The Dynamics of Employee Relations - Case Study Example

Master Project 200280 Project Proposal (British Airways ) Student: Ahmad Alrababah Student ID: 17391450 Table of Contents Project Proposal (British Airways ) 1 Executive Summary 3 Introduction 3 Situational Analysis (PESTEL and Benchmarking) 4 Issues 7 Employee involvement and Change Management 7 Quality Management (Initiatives Like Open Skies & Terminal 5) 9 Theoretical Outlook 9 Segmentation of Target Market 10 Social Matrix Analysis 10 References 12 Executive Summary Dynamism is trademark of business. An organisation is continuously subjected to various internal and external factors which compel it to keep adjusting in order to sustain. Similarly the journey of British Airways is also full of various strategic changes to cope up with the issues it has been facing from time to time. This proposal endeavors to highlight the some of these issues which surfaced after privatization of BA. It will critically analyze some of the specific issues and would correlate them with some theoretical concepts. However, this proposal would not endeavor to recommend or suggest any possible solution for these issues. Introduction British Airways (BA) is one of the global leading scheduled international airlines. It has in its kitty, a capacity to carry around 33 million passengers every year to more than 150 destinations across the globe and capacity to transport around 800,000 tones of cargo annually across the globe. It also boasts a huge employee base of around 36,000 people which are required to manage its global operations through a large fleet base of around 240 aircraft. It is also one of the oldest established players in the industry and has been highly regarded (Oum & Yu, 1998). But the situation of the company has not always been in line with its credential in the industry. There have been some key business issues like those associated with employee involvement and management of quality of services rendered by the airlines which did not allow the company reaches the position in the industry which it deserves. Situational Analysis (PESTEL and Benchmarking) First of all, in order to understand the situation in which the company is, let us carry out a situational analysis. Various factors that would be considered to carry out this analysis are as under: FACTOR ISSUE ANALYSIS EFFECT ON COMPANY International World economy changing rapidly, becoming highly competitive and unstable. Reduction in trade barriers, through establishing trade agreements. The Globalisation movement - improvements in IT, and telecommunication Emergence of new economies & country development – causing new markets for opportunity. Increased competition (Negative) Acquisition of cost-effective labour & material(Positive) Reduction in trade barrier (Positive) New market avenue (Positive) Overall Ruling: Positive Economic Increasing individual income. Ongoing global slowdown Increasing Unemployment levels. Interest & taxation rates. Increased affordability (Positive) Reduction in overall demand (Negative) Reduction in affordability (Negative) Falling Margins (Negative) Overall Ruling: Negative Political Impact of international trading barriers. Government & attitude towards Airlines industry Creating international trading agreements (Free trading agreements) with countries Regulations & agency – uncertainty with international trading, (Negative) Encourage industry expanding (Positive) International trading agreements ease entry into country (Positive) Overall Ruling: Positive Technological Improvements & development of technology. Revolutions & innovation in transportation. Technology integration into the industry Improved innovation at global level (Positive) More efficient manufacturing operations/procedures (positive) Achievement of economy of scale and scope (Positive) Overall Ruling: Positive Legal Industry regulations and laws. Penal Clauses against poor service delivery. Corporate social responsibility. Prevents monopoly & dominant control (Positive) Brings corporate ownership (Positive) Overall Ruling: Positive Social / Cultural The change in social attitude & behaviour. Influence of education / literacy Social issues – concern for accidents like 9/11 Recent movements of multiculturalism immigration into the Western world. Quality innovative services bring satisfaction and enjoyment (Positive) Increase services acceptability through more rational to buy product (Positive) Increased fear from air travel (Negative) Multiculturalism – change in religious beliefs & custom (Balanced) Overall Ruling: Balanced Sustainability Continuously rapid changing environment, due to globalisation. The increasing issue of ‘global warming’ & ‘climate change’ – encouraging companies to become ‘green’: recycling, waste management, environmentally friendly. Change is continuous, uncertain, unstable (Negative) Establishment of renewable energy source which is not cost effective (Negative) Overall Ruling: Negative The above analysis shows that most of the factors are having overall positive impact for the company. Even for those which are either balanced or negative, they have same impact on other players in the industry too. However, when compared to its peers, the performance of the company is far from being comparable. For an example, the chart given below indicated that when benchmarked on various parameters with other competitors, the overall performance of the company was found abysmally poor. Source: Adapted from http://www.ethos.ae/wp-content/uploads/2011/03/Airline-Benchmarking-Report.pdf Let us now examine some of the key issues which are responsible for such situation for one of the great global airliner. Issues The tow key issues that would be dealt would be associated with employee relationship and quality management. For any services company in general and British Airways in particular, both these factors would directly affect the customer sentiments and hence the likelihood that the company’s business would in turn suffer due to such customer mindset. Thus analysis of these two issues would put forward very critical study on the overall business operations of the company. Employee involvement and Change Management After the integration of British Overseas Airways Corporation (BOAC) and British European Airways (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 (Lebrecht, 1999). 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 knowhow 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 (Martínez, Turnbull, Blyton & McGurk, 2001).  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, which are clearly meant to distinguish various hierarchies across the organization. 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 (Blyton & Turnbull, 2004).  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 at one time 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. In addition, because of the inability of the management to handle employees effectively and to show commitment and honest communication, more customer oriented problems arise.  This in return affects the overall operation of the business making the business less profitable and declines the reputation among its target market.  Quality Management (Initiatives Like Open Skies & Terminal 5) These initiates were intended to enhance and improve the services quality and 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 (www.peoplemanagement.co.uk). 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 Segmentation of Target Market First of all it is recommended to carry out segmentation analysis of the target market of the company. This will give us an idea who all uses the services of the company and what their expectations would be. This will help us to understand the mismatch between the customer expectation and the service deliver by the employees. The segmental analysis would also help us understand how employees need to oriented and how to reduces that prevalent dissatisfaction among them and make them more customer oriented (Shultz, 2007). Based on the above segmentation analysis, the employees need to be giving more attention to the customers and company should always ensure that there should not be any differentiation among the employees serving different customer base. This will make sure that the changes are In that case, the company would be able to make better brand identification among the customers. One of the main goals of change management is to align people, culture, and value with strategic shift in the company (Bridges, 2003). Social Matrix Analysis The social matrix analysis based on Layton’s model would be used to analyze whether the company is able to deliver the requisite growth and well being to the stakeholders or not (Layton, 2009). The analysis would be based on all the parameters of the social matrix. Prima facie, it can be inferred that the requisite growth and well being has not be adequately achieved in this case especially when considered for the important stakeholder like employees of the company and in turn for the customers of the company who are not in a position to enjoy the desired level of services. Thus, while company claims to achieve highest level of desired service provision, the analysis would reveal as where the gaps are, which are resulting in non achievement of the same. (Inferred from corporate information provided on www.britishairways.com) However, from various instances it can be inferred that the company has been dealing with these issues and there have been instances of success and failure in the same (Prokesch, 1995). This social matrix analysis can be also be leveraged to validate various attempts that have been put forwarded by the company to rectify the issues. Further, this analysis would provide the opportunity to look into the area of adherence and deviations from marketing model adopted by the company. Thus if the adopted model is closer to some other marketing model, then more elaborate analysis in that context can also be carried out. Various research and studies on this company would be leveraged as source of information for the proposed analysis. The analysis would then be used for recommending the resolution of the issues that are being considered. As it has been proposed that the issues which are being dealt here are impacting the customer satisfaction and hence the overall business operations of the company, the recommendations if incorporated would definitely bring in more employee satisfaction with their orientation towards customer service and quality improvement. Then it goes unsaid that with more customer satisfaction, the overall business operation of the company is going to improve. References Blyton, P., Turnbull, P. (1998, 2004), The Dynamics of Employee Relations, London, Routledge Bridges, W, 2003, Managing Transitions: Making the Most of Change. Nicholas Brealey Publishing, USA http://www.peoplemanagement.co.uk/pm/articles/2010/04/hrd-2010-british-airways-troubles-bring-urgency-to-changeprogramme. Lebrecht, D. 1999 ‘Effects on airline employees of growing competition’. London: British Airways, paper presented at the Airline Industrial Relations Conference, SMi Group. Martínez Lucio, M., Turnbull, P., Blyton, P. and McGurk, J. 2001 ‘Using regulation: an international comparative study of the civil aviation industry in Britain and Spain’. European Journal of Industrial Relations 7(1): 49-70. Moore, Elizabeth S. and William L, Wilkie (2000), "Criticisms, Controversies and Problems in the Aggregate Marketing System Oum, T.H. and Yu, C. 1998 Winning airlines: productivity and cost competitiveness of the world’s major airlines. Boston: Kluwer. Prokesch, S.E. 1995 ‘Competing on customer service: an interview with British Airways’ Sir Colin Marshall’. Harvard Business Review November-December: 101-112. Roger A. Layton, 2009, On Economic Growth, Marketing Systems, and the Quality of Life, Journal of Macromarketing 2009 29: 349, retrieved from http://jmk.sagepub.com/content/29/4/349, surfed on 3rd October 2012. Shultz, C. J. II. 2007. Marketing as constructive engagement. Journal of Public Policy & Marketing 26:293-301. www.britishairways.com, surfed on 3rd October 2012. www.ethos.ae/wp-content/uploads/2011/03/Airline-Benchmarking-Report.pdf, surfed on 3rd October 2012. Read More