The Management of Airbus SAS - Essay Example

?The Airbus Way Executive Summary Airbus SAS is considered as one of the leading manufacturers of aircrafts which provides a wide variety of facilities in terms of military operations as well as commercial purposes. In this paper, two types of cultural models have been utilized in order to evaluate the cultural differences within the organisational working environment of Airbus. Through these cultural models, the diversity as well as the cultural difference related issues witnessed by the company in relation to its employees and the operational activities has been analyzed comprehensively. In the section of main findings, this paper also depicts major reason underlying behind the failure of European Aeronautic Defence and Space (EADS) and the British Aircraft Marconi Electronic (BAE) system. Moreover, this paper also comprehends regarding the unfairness of employees’ behaviour with the other members which have been mostly due to the improper distribution of authorization power. Table of Contents Executive Summary 2 Introduction 4 Main Findings 5 Lewis’ Cross Cultural Model 5 Hofstede's Cultural Model 7 Problems Related With Airbus Cultural Diversity 9 Failure Merger Planned Between Airbus’ Parent Company EADS and BAE System 11 Conclusion 12 Recommendations 13 References 14 Bibliography 17 Introduction Airbus SAS is a subsidiary company owned by European Aeronautic Defence and Space (EADS) which is considered as one of the leading European aerospace and defence service providing company one of the world’s largest aircraft manufacturers. It operates by focusing upon the customers’ needs and preferences relying upon the expertise of employees and technological leadership. Company offers several kinds of jet-liner products, including military communication aircrafts, commercial airline aircrafts and transport aircrafts. Apart from these, the company also provides multi-role military air-lifters for various observation purposes, medical evacuations, marine patrols, carrying paratroopers and cargo transports. Moreover, company manufactures, develops and supports commercial aircrafts for over 100 seats (Airbus S.A.S., 2013). At present, Airbus also offers comprehensive as well as modern product lines which include superior facilities for passenger aircrafts comprising from 107 to 525 seating capacity. Several kinds of amenities are also offered through commercial aircrafts such as A320 single-aisle aircrafts, A330 or A340 long range aircrafts, A350 XWB next-generation family aircrafts and A380 double-decker family aircrafts. Additionally, it can be observed that in its operations, Airbus tends to expand its opportunities in present competitive commercial market and broaden its product ranges by implementing expert, high skilled employees within the military markets. Moreover, company also aims at expanding its business portfolio comprising freighter aircraft products with the expectation to set new standards of operations within the general aircraft manufacturing industry sectors (Airbus S.A.S., 2013). Main Findings Lewis’ Cross Cultural Model During 1990s, British multilingual person and cross-cultural communication expert, Mr. Richard Lewis created a cultural model which till date is used to help the evaluation of the differences among divergent cultures. This model has been widely used to deliver generalized evaluation upon cultural diversity that can assist leaders to regulate their leadership styles by fulfilling different cultural needs of their employees and the stakeholders at large. This model classifies cultural differences into three main categories, such as ‘Linear-active’, ‘Multi-active’ and ‘Reactive’ (Richard Lewis Communications, 2013). Figure: The Lewis Model (Richard Lewis Communications, 2013) According to the Lewis Model it has been observed that organisations which operate under the category of a linear active culture, are basically task oriented owing to which greater focus is rendered towards technical competencies and demonstration of facts before sentimental concerns, concentrating largely upon the attitudes and employees’ behavioural traits in order to attain short-term success. Moreover, organisations that operate within multi-active cultures have been observed to emphasize on their eloquence possessing the capability to convince as well as utilize human resources through motivation. Furthermore, companies which operate under reactive cultures are basically considered to have a people oriented management system where the feedbacks obtained from partners or colleagues are always considered with immense significance to develop strategic reactions accordingly (Richard Lewis Communications, 2013). From the case study of Airbus, it can be observed that the company always attempts to follow and operate under the dimension of a ‘Multi-active’ culture. In every manufacturing unit, the company operates deciphering huge diversity within its employees, which can be further observed to comprise people belonging from 100 different nationalities. Notably, the total number employees currently working with the organisation is accounted as 55,000 in every single operational unit. It is worth mentioning in this context that workforce diversity is considered as a significant reason behind the success of Airbus. The company’s managerial concerns can also be observed as highly people-oriented where employees are considered as assets and are continuously satisfied as well as motivated for better performance and productivity. Contextually, apart from its Europe based operations, the company has its branches located in China, North America, Japan, Russia and India among others (Airbus S.A.S., 2013). Hence, it can be affirmed that Airbus complies with the characteristics of a multi-active culture following a people oriented work culture which further helps it to expand its business across the various continents of the world. However, from a critical point of view, it can also be observed that Airbus sometimes follows the characteristics of a reactive work culture paying due consideration towards the experiences and values of its partners and employees regarding organisational decision making and issues related with working procedures (Airbus S.A.S., 2013). Hofstede's Cultural Model The Hofstede Model of cultural dimension refers to the effects of the community’s values and its reflection towards the individual’s behavioural traits. Since its development, this theory has been widely utilized in three different fields of researches including global management, cross-cultural communication and psychology. Through this theory, an organisation can be evaluated on the basis of differences in its working culture among the employees. This theory generally focuses upon five cultural dimensions on the basis of their divergent values, i.e. uncertainty avoidance, power distance, individualism, masculinity and long-term orientation (SAGE Publications, 2013). Theoretically, Individualism (IDV) refers to the strengths of individual workers by which they intend to interact and develop alliance with each other within a given environmental setting. Moreover, this dimension concentrates upon the degree by which community people attempts to strengthen their individual or group level achievements. Consequently, a high degree of IDV indicates greater chances of conflicts among the organisational members. The other dimension of cultural difference, i.e. Power Distance (PD) considers the degree of inequality that exists within the members of the society. A high degree of PD implies that people within the society accept an imbalance distribution of authority and understand only their individual benefits within the community. Contextually, Uncertainty Avoidance (UA) refers to the degree of reluctance witnessed by an individual when an uncertainty circumstance emerges within their cultural contexts. Similarly, Masculinity (MAS) refers to the degree of obedience deciphered by the society towards the already set social norms and values, concerning the traditional role of particular individuals based on their gender, age and socio-economic positioning. Higher degree of MAS is found in such types of organisations where men are anticipated to be more powerful, assertive and responsible rather than women. Moreover, Long-Term Orientation (LTO) refers to the consideration provided to short-term values or rather benefits in comparison to long-term obtainments when implementing any planned strategic action (Boyd, 2011). Contextually, from the case study it has been observed that there lay a high degree of IDV within the organisational culture of Airbus. In terms of IDV, the company tends to effectively distribute job tasks for each and every employee based upon their individual characteristics. Moreover, it has been observed that a mutual working environment is always maintained by the members of Airbus where employees are rendered with ample scope to interact with other people belonging to different cultural backgrounds. Moreover, Airbus always tends to maintain a low degree of PD, where every organisational member can obtain the virtues of rationally distributed authoritative power emphasising on individual skills and thereby maintain a cooperative but competitive work environment. Additionally, a low degree of UA can also be observed to exist within the work culture of Airbus owing to which, if an uncertainty emerges within the organisational setting, the managers or organisational leaders make strategic attempts to clarify the issue and accordingly develop solutions. However, at times the company can be observed to maintain high degree of UA. For instance, it does not allow any type of informal attitudes among its employees which can emerge as a major cause of uncertainty deciphering reluctance towards such occurrences. The anti-discriminatory policies of the company also depicts a low degree of MA within the organisational context of Airbus owing to the fact that as per the company norms, management always tends to distribute equal power between individual employees irrespective of their socio-economic divergences or gender. Contextually, Airbus always attempts to offer equal treatment for its individual workers emphasising upon their productivity and skills solely. Furthermore, the company always tends to follow a low degree of LTO, where the management upholds equality in terms of promotion and compensation (OBSA, 2012). Problems Related With Airbus Cultural Diversity In the present business scenario, aircraft manufacturing industry can be observed as geographically scattered in large areas where most of the market players have to face issues related with workforce diversity within their work culture. Recent studies have depicted that diversity in workplaces can prove to be quite productive and useful subjected to its management. However, the task to manage diversity can be identified as a challenging strategic issue which largely depends upon the competencies of the leaders in today’s organisational context (Rosado, 2006). It is in this context that owing to the differences in individual perceptions, management styles and inappropriate communication between employees belonging to different cultures that effective management of diversity becomes a quite challenging task (Eckel & Grossman, 2005). Similar facts can also be observed with reference to the case study of Airbus. Recently, the organisation engaged two chief executives from different cultures to manage and control the operations of Airbus, one belonging to the German culture and the other belong to French cultural background when the production of A380 passenger aircrafts was recorded to decrease fundamentally because of instability within the workplace environment due to improper management of communication systems leading to misinterpretations to management strategies. This particular scenario can be analysed with the help of the two cultural frameworks of Hofstede and Lewis. Contextually, as per the Hofstede’s Cultural dimension, the French executive can be observed to follow a high degree of PD, whereas the German executive emphasised on a lower degree of the dimension. Therefore, at the time of decision making, German executive was always observed to ignore maintaining good communication with the subordinate employees disregarding their suggestions and thereby creating dissatisfaction among the team. Moreover, it has been observed that a degree of unequal IDV persisted between the German and the French leader. This can also be justified with the application of Hofstede model that there was an unequal distribution of power where the working environment comprising French and German workers witnessed regular conflicts and uncooperative behaviour from their peers, which in turn hampered the overall productivity of the organisation (Airbus S.A.S., 2013). Similarly, cultural differences, within Airbus’ working culture, can also be observed with the application of Lewis’ cultural model which indicates that the French society is much more Multi-active in nature and the German society is completely Linear-active in terms of its characteristics (Richard Lewis Communications, 2013). Apart from these, technology related issues also occurred due to cultural differences. The engineers of German and Spain, involved in the product testing and designing segment of Airbus, were always observed to prefer utilizing V4 version of software which was considered as the older version of Computer Aided Design (CAD) by the French and English engineers which created delays while transferring data from one system to another. Due to these circumstances, the company had to face huge losses in terms of its profitability over a certain period of time. Furthermore, another instance of cultural difference has also been observed within Airbus’ working environment. It was when the organisation’s Human Resource department attempted to provide training and development sessions to the employees, the French employees were found to be unresponsive deciphering high degree of IDV, where they depicted their preference for choosing and setting their own training sessions (Airbus S.A.S., 2013; The Brampton Board of Trade, 2010). Failure Merger Planned Between Airbus’ Parent Company EADS and BAE System In 10th October 2012, EADS and BAE System Plc took the decisions to cancel their merger plan due to political stalemate. It was observed in this context that the governments of Germany, UK and France, after interacting with each other regarding the identified political obstacles, concluded cultural divergences as the major failure of the merger. A critical understanding of the issue further depicted that the UK governments made continuous attempts to influence BAE’s employees to maintain effective relationship with the US pentagon. Contextually, the government of Germany was found to disagree with this merger deal owing to the fact that their work culture was entirely different from that practiced by the French workers. However, due to this failure BAE’s shares witnessed a steep fall of 2% in the London stock market. Subsequently, EADS’ shares also fell by 3% over the same fiscal year. Hence, one of the significant reasons of this failure can be identified in terms of the cross-cultural differences faced by the German and French employees in terms of their operational activities being directed by the leaders of their nationality and cultural background, respectively. Moreover, it has also been observed that due to unequal distribution of authorization power, French employees deciphered an uncooperative behaviour towards their German peers. Contextually, it becomes quite apparent that the merger between EADS and BAE failed due to the cross-cultural differences between the French and the German employees within Airbus’ organisational work culture (BBC, 2013; WHNT, 2013). Conclusion The core idea that emerges from overall discussion is that cultural differences and the workforce diversity are the two main aspects by which an organisation can run its business successfully under a complex situation. As much the case of Airbus in concerned, it has been observed that company’s management team was not appropriately evaluating the differences among the employees in terms of cultural beliefs and dimensions, working procedures and communication styles. Management team was also observed to lack in properly distributing the authorization power within organisational dimensions where French workers were found to be inadequately cooperative to the German as well as other workers belonging to different cultures. Apart from these, high degree of power distance also existed within Airbus’ organisational culture where German executives were found to disagree with the decisions taken by the French management team. Recommendations It can be affirmed in this regard that it is fundamentally the responsibilities of the managers to direct and manage these two aspects in an appropriate manner so that it is becomes easier for the employees at other hierarchical levels of the organisation to attain long term profitability as well as sustainable competitive positioning in the industrial context at large. From the overall discussion, it can be thus recommended that the management of Airbus should properly evaluate the differences persisting within its work culture in order to maintain effective diversity management so as to obtain greater sustainability benefits in the long-run. If mangers are able to control and direct this diversity in an efficient manner, it is quite likely that Airbus shall gain better competencies in overcoming issues which are related with cultural differences. Apart from this, the management team should also maintain proper communication system among all the level of employees so that they can solve each and every issue related with operational activities with efficiency and ethical concerns. References Airbus S.A.S., 2013. Company: Welcome to the World of Airbus. Home. [Online] Available at: http://www.airbus.com/company/ [Accessed December 10, 2013]. Airbus S.A.S., 2013. People & Culture: Employees from All Corners of the World. Company Culture. [Online] Available at: http://www.airbus.com/company/people-culture/ [Accessed December 10, 2013]. BBC, 2013. BAE-EADS Merger Cancelled Amid Political Impasse. Business. [Online] Available at: http://www.bbc.co.uk/news/business-19897699 [Accessed December 10, 2013]. Boyd, H. M., 2011. Hofstede’s Cultural Attitudes Research-Cultural Dimensions. Global Human Resource Management. [Online] Available at: http://www.boydassociates.net/stonehill/global/hofstede-plus.pdf [Accessed December 10, 2013]. Browaeys, M. J. & Price, R., 2010. Understanding Cross-cultural Management. Pearson Education India. Eckel, C. C. & Grossman, P. J., 2005. Managing Diversity by Creating Team Identity. Journal of Economic Behaviour & Organisation, Vol. 58, pp. 371-392. Richard Lewis Communications, 2013. Negotiating across Cultures. Services. [Online] Available at: http://www.crossculture.com/services/negotiating-across-cultures/ [Accessed December 10, 2013]. Rosado, C., 2006. What Do We Mean By “Managing Diversity”. Southern Connecticut State University. [Online] Available at: http://www.edchange.org/multicultural/papers/rosado_managing_diversity.pdf [Accessed December 10, 2013]. SAGE Publications, 2013. Dimensions of Culture. Chapter: 7. [Online] Available at: http://www.sagepub.com/upm-data/11711_Chapter7.pdf [Accessed December 10, 2013]. The Brampton Board of Trade, 2010. Workplace Diversity: An Employer’s Guide for Business Advantage. Introduction. [Online] Available at: http://www.skillswithoutborders.com/files/2.pdf [Accessed December 10, 2013]. OBSA, 2012. Social Practice. Airbus People. [Online] Available at: http://www.obsa.org/Lists/Documentacion/Attachments/144/Part_III_Social_EN.pdf [Accessed December 10, 2013]. WHNT, 2013. BAE Systems – EADS Merger Collapses. News. [Online] Available at: http://whnt.com/2012/10/11/bae-systems-eads-merger-collapses/ [Accessed December 10, 2013]. Bibliography Hall, E. T. & Hall, M. R., 1990. Understanding Cultural Differences: Germans, French and Americans. Intercultural Press. Jackson, S. E., 1992. Diversity in the Workplace: Human Resources Initiatives. Guilford Press. Michaels, D., 2012. Defence Deal Would Roil Industry. Article. 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