Employee Relations at British Airways - Term Paper Example

 «Employee Relations at British Airways» Table of Contents Abstract 3 1. Introduction 3 2. British Airways – overview 4 3. Employee relations in British Airways 5 3.1 Main characteristics of employee relations in BA 6 3.2 Factors that influenced employee relations in BA 7 3.3 How the changes in employee relations in BA reflected the changes in the employee relations framework within the UK? 8 3.4 Shifts in the management style of employee relations at BA and their rationale 9 3.5 Consequences of the changes in employee relations in BA 10 4. Conclusion 11 References 12 Abstract The expansion of globalization has forced firms to change their strategic plans in order to increase their competitiveness towards their rivals; in many cases, the alteration of existing business practices is not particularly easy – especially when these practices have been followed for quite a long being part of the organizational culture. Current paper focuses on the employment relations in British Airways; the firm’s position in the British airline industry has been significant; however, the failure in implementing effective HR plans caused severe organizational turbulences – which are still in progress. The firm’s employee relations framework is presented and critically analyzed aiming to highlight the reasons that led to the decline of the firm’s performance – at the point that this decline was related with the HR policies – but also to present and explain the potential role of the firm’s manager in the formulation and establishment of ineffective HR schemes across the organization. 1. Introduction The performance of organizations in various industries is highly depended on the satisfaction of their employees; employee satisfaction can affect the employee performance, which is also closely related with the organizational performance (Nebeker et al., 2001, p.29). In service firms this issue can have particular importance; in fact, these firms the behaviour of the employer towards the employees is expected to set the criteria on which the employees’ behaviour towards the customers will be based; for this reason, in the services sector, the ways that employees are treated need to be carefully reviewed and monitored (Jackson et al., 2009, p.279). On the other hand, the relevant practices of competitors have to be taken into consideration – in most cases, the HR plans promoted within an organization need to be supported by additional policies and schemes. For instance, in the airline industry the introduction of low cost services has to be followed by incentives to the firm’s employees to support the specific schemes (Harvey et al., 2006, p.330). The above task if often difficult to be developed – especially because each firm is likely to have different ethics and culture which can result to different measures for supporting the introduction of change in one or more organizational departments (Hunter, 2006, p.315). In accordance with the above, employee relations plans in organizations worldwide should be carefully examined both as of their feasibility – in terms of resources and organizational culture – and their flexibility – being able to be adapted to different market trends and needs. The criteria mentioned above should be also used in the case of British Airways: the decline in the firm’s performance should be effectively faced through appropriately customized employee relations schemes; the policies currently used by the firm’s managers – as analyzed below – cannot be expected to benefit the firm in the long term even if in the short term the increase of the firm’s profitability is achieved. 2. British Airways – overview British Airways is a major competitor in the British airline industry; the firm operates in the specific industry for about 90 years; through the decades the firm has managed to keep a leading position in the British airline industry; the events of the September of 2001 caused severe delays in the organizational performance – as in most airline firms worldwide. The recent recession also affected the profitability of the firm but not at the same level with the events of the September the 11th. In fact, in accordance with a recent report the traffic of the firm, in terms of ‘Revenue Passenger Kilometres, rose by 3.9 per cent by October 2010’ (British Airways, investor relations, 2010); a comparison is made with the same period of last year highlighting the ability of the firm to secure its performance despite the severe turbulences in the global market. However, severe conflicts have been developed in the firm’s internal environment; these conflicts derive from the lack of effective and fair HR plans – the firm’s employees feel that they are not given the necessary incentives to perform; moreover, they are not fairly compensated for their work; strikes has become a common phenomenon for the organization. 3. Employee relations in British Airways Employee relations in British Airways have been differentiated under the influence of the firm’s ownership structure; as part of the British public sector, British Airways has been characterized by a high unionism; it was during that period that employee relations in BA were quite satisfactory for employees – negotiations with unions were necessary for the introduction of any change in the workplace. However, the performance of the firm during that period was kept at rather low levels – even the increase in performance between 1980s and 1990s was not appropriately supported; by the early 1990s the problems in regard to the employee relations across the organization appeared once again. In fact, the period between 1980s and 1990s can be characterized as the most crucial for the firm’s employee relations; it was during the above period that the need for changes in the organizational culture was made clear; the firm should become more customer-oriented; employees were offered appropriately training and support in order to improve their behaviour towards the customers; this practice was proved successful; in the early 1990s the firm has significantly improved its customer services sector - along with its profitability. The adoption of similar practices from competitors led the firm to the need to develop new plans in order to support its performance. At the same time, the firm’s privatization was initiated – and finally developed. In the context of its privatization, the firm’s traditional policies on employee relations were changed; redundancy schemes become a common practice of the firm’s managers up today. 3.1 Main characteristics of employee relations in BA In the past, employee relations in British Airways were highly based on the initiatives and the proposals of Unions – referring to the period when BA was part of the British public sector; however, during that period the quality of the firm’s customer services was quite low and this is an argument used by the initiators of the privatization – and its current managers – in order to justify their decisions for limitation of the firm’s operational costs through reducing its staff (Milmo, 15 December 2009). On the other hand, the efforts of the firm’s management team to introduce HR plans have been appropriately faced by the Unions; in the past, the power of Unions to intervene in the firm’s strategic plan was significant; however, today, also, the role of Unions in the development of the firm’s decisions remains important; the strike of December of 2009 – one of the most severe in the firm’s history – was supported by Unite – which represents almost ‘the three quarters of the firm’s employees’ (Milmo, 4 June 2010); in current discussions regarding the number of employees and the structure of the seniority system, Unite has a key role in protecting the interests of employees (Milmo, 31 January 2010). In accordance with the HR plans adopted by the firm’s managers in January 2010, two important differences were introduced in the firm’s employee relations: a) new crew has been hired – it is planned that ‘this crew will be working as a separate fleet’ (Milmo, 31 January 2010); b) the promotion system has been changed; promotion is based now ‘on the long of employment in the organization’ (Milmo, 31 January 2010). Moreover, crews were no longer able to work on a separate basis (Milmo, 31 January 2010) – i.e. to be organized in groups that can work independently; it has been proved that this separation increases the firm’s operational costs. 3.2 Factors that influenced employee relations in BA In accordance with the issues developed above, two were the main factors that influenced employee relations in BA: the firm’s ownership status and the increase of competition. While firm was part of the British public sector no major changes were attempted in regard to its employee relations – most of the changes initiated were discussed with unions in advance. After the privatization of the firm, most changes in employee relations are developed without a prior consent of the unions – even if discussion is made with unions in regard to the changes proposed, the view of unions is usually not taken into consideration when the relevant plans are realized. This trend is reflected in a recent announcement of BALPA – the BA pilots’ union: in a recent meeting of the union’s members – in September 2010 – it was decided that any appropriate measure should be taken in order for the career prospects of BA and Iberia pilots to be protected – the meeting focused on the effects of the BA and Iberia merger on the careers of the two firms’ pilots (BALPA, 2010). In the past, the changes in the firm’s employee relations were based on the need for changing the firm’s culture – at 1980s; the plans for the change of the organizational culture – which were adopted then – led to the increase of the firm’s profitability but did not negatively affected employee relations in BA; after the privatization of the firm, employee relations across the organization had to be adapted to the market’s trends – the increase of the firm’s profitability was necessary in order for the firm to survive – the financial support of the state did not exist; any necessary measure – even if negative for the firm’s employee relations had to be introduced; the key factor that led the changes in the firm’s employee relations was now the profit. In accordance with a report published in the BBC News (December 2009), the recent changes in the employee relations in BA has been mostly resulted because of the radical limitation of the firm’s profitability; in the first half of 2009 the loss of the firm was estimated to £292m; the firm’s managers decided to cut about 4,900 jobs in order to reduce the firm’s daily operational costs; the above plan caused the strong opposition of employees – who were willing to work for free for a period but not to lose their job (BBC News, December 2009). 3.3 How the changes in employee relations in BA reflected the changes in the employee relations’ framework within the UK? Employee relations in Britain have been traditionally based on the specific principle: the interests of employees are of key importance for the settlements initiated in the workplace; however, the changes in the firm’s employee relations can be regarded as reflecting the changes of employee relations in Britain (Blyton et al., 2007, p.126). In fact, the ‘poor workplace industrial relations’ (Gennard et al., 2005, p.80) characterized the 1960s; it could be noted that the measures taken by the British government for the increase of income – between the years 1948 and 1979 (Gennard et al., 2005, p.80) – did not have the results expected. The new employee relationship framework – as developed across Britain – and which is based on the use of ‘newsletters and meetings’ (Lewis et al., 2003, p.114) for the communication between employers and employees has been reflected to the communication practices used by the firm’s leaders. The inappropriateness of the HR policies adopted by organizations in Britain is proved by the fact that ‘in 1990s the applications to the Employment Tribunals exceeded the 100,000 annually’ (Dickens et al., 2006, p.7); the failure of the firm’s plans to meet the needs of employees reflects the failure of the state to introduce an effective and fair Employment Relations Framework – as indicated above. 3.4 Shifts in the management style of employee relations at BA and their rationale British Airways was a firm owned by the state; during that period its management style was that of all organizations of the public sector; delays in the development and the application of plans were a common phenomenon; on the other hand, the quality of the firm’s customer services was quite low. The firm’s leaders were not particularly bothered in order to take measures for the improvement of the quality of services; only when the performance of the firm started to present severe delays – in 1980s – the need for changing the firm’s culture emerged. This practice was proved effective but the increase of competition did not allow the relevant schemes to perform well in the long term. The privatization of the firm, resulted to the change of the organization’s leadership style; decisions were taken quickly but the financial support of the state was not available any more; the introduction of redundancy as a major strategic plan for reducing the firm’s operational costs was proved inadequate; the merger of the firm with Iberia was identified as a key strategic plan in order for the firm to avoid the risk of bankruptcy (Rivers, 2010); the above facts can lead to the assumption that the leadership style during the firm’s dependency on the state has been more efficient compared to the leadership style used after the firm’s privatization. 3.5 Consequences of the changes in employee relations in BA The changes initiated in the firm’s employee relations led to severe inter-organizational turbulences; strikes were developed (Weaver et al., 2010) – the most severe was that of the December of 2009 – which resulted to severe financial losses for the firm; in fact, it has been estimated that the loss of each day of strike is ‘between £20m and £30m’ (BBC News, 2009); moreover, because of the continuous conflicts, the revenues of the firm – as a total – have been declined: in the second half of 2009 the reduction of the firm’s income has been estimated to 13,6% (Milmo, 31 January 2010). Another important consequence of the changes initiated in employee relations in BA has been the transformation of the firm’s structure – the organizational hierarchy has been changed – the separation of crews in groups has been eliminated and the hiring of new staff has been strongly supported. All these changes led to the limitation of the firm’s traditional culture and structure; after all these changes, the firm could not perform independently; this fact is reflected to the firm’s merger with Iberia – a solution that was considered as necessary in order for the firm to survive. The continuous increase of job losses across the organization can be considered as another severe consequence of the changes initiated by the firm’s new leaders – referring to the period after the firm’s privatization. The lack of effective planning in order to support the changes introduced in the organization has been proved by the fact that the firm’s performance have not been particularly supported – at least not at the level expected by the initiators of these changes (The Guardian editorial, 2009). It has been also proved by the fact that the merger of the firm with Iberia has become unavoidable – as explained above. 4. Conclusion British Airways has been traditionally a major competitor in the global airline industry; the delays in the stabilization of the firm’s performance in the global market can be considered as related with severe managerial failures – especially in regard to the HR policies developed across the organization. As proved through the research developed on the particular issue, the deterioration of the firm’s performance – referring especially to 1990s up today – has been related to a series of ineffective managerial decisions. The principles on which the firm has been traditionally based should be taken into consideration when updating the business plans and policies; the initiatives which have been developed in the past and which focused on the re-format of the firm’s culture can be characterized as quite satisfactory; however, these initiatives were not appropriately supported – no particular incentives were given to employees to participate in the relevant efforts; the employee relations in British Airways have been proved as having a key role in the firm’s struggle to stabilize its performance. The measures adopted for addressing the employee relations problems across the organization should be reviewed – the events that have followed their introduction prove their incompatibility with the firm’s values and ethics but also with the employee relations standards applied on firms across Britain. (2636 words) References/ Bibliography A. Journals Grugulis, I., Wilkinson, A. (2002) Managing Culture at British Airways: Hype, Hope and Reality. Long Range Planning, Volume 35, Issue 2, pp. 179-194 Harvey, G., Turnbull, P. (2006) Employment Relations, Management Style and Flight Crew Attitudes at Low Cost Airline Subsidiaries:: The Cases of British Airways/Go and bmi/bmibaby. European Management Journal, Volume 24, Issue 5, pp. 330-337 Harvey, G., Turnbull, P. (2006) Employment Relations, Management Style and Flight Crew Attitudes at Low Cost Airline Subsidiaries:: The Cases of British Airways/Go and bmi/bmibaby. European Management Journal, Volume 24, Issue 5, pp. 330-337 Jackson, D., Sirianni, N. (2009) Building the bottom line by developing the frontline: Career development for service employees. Business Horizons, Volume 52, Issue 3, pp. 279-287 Nebeker, D., Busso, L., Werenfels, P. (2001) Airline station performance as a function of employee satisfaction. Journal of Quality Management, Volume 6, Issue 1, pp. 29-45 B. Books Armstrong, M. 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