Introduction
This case is about changing culture at British Airways since 1980s to around 2000. Before the change, the organization was reporting losses year after year due to poor market perception as a result of bad organization image. The case outlines problems the organization underwent through late 1970s and early 1980s.
The case also outlines the changes the company undertook to deal with the problems they encountered. In real sense, the company needed change to improve its financial strength apart from convincing the workforce about the significance of customer service to ensure good market perception.
In addition, the company underwent culture change because the management wanted to come up with a strategy that will ensure maintenance of momentum as well as recapturing the focus that will enable the company to deal with different challenges it was facing like the 1981 crisis.
Moreover, the company was undertaking cultural changes because the British government had announced the plan of privatizing through sale of shares. As a result, the organization was trying as much as possible to ensure that it attract potential public investors willing to buy shares at a better price.
Moreover, the operation cost of the company was too high. This is because the company had a very large number of employees due to their poor market prediction. The company had anticipated their passenger volume to increase which required large staff to ensure efficient and effective production. Instead, the passenger volume decreased by around 4 percent. As a result, there was need to change the company culture.
Moreover, the operations costs were high because of increased fuel costs. High fuel costs were as a result of diverse as well as aging fleets. In total, change was necessary to ensure that the above named factors are dealt with to ensure that by the time privatization takes place, the potential investors will be embraced with the ailing airline company.
Due to the fact that British Airline was facing productivity problems, there was need for change. As a result, for the company to increase its production there was need for culture change. There production percent compared to other foreign airline production was 59% which was the highest ever production the company had ever reached. This is just an average to other competitive airlines. Apart from productivity, customer service was also suffering. As a result, there was need for the company to undergo changes.
Diagnosing the Problems and Analyzing the case
Challenges of Change Management
In dealing with inefficiency and inconveniences, the British Overseas Airways Corporation (BOAC) merged with British European airways (BEA). The merger was to be controlled by British Airways board. Though it was assumed that the board was controlling the merger policies, in real sense, BOAC and BEA were still operating as individual entities. This is because; every corporation had its own chairperson, board as well as chief executive officer.
Though Sir Frank tried to create a functional division to ensure that the two groups are integrated into a single board, still there existed divisions within British Airways. These divisions were due to differences in company culture. BEA’s culture concentrated more on factors that did not exist. For instance, BEA was concentrating more on building airline infrastructure, other than concentrating on profits. They were concentrating more on opening stations and looking for networks to work.
However, the problem was that they were doing nothing to align their market with their expansion strategies. On the other hand, BOAC was concentrating more on technological advancements like initiating jet passenger services. However, such innovations were costing the company a lot of money, hence the company ended up facing financial problems.
The merger also lacked economy of scale as well as residual loyalties to increase efficiency. This is because the opportunity of getting consolidated economy of scale benefits were squandered by distinctions in the merger. Though they were operating under the same umbrella, the merger was being operated by two distinct organizations.
Due to this distinction, the merger was incurring high costs to sustain this structure. In general, the process of merging the two airlines ended up creating “a hybrid racked with management demarcation squabbles” (Campbell-smith 10).
Due to lack of a unifying corporate culture, the competitive advantage that led to the merger ended up being defeated hence rendered hopeless. Most of the time that would have been used in managing change, was being wasted in resolving industrial relation as well as organizational conflict issues. As a result, there was no time to unify the two cultures.
These issues are supported by Ravenscraft & Scherer 55 who argued that controlling diverse values, believes and preferences in a merger is not easy since nobody will be ready to do it. This has been the real problem in ensuring that culture in merged firms is productive. This is mainly as a result of both powerful and influential individuals in the two organizations taking strong stands and running their own bit of affairs.
In addition, merging may make employees divert their attentions due to their concern on the position they are holding by the time of merging. They will question their prosperity, their role, company profits and loses. As a result, potential employees might start looking for jobs in other places.
Zatz par 4 adds that, merging is very demoralizing. This is particularly when communication from the management is inefficient hence delivering misleading information. As a result, people might just spread rumors as well as spending a lot of time on change at the expense of productivity.
According to Ravenscraft & Scherer 64, power relationships might also face some difficulties during firm merging. This is based on the fact that, coming up with a true power sharing in a merger is very difficult, as a result in most mergers one side usually dominate the other.
Other problems emerged as a result of government support by reinforcing operational culture. This is because, the company managers ended up neglecting their increasing inefficiencies. This is because the government was encouraging a monopolistic market, by favoring them.
As a result, managers failed to carry out their responsibilities to the later to improve their efficiencies. According to Fairburn & Kay 46, a monopolistic market does not encourage creativity and innovation to increase product quality. As a result, products from British Airline were of poor quality.
The company used employee retrenchment as a means of reducing operation costs. Though the company wanted to accomplish this process through volunteer-ship, the problem is that the company ended up receiving more volunteers than required. As a result, the company ended up spending more on this process. In addition the company lost potential employees to other airlines.
The company also launched Manhattan Landing campaign and carrying out extensive marketing. During its launch, every employ was invited in a celebration. This acted as a get together party for employees which according (Corke 82) the aim was to motivate employees and building team work. Though the company managed to brighten their brand, the company incurred huge expenses.
BA also encouraged quality customer service; this was a very good culture that encouraged ‘putting people first.’ As a result, employees were taken to training programs to encourage participation of employees in this new culture. Despite of all these changes and improvements, the company still faced change and institutionalization problems. This is because, there was stiff competition and higher operation costs impeded cultural change in the organization.
The company experienced a drift towards higher salary rates. Another challenge as a result of change in British Airways was balancing cost reduction and customer service delivery. In most cases, increasing customer service quality usually calls for increased costs. This is in line with Kotter & Cohen 98 argument that customer satisfaction calls for intensive research, qualified employees among other things, which in total increases the company operation costs.
Enablers of Change
Board’s and management’s commitments; if board members along with top managers can involve themselves at every stage of change, then change will succeed. In addition, board members and top managers should articulate the advantages of change to the company. Their commitment is very significant because it motivates employees by providing momentum during low seasons apart from increasing the chance of a change that will be everlasting.
Prior experience; according to Daryl 67, promoting change in an organization entails a lot of complex dealings. Those organizations which have handled change in previous years are aware of commitments, time and personnel required for successful change. Organizations should know that enhancing change is a process that requires setting realistic objectives along with expectations.
Evaluation and planning; effective written plans for achieving positive change in an organization originate from careful evaluation of current staff, policies and board presentation as they relate to change. It is even good for the company to come up with framework outlining change processes by examining areas that need change, apart from developing a plan of change that can be embraced by the organization as a goal that can be achieved.
Assigned staff members; good leadership and continuity are important elements of any successful change. It is true that there are specific people in an organization who should play a role of change coordination as well as overseeing all phases involved in the process of organization change.
It is not a must that the change coordinator has to be company manager, but the coordinator should receive support from the top management as well as the board. The duties of change coordinators should also be described in the job description of this person. As a result, it should be considered just like other responsibilities of this person (Daryl 67).
Change committee; this committee should be able to take the task-oriented approaches to plan and implement change initiatives. Every committee member should be in a position of playing a catalytic role by advocating change within their respective departments. This committee should also advise the change coordinator, sharing the workloads as well as assuming power and authoritative positions when making recommendations to top managers as well as directors.
Broad involvement; Kotter, & Cohen 78 argued that opportunities of becoming a change committee member should be given to everyone in the company. This will be very effective in the process of creating a sense of ownership as well as commitment to change process and its outcomes. To ensure this, the committee should be made up of individuals from diversified sections of employees and at least a board member.
However, the members should not serve in the board for a very long time, there should be rules and regulations governing the number of years or month a member should be in the change committee. This is because, if members remain in the committee for long, there are possibilities that burnouts will start occurring and the committee will not remain intact particularly when personnel turnover is happening.
Consultancy; for effective change to happen, consultancy must be in line with the organization’s plan and implementation of change. Moreover, consultants usually bring efficiency as well as objectivity to change efforts by being responsible for associated roles. These roles include carrying out organization change assessment and evaluation.
Resources; the organization’s management should be having a will to allocate resources like money, to ensure that change initiatives have succeeded. Moreover, realistic plans are required to consider staff time for change committee meetings, organization activities as well as the responsibility of change coordinator.
Training; employees as well as board members should be trained to acquaint them with various needs along with issues involved in change. There should be an exploration of diversity among individuals during training to ensure greater understanding of change issues, hence improving staff interaction along with prompt attitudes as well as behaviors (Daryl 67).
Effective communication; this is a vehicle of delivering timely and proper information flow within the organization. In addition, it allows change committee to receive timely and proper feedbacks.
Blocks of Change
Unsuitable consultants; in case of improper alignment between consultants and the organization goals and culture, the consultancy will end up being weak. Individuals having no experience or even inappropriate skills will make change initiative a failed process. Moreover, overdependence on consultancy might diminish the organization’s powers and ownership of change process.
Complexity in the organization; the issue of involving employees has been very difficult particularly in large organizations, having many employees playing different roles and in different settings. In addition, getting such employees to involve them particularly in the change committees can be very challenging. This is because most of them have no time to attend meetings (Daryl 89).
Another block to change is resistance; this usually occurs when employees and other individuals feel that their powers and privileges are being threatened by change. Identifying the areas of resistance, addressing fears and issues of their origin is very critical. In case this is not resolved then resistance has the ability to affect true change within the company.
Turnover; this has the ability of creating a challenge of familiarizing with the new changes. As a result, securing the support of such people in change can be very difficult.
Poorly planned training; this can create more problems as to what they can produce as solutions. Sessions undertaken under large groups can lead to counter-productivity in case difficult issues have been raised and no follow-ups, feedbacks along with resolutions of such issues.
In addition, change training based mainly on the identification of oppression of one group other than putting the entire organization into consideration, might end up leading to division and confusion that in one way or the other will lead to resisting change. (Daryl 70).
Financial constrains; budgetary allocations as well as conflicts over limited resources can create lots of frictions along with morale loss. Moreover, employees might doubt the significance of change in case the organization faces financial constrains.
Unions; in case the union opinions have not been incorporated in the change plan or change efforts, particularly when it comes to matters concerning personnel practices and policies it might be very difficult. In case employees are represented by unions, union’s officials have to be included in the change discussion process so that agreements are based on collective bargaining grounds.
Recommendations
How to Manage Change in an Organization
During change, the company should ensure that it has instilled customer’s opinions apart from concentrating on customer’s demands. In managing challenges of change, organization has to be ready to gain competitive advantage by understanding customer’s needs and wants.
In achieving this, the organization should ensure that employees are spending most of their time thinking about innovative and creative ways of meeting customer’s demands, instead of thinking about the next client or their positions in the company. This will be effective in dealing with issues in a merger. According to adamssixsigma.com par 4 this strategy of letting employees to concentrate on client satisfaction helps much in managing change as employees will not feel that change has oppressed them.
Another strategy is to increase change capacity. To achieve this, managers should be in a position to align the company’s activities towards one goal. Kotter, 89 supported this notion by adding that, in case proper alignments have been done by managers, then organization’s structures and systems will move swiftly during and after change.
However, to ensure that change capacity continues for a very long time, both top managers and board of directors have to be flexible. This is because, they should continue learning as well as adopting new knowledge and skills as time goes.
Changing organization hardware as well as software; hardware includes things like organization strategies, systems as well as structures, while software refers to things like employees’ behaviors. As a result, in managing change, managers should not only look at change strategies and structures but they should also consider employee behavior, encouragement as well as changing employee mindsets. Managers intending to manage change effectively have to create new mindsets that employees, clients as well as suppliers will share.
Another strategy to manage change is by empowering employees to act as leaders at all organization levels. This means that every employee is responsible and accountable to all activities taking place in the organization. To manage change effectively, employees ought to be empowered and trusted in a manner that they are in a position of dealing with issues that might affect change. As leaders, employees should be allowed to communicate their views about change.
According to Kotter & Cohen 78 this will enhance a sense of ownership of change among employees. Moreover, managers should try to instill change amongst employees. This is what Kotter & Cohen 78 explains as letting the employees to understand the need and benefits of change.
According to adamssixsigma.com par 3, employee involvement is a very important step in managing change. Managers should not take change process as being one way, feedbacks from different employees is a very integral part of change management process. In addition, analyzing and making corrective measures depending on the feedback provided helps in providing robust cycles of change implementation.
Handling Change Management
Start by bureaucracy bashing, which involves removal of backloads that might hinder the change process. This may be achieved by eliminating processes that might consume a lot of energy but result to frustrations.
Empowering employees is another way of managing change process. Managers should encourage open communication apart from involving employees in the change process. Without dialogue, though costs might be reduced and productivity increased but change process will not last for a longer time. The environment should provide chances to a system where every employee is involved in the change process.
According to Kotter & Cohen 100 though managers might communicate clearly to their employees, employees might not understand the message. This is because, understanding the message depends on several factors. To ensure effective communication, managers should allow the audience, when to say and what to say. As a result, the change committee should design communication plans that encompass the employee, supervisor and executive needs.
To manage change process, there should be continuous improvements. This involves translating initial change commitments, into long term process to ensure that employees are not just followers but part of change. To achieve this, (Kotter 67) suggests that, coaching and training for change management should be enhanced. Managers and supervisors should be acquainted with different ways of motivating employees to change.
However, supervisors are the most difficult group to convince the need to make changes; hence most of them have been acting as a resistance source. Moreover, training should be conducted to ensure that employees have developed skills and knowledge required for change to happen, apart from building change leadership.
Recognizing success as well as celebrating early wins is the best strategy to manage change process. The organization should be in a position to recognize individuals and groups which have attained change.
This is very helpful particularly in cementing as well as reinforcing organization change. Nevertheless, after-action-review is also a very significant way of managing change process. As a result, the management should look at the entire change process, evaluate its success as well as failures and identify process change for the next step.
Works Cited
Adamssixsigma.com. Change Management and Effectively Managing Change, 2011. Web.
Campbell-smith, Duncan. The British Airways Story: Struggle for Take-Off. London: Coronet Books, 1986. Print.
Corke, Alison. British Airways: Path to Profitability. London: Pan Books, 1986. Print.
Daryl, Hobbs. Human Capital: The Issues, Enablers and Blocks in Institutional Change. Illinois: Farm Foundation, 1994. Print.
Fairburn, James & Kay, John. Mergers and Merger Policy. Oxford: Oxford University Press, 1989. Print.
Kotter, John & Cohen Dan. The Heart of Change: Real-Life Stories of How People Change Their Organizations. Allston: Harvard Business Review Press, 2002. Print.
Kotter, John. Leading Change. Allston: Harvard Business Press, 1996. Print.
Ravenscraft, David. & Scherer, Frederic. Mergers, Sell-offs and Economic Efficiency. Washington, DC: The Brookings Institution, 1987. Print.
Zatz, David. Mergers and Acquisitions: Finding Synergy and Avoiding the Reefs, 2011. Web. <https://www.toolpack.info/mergers.html>.