead of Germany as a result of the combined business of TUI Travel directed at cost savings (Davies, 2007). Even after the merger of TUI Tourism and First Choice Holidays PLC, the parent company TUI AG based in Hannover owns the most of the shares in TUI Travel. 56.4 pc of TUI Travel belong to TUI AG (Thomas, 2013). It has long been expected that TUI Travel would ultimately reunite with TUI AG as soon as TUI AG buys the rest of the 43.6 pc of the UK company that it is not owned by it presently (Taylor, 2013). This also reflects from a statement made by TUI Travel; “"The independent directors of TUI Travel have recently received an approach from TUI AG which may or may not result in a combination of the two companies” (Thomas, 2013). While the major focus of TUI AG is on tourism, its management has not publicly commented on the options it foresees for the TUI Travel (Aviation Week, 2013). TUI AG and TUI Travel have their separate headquarters. The headquarter of TUI AG is in Hannover, Germany whereas the headquarter of TUI Travel is in London. If a merger happens between TUI AG and TUI Travel, it would help build synergies, nevertheless the decision on any such deal is not made so far. Cultural changes Reflecting on the areas of interest of the two companies, the head of reward and recognition, Tim Taylor, who works at TUI Travel, UK said, “"First Choice is more targeted at the family market, which from the research we have done has told us that is where the brand already fits…The Thomson brand is more focused on the slightly older consumer but, of course, they go across all products as well” (Taylor cited in Sullivan, 2009). Post-merger, the combined entity of First Choice Holidays PLC and TUI Tourism included a whole range of tools and interfaces related to the treasury system business but there was no straightforward way of getting a holistic perspective of the overall treasury operations. Lack of linkage between the systems of legacy treasury management was one of the main problems. Lack of communication between the legacy treasury management systems (TMSs) made the process of management reporting a relatively manual process that was dependent upon the outputs of the two systems. This also made the exposure calculations, transaction management, and position reports more cumbersome. “The company has a reputation for offering first class training and development and has a well-embedded training culture” (Roberts, Smyth, and Sumal, 2008, p. 1). The pros of the culture of TUI Travel post-merger include but are not limited to increased flexibility, innovation, dynamism, and better career opportunities. TUI Travel provides its employees with work life balance and outstanding benefits of traveling. The environment of the company is healthy. The employees are quite well-disciplined. For the travel industry, the pay received by the employees is very good and the brand is quite prestigious. The organization is entrepreneurial and the leadership is decentralized. Senior management of TUI Travel is passionate, team oriented, and professional in attitude and approach. The work environment is informal and casual and thus provides the employees with a lot of flexibility. One former employee of TUI Travel described the plus points of the culture of TUI Travel in these words, “Can live in different places under the sun! After companys long experience theres a wide knowledge how things are working in those kinds of tourist places where the system in general doesnt work always so fluently. f.ex. good living conditions, might be a shared car, always some backup” (Glassdoor, 2012). The new brand TUI travel is quite optimistic about the effects of merger on its culture and future. The Chief Executive Officer, Peter Long has expressed this in these words, “We are confident that the combination of organic and acquisition led growth, coupled with the synergy benefits arising from integration, will deliver superior returns for our shareholders. Furthermore, by delivering both underlying growth and synergies, we are building a platform from which we can deliver sustainable long-term earnings and margin growth” (Long cited in TUI Travel, 2007, p. 1). TUI Travel has been able to provide its shareholders with superior returns as a result of growth led by acquisition and the synergy benefits obtained from the integration. This synergy and growth has enabled TUI Travel to construct a platform that it can use to deliver margin growth and sustainable earnings in the long run. In addition to that, TUI Travel has built the reputation of providing its workers with a first class apprenticeship programme. TUI Travel has made this a programme of choice as is demonstrated in the career development and opportunities available for the apprentices. The cons of the culture of TUI Travel include lack of strong structure and organization. The environment of the company is not very conducive for professional development of the employees especially in between the departments. TUI Travel needs to invest in the training and development of its employees. Most of the employees stay in the same department throughout their career. Task 2(a) Post-merger, the administration of TUI Travel needed to invest substantial efforts in managing the motivation of the workforce. Post-merger, there happened a change in the systems, trends, goals and strategies of the company. Management faced this challenge of aligning the interests of the workers with the interests of TUI Travel. TUI Travel has adopted unique approaches to sustain and alleviate the motivation of its employees. Management at the TUI Travel has carried out extensive work to provide its employees with consolidated perks. “What we’ve done is we’ve tried to make our programme the programme of choice for people to go to. One, because of the package we offer but, two, because it’s actually the one where they’ve got the greatest number of career opportunities and chances of success” (Smyth cited in Roberts, Smyth, and Sumal, 2008, p. 1). TUI Travel has harmonized the arrangements on the benefits given to the employees that include but are not limited to fleet, pensions, travel discounts, conditions for annual leave, and childcare vouchers. TUI Travel agreed to use the same trust-based pension of defined contribution (DC) with employer contributions related to grade. Before, TUI used a DC scheme in which the employer matched up to 1.5 times the contributions of members and the maximum limit was established at 8 per cent. TUI Travels has consolidated the arrangements of fleet. Staff members who need to cover long distances are provided with car by the company whereas the senior staff members receive cash allowances. Before, drivers at TUI AG based in Germany were provided with allowance whereas the drivers at First Choice Holidays had the option of choosing between an allowance and a car. It was decided to roll out the new annual leave entitlements like those that were rolled out by First Choice to all staff members in 2009. Under this scheme, all employees in the head office got annual leave of 25 days irrespective of grade, which would extend up to 28 days after the service of five years. Taylor shares the challenges encountered by TUI Travel in these words, “[Consolidation] was a challenge in terms of the time frame…At the start of the first year of the new business we wanted to have substantially completed the harmonisation process. The thinking behind it was it would then give us a platform to build on with regard to employees” (Taylor cited in Sullivan, 2009). Task 2(b) Motivating the workers is a shared responsibility of the leaders and managers in any organization. Difference lies in their domain of control and the organizational structure for which the managers and leaders are independently responsible. One of the most fundamental aspects of motivating the staff members is to align the values, purposes, and aims between them, the groups, and the organization as a whole. The platform for motivation gets better with improved alignment and personal association of the staff with the goals of the organization. The tendency of motivational activities and ideas to lead the organization to success reduces when it is difficult for the staff members to associate with the goals of the organization. The complexity of motivation originates in the fact that it differs for each individual. One approach that management may adopt to understand the motivation and needs of individual staff members is to try to understand their motivation according to the stage of life they are in. The life stage theory of Erik Erikson provides guidance in understanding individuals’ motivations based on their present stage of life. The receptiveness and potential of motivation in every individual changes from one day to another depending upon what situation he/she is in at a particular point in time. Nevertheless, correct values and alignment makes the motivational methods function better. Inspirational quotes, posters, stories, poems, activities that build teams, and motivational speakers, all help develop motivation in the employees in an organization. Employees get confidence and their performance is improved with inspirational and motivational experiences. Good leadership requires one to have good skills of motivating people and using a variety of inspirational techniques. The methods of motivation vary greatly, ranging from poems and inspirational quotes to activities and games directed at team building. Activities that help motivate the staff include but are not limited to ice-breakers, exercises for conferences, warm-up exercises, meetings and events, and workshops, that not only instill more skills in them but also motivate them. Motivation is also a compulsory component of the processes and techniques of life coaching. People that are motivated perform better as suggested by the McGregor’s XY Theory. Games and competition in teams help people understand one another and communicate with one another better. The Johari Window Theory proposes that this is an effective way of cultivating mutual respect among the staff members. Visualization in the sub-conscious and conscious brain is stimulated by powerful constructive imagery which serves to improve behavior and motivation of the employees. When people play games, they experience achieving and winning in ways that are different from their routine work. Employees like to be in events that include new activities that are not as such related to work, particularly when the seniors and bosses also make part of the same teams as them. This promotes a can-do culture and improves cohesiveness among them. When the managers break down misunderstandings, insecurities, barriers, divisions, hierarchies, and prejudices, teams start to build up (Chapman, 2012). Providing employees with opportunities of a little fun immediately removes the barriers. Teams work together when a common purpose is identified. Numerous theories of motivation have been proposed that differ in their approaches and implications for the management. Maslow’s hierarchy of needs theory is one of the most popular theories of motivation that offers many implications for the managers and leaders. Maslow identified five basic needs that are common to all people and play an important role in motivating them. These needs include physiological needs, safety needs, love and belongingness needs, self-esteem needs, and the need to self-actualize. Maslow arranged these needs in a hierarchical order so that they take the form of a pyramid when place on top of each other with the physiological needs at the base and the self-actualization need at the top of the pyramid. Needs transform from essential to optimal from the base to the top of the pyramid. Maslow’s hierarchy of needs theory asserts that one cannot attain a higher level need unless all lower level needs are satisfied. Hence, an individual would not feel the need of love and belongingness unless his/her safety needs are satisfied. The implication of Maslow’s hierarchy of needs theory for the managers and leaders is to prioritize their attempts to address the needs of the employees in the order suggested by the pyramid. Hence, employees’ safety needs should be addressed first, followed by their love and belongingness needs, and then their self-esteem needs. It is only after all these needs have been satisfied that employees would feel the need to self-actualize which they would be able to achieve by utilizing their potential best. A detailed analysis of the motivational theories suggests that managers and leaders cannot have an easy way out to motivate all the employees with a single strategy. Every employee has a distinct personality and likes and dislikes that differ from those of the others. In order to motivate employees, managers and leaders need to study and understand the psychology of each and every employee and find out what works best for them. This may be more difficult to achieve when the workforce is diverse. One way to find out the factors that motivate individual employees is by conducting a survey where the employees are asked to rate the options according to their preferences. “An employee analysis requires you to meet with each employee individually to discuss their work-related desires. Most employees appreciate a managers sincere interest in their lives” (Tucker, 2013). This would provide the managers and leaders with a firsthand account of the employees’ desires, likes and dislikes by themselves. Task 3 Mergers are exciting events that bring along plentiful opportunities of growth and give a prominent step-change in the business. Mergers, if properly executed, can offer exponential increase in the fundamental transformation as well as market share of the business. If done incorrectly, mergers can destroy even the image and functionality of the parent organizations and hence prove a failure. Many mergers do not manage to offer any considerable shareholder value and up to 57 per cent of all causes of turnaround are related to mergers (Waitley, n.d.). If team building is not executed effectively at the time of mergers, it can lead to evaporation of the enthusiasm and energy that was infused with the new vision. The messages of empowerment, support, and growth of the staff remain unheard by the skeptical staff who feels isolated, uprooted, and lack control upon their career plans. The tremendous frustration and anxiety can be overwhelming and thus cause emotional blockage that is manifested in resentment at the deprivation of control, reluctance to change, and resistance toward the innovative ideas. Therefore, it is, for the most part, people issues like loss of focus, lack of programme leadership, and wastage of time in dealing with company politics that become the cause of failure in the cases of mergers. This imparts the need for the management to take strong steps for effective team building at the time of mergers. Team building unites the staff members at one platform and they have a common ideology, goals, and vision that keeps them focused on the attainment of new objectives formed as a result of the merger. It is important to re-activate the excitement of pre-merger planning frequently throughout the organization by fostering effective team building. Teams establish goals that outstrip the expectations of the management and foster a sense of pride and community in the organization. The management at TUI Travel adopts a very structured and rational approach for team building where the employees are provided with an opportunity to select the tasks that they can achieve considering their individualistic talent, skills, and competencies. “We always use a taster day. So what we do is we bring people into the location and see how they get on with the tasks which are typical of the day. And what we do find is that lots of people will either immediately realise it’s for me or it’s not for me” (Smyth cited in Roberts, Smyth, and Sumal, 2008, p. 2). Team building and change sometimes yield negative results for an organization. This particularly happens when the change is not implemented with a proper strategy so as to let it follow from the start through to completion while achieving the organizational objectives. An example of change fatigue is the cynicism caused by the announcement of a change programme in a very positive light. Change cannot always be considered to have positive effects on an organization. Change is not positive for the people that have to be made redundant. Although change is believed to offer such benefits as restructuring and acquisition and costsaving, yet it has negative connotations on the business people. “As the change fatigue manifested itself in a variety of different ways, this description may now be too simplistic for the complexities of the human impact of change” (Ferguson, 2011). This fatigue is caused when the change is mismanaged instead of in direct response to the change. Mismanagement happens in a variety of ways including lack of involvement, lack of honest communication, engagement and communication in change, and change that is not followed through to the point of completion. When the change fatigue happens because of mismanagement, it can be improved by business leaders, consultants, and human resource management that manage and lead change. According to Jacky Simmonds who works at TUI Travel, “We are expecting far more from leadership and line management in terms of initiative and drive. It requires a fundamental shift in how we think about the line management role” (Simmonds cited in Ferguson, 2011). To derive the best results from implementation of change, it is imperative that the whole process of change introduction and implementation in the organization is properly planned and managed from the conceptual stage to the stage of completion. Organizational personnel should be explained the rationale for introducing change as well as their individualistic and collective roles and responsibilities in the new system. Management assumes the most important role in executing the change in the organization from the start to end. Finally, management should keep motivating the workers continuously to keep them directed at the achievement of goals. References: Aviation Week 2013, TUI AG Shareholders Eye Takeover By TUI Travel: Sources, [Online] Available at http://www.aviationweek.com/Article.aspx?id=/article-xml/awx_01_16_2013_p0-537380.xml&p=2 [accessed: 21 March 2013]. 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