Employee Relationship which Surfaced after Privatization of British Airways - Case Study Example

Executive Summary Human resource is always one of the most vital resources for any of the company. The employees have to play a very vital role in development of any company. As such the employee relationship stands critical for the performance of a company. In the given case study, the significance of employee relationship is highlighted. There has been immense organizational change in British Airways (BA) which has further led to various changes in culture as well as employee relationship. This assignment endeavors to highlight the various issues pertaining to employee relationship which surfaced after privatization of BA. It will critically analyze some of the specific issues. Moreover it will also try to predict the repercussions from the employee relationship point of view. Introduction After the integration of BOAC and BEA which created British Airways, it had faced many concern and troubles.  One of the major troubles encountered by BA was pertaining to employee relationship due to cultural change. The consequences of culture become specifically obvious in cross national operations, amalgamations, and takeovers, where not only different organizational cultures but also employee relationship.  And this happened between the employees of the two integrating entities BOAC and BEA.  This problem can be portrayed as clash of culture. For an instance, the staffs of BOAC were depicted by BEA staff as detached, and definitely less equipped with the know how of the overly competitive airline sector.  On the other hand, BOAC were snooty with the staff of BEA thinking that flights to the European mainland were for tradesmen while long haul air travel was for the province of the gentleman.  The contradicting ideas and beliefs of each of the employee was one of the various cause of the problems encountered by British Airways after the merging. Further problem or issue faced by British Airways is in terms of its forced management system.  The British Airways put into practice a very hierarchical, nonflexible and inattentive with status differences which can be seen in their staff uniforms. The company is also having a problem because of its being rules-oriented.  In addition, another problem that arises is the inability of the management of the new company to see and satisfy the needs of their customers.  The company has given emphasis on its inward-looking management approach and concentrates on retaining its various routes which resulted on unsatisfied customers.  These troubles and difference had a negative effect on the new company.  British Airways has been considered as the most notorious company because of its poor service.  Furthermore, the company’s operation has been affected and in 1980 the company had been regarded to have the worst punctuality record all over European carriers flying from UK and voted as the airline to avoid. This also results in substantial loss of the company. After the changes, initial period started proving to be favorable. The company was able to make better brand identification among the customers. But taking a closer look it seems that these changes were supported by the external factors only. This is evident from the fact that as soon as the external factors started deteriorating against the company, the internal crisis started surfacing and revealed the state of complete chaos. Analysis              In order to change its reputation of being an industry with poor services, British Airways had considered major management changes. Known as change management, companies, businesses and working organizations are integrating change into their work system so as to be competitive and be more efficient in satisfying clients or customer needs.  According to change may be referred as the implementation of an innovation, in which the vital role is to improve output through an adaptation of practices. Under the new management, imposed changes included closure of several routes as well as selling off the cargo service and planes. The company also lay off large chunk of staff as part of the change.  During initial period in 80s, BA was generating its first surplus which is the effect of the cost-cutting activities imposed. This was the time when management also realized that the organization needs to pay attention on it customer service so as to ensure that the industry will continue to earn profit. In order to initiate such change, BA hired Consultants to gather data about staff and customer attitudes. The result of such evaluation shows that there is a significant gap between what the staff is providing and what the customer actually needed. Hence, another management initiative was the change of the system from staff- oriented to customer oriented industry through the creation of “customer is king” culture within the organization.  Management also founds out that the staff has an internal problem in terms of having a good and harmonious working relation; hence, he decided to create a more cohesion among the BA staff by implementing the Staff Development Initiative which aimed at deep-seated and lasting cultural change. This also aims on having more effective employees which will provide quality and excellent service among its customers. This cultural training continued until the late 1990s and in order for the employees to do their job efficiently and to ensure customer satisfaction also created Awards for Excellence in 1987.  The aim of this initiative is to reward high performers and motivate the employees to always do their best in providing services.  During that year, Brainwaves, a suggestion scheme was also introduced. Part of the changes imposed by new management is its integration with various professional academies to provide MBA course for its employees. This is a part of the cultural training imposed by the company to make its employees more effective is providing services to its target market. In addition, the organizational structure of British Airways also changes to a much flatter and slimmer structure. Five sections of the industry are directly reporting to the CEO and eleven profit centers were created. This structural alternation aims to enhance the staff integration and communication, within BA. The performance-related pay was also introduced by the management based on an appraisal system which values the significance of customer service and organizational cohesion. This change also includes major investments in planes, ground facilities and IT in order to adhere to the needs of its customers.             The main objective of the changes imposed by British Airways is to make the company survive in the marketplace and become competitive in the airline industry.  The changes imposed by the company had helped the industry to become more customer-oriented by providing quality and excellent services. Through these changes, the company has also been able to improve the relationship of the employees as well as the employee-customer relations.  The time-consuming and expensive investments as part of the changes also paid off when BA won the prestigious Business Traveler “World’s Best Airline award in 1989.  The management changes imposed within BA had made the company become more competitive in the UK market. The strategies imposed as well as the human resources management technique has been the key factors why the company had achieved so much and became a strong competitor in the airline industry.   Although the management change had been able to enhance the competitiveness of the British Airways, this does not mean that the company is free from any other problems and issues. As mentioned above, the management imposed a more comprehensive human resources management through its Staff Development Initiative, however, not all employees had been able to meet the objective of such initiative.  Hence, the problem encountered by BA during and after the management change is with regards to some of the employees. The problems were attributed to the behavior of some of the employees which causes internal problems to the operation of the industry. In addition, the initiative in terms of customer relations also faced problems by 1997 as far as an employee relation is concerned. The problem lies on the inability of the management to foresee and predict some problems upon the change management. Internal problems in accordance with employee relation also arise when the company had included cost-cutting approach within the industry which was called Business Efficiency Programme (BEP). This programme had resulted in cabin crew worries in terms of financial losses and triggered the employees to conduct strikes and rallies. In this event, 300 staff has joined in spite of the intimidation of the management including threats to block promotion or even of dismissal and/or being sued for damages. Another 1500 personnel participated in a mass sick-out which has an overall cost of BA £125 million. This problem was a result of the inability of the management to utilize strategic management system in terms of employee relations. Another problem that arises is in terms of the increasing customer dissatisfaction of the services offered by British Airways. In addition, because of the inability of the management to handle employees effectively and to show commitment and honest communication, more internal human resources problems arise.  This in return affects the overall operation of the business making the business loss profits and reputation among its target market.  Taking a holistic view of the whole case it is quite clear that the strategy of the management changed from collective to individual employee relationship management over time. It helped the company to avoid collective bargaining pressure which was a hard nut to crack. Latest Changes Under the leadership of Walsh, there are various contemporary measures were take. This mainly included keeping with the core competency and spinning off the non core business. There were various subsidiaries which were sold of in line with the view to stick to core business. Major steps were taken to bring down the operating cost of the company. Retrenchment of the staff was on the top of the cards as staff cost was almost 30% of the total overhead. Then came the fuel cost which made 24%. To save on fuel, the operating network of the airline was redesigned. The sectors which were non productive or were not enough profit oriented, were shunted off.            In order to solve such problems in terms of having good employee relationship and customer relationship the management brings back its strategy of Putting People First as Putting People First Again. In addition, the management also provides the updated course to all BA personnel.              The BA has also started an e-commerce strategy to increase online sales and bring down the overhead costs. The company is still not out of the various issues it is entangled into. The company is still in front of a larger dilemma in spite of its initiatives and changes imposed.  With this, the management is now trying to seek some strategies and approaches so as to solve these problems and one of which is thru a marketing communication initiatives.  Initiatives Like Open Skies & Terminal 5 These initiates were intended to enhance and improve the performance of the company. They were strategically thought over by the management for that purpose. But the problems with both these initiates were the implementation failure. The company lacked basic ground work to successfully implement these. For an example, the training of the employees on the new terminal was not taken care of. This resulted in confusion and customer inconvenience. Moreover this resulted in financial cost to the company which was already crucial. As such this crested a catch 22 position as far as employee relationship is concerned. Theses initiatives are very significant per se. These will have long term effect on the employee relationship of the company if properly handled and implemented. The company should make the employee understand its strategy behind these initiatives and then ask for their cooperation. It should also instill faith in the employees that these initiatives will prove in their favor too. The training and orientation will condition the employee in favor of the company and will help BA to come out of the present financial as well as organizational turmoil. Theoretical outlook There are various theoretical perspectives through which we can view this case study. Though it would be grossly inappropriate to judge any of them as wrong or right, yet this essay will take a stand on one which will very closely represent the standing of the company vis-à-vis employee relationship.ent approaches and theories regarding industrial relations nowadays. The three most contemporary and relevant theories of industrial relations which exist can be enumerated as ‘Unitary theory, “Pluralist theory” and “Marxist theory”. As far as this case study is concerned, the Unitary theory seems the most relevant among all the three. This theory is based on the presumption of integration of any organization with its people. It outlines that any organization should be an integrated team comprising of employees and workers along with a unique as well as single line of authority. This is quite relevant in this case, as integration was the underpinning of the change that took place in British Airways. Another characteristic of this theory is that there exists a loyalty structure with common set of values, interests and objectives which should be shared by each and every member of the integrated team or organization. This means that any organizations ought to be tuneful and inclusive in nature. This is very close to the situation that existed during early period after the management change took place in British Airways. The good performance to a bit was due to the shared vision between the management and the employees and worked as members of one team. As a matter of fact the unitary approach assumes that both management and employees can attain and gratify their shared goals which can translate into very high levels of productivity, profitability, pay and job security. The management takes a stand in this perspective, to control, direct and organize the work force and employees as an integrated system. But the British Airways failed in implementation of the theory into practice. This theory to be successfully implemented needs a lot of homework. The company failed to maintain the basic harmony. This lack of harmony slowly took shape of opposition, conflict and further deterioration of relationship. As far as Unitary theory is concerned such conflicts are considered absolutely exceptional and perfectly unnecessary. The existence of conflict is not perceived. Thus it can be said from the theoretical perspective that the idea of change management was unitary in perception but it was not so when implemented. This resulted in the deterioration of conditions as far as employee relationship is concerned in British Airways. References: 1) Blyton, P., Turnbull, P. (1998, 2004), The Dynamics of Employee Relations, London, Routledge 2) www.guardian.co.uk, surfed on 3rd October 2009, 2345 hrs GMT. 3) www.britishairways.com, surfed on 3rd October 2009, 2345 hrs GMT. 4) www.bbc.co.uk, surfed on 3rd October 2009, 2345 hrs GMT. 5) www.balpa.org.uk, surfed on 3rd October 2009, 2345 hrs GMT. 6) (www.tgwu.org.uk, surfed on 3rd October 2009, 2345 hrs GMT. Read More