Abstract
This paper focuses on a case study of the staffing problems at British Airways (BA) as an illustration of a service-oriented company that faces modern-day problems of employee opposition to downsizing. The paper uses online questionnaires as the main data collection tool to sample the views of ten company employees who work in British Airways (BA). Comprehensively, this paper acknowledges that BA has maintained a good relationship with most of its stakeholders, except for its employees.
Therefore, this paper proposes that BA should adopt an open communication strategy to improve its relationship with its employees. Similarly, this paper recommends that BA should uphold stakeholder engagement as the main solutions to the periodic industrial actions it faces. This way, the company can improve its competitiveness in service provision and maintain its leadership in the aviation sector.
Introduction
British Airways (BA) Company is the national flight carrier of the United Kingdom (UK). BA operates under the banner of the One World Alliance and under its parent company – International Airlines group (Cole, 2003). The parent company lists in the London Stock exchange (Cole, 2003).
So far, BA flies to more than 160 destinations around the world (Melville, 2011). Its presence manifests in Europe, Asia, North America, Africa, and other parts of the world (however, its main hub is in London) (Melville, 2011). Based on its fleet size, BA is among the largest airline companies in the world. Moreover, besides Easy Jet Company, BA is the largest airline company in the UK, in terms of its passenger numbers (Cole, 2003).
BA offers a variety of services including engineering and cargo transportation. However, passenger service is its main business focus. Since its privatization, BA has been a phenomenal success in the provision of passenger services.
The company’s privatization helped the organization to move from a loss-making entity to a profitable enterprise. An increase in the organization’s turnover, operating profits, and earnings per share characterized the swift transition of the company into a profit-making entity. The volumes of passengers have also more than quadrupled in the past decade (Melville, 2011).
Nonetheless, underlying BA’s success is a growing dispute between the company’s management and its workers. The fiercely competitive aviation sector also threatens the sustainability of the company’s service. Indeed, low-cost airlines considerably erode BA’s market share through effective pricing and the provision of quality services.
On one hand, BA’s has been forced to improve its customer services by nurturing long-term relationships with its customers, but this move has been undermined by several factors. Staffing problems and a demoralized workforce highlights some of the problems that affect the company’s goal of maintaining its industry leadership.
Defining the Problem
For most parts of the years 2010 and 2011, British Airways experienced several industrial actions from its workers (Werdigier, 2010). The workers demanded higher pay and better working conditions. BA was however hesitant to do so, after citing significant hikes in operating costs and an unstable business environment as its reasons for rejecting the demands of the workers.
Besides the rising costs of operations and the unstable business environment, British Airways also suffered from an increasingly fragile British economy, characterized by high unemployment rates and a weakening consumer spending power (Werdigier, 2010). The sheer extent of a serious British Airways strike worried many analysts who feared that such an eventuality might cause more fragility of the country’s economy (Werdigier, 2010). This happened.
Broadly, the BA strike involved a dispute between the company’s staff (through their union) and managers of the airline company. The union accused the airline’s management of bullying and harassing its workers. For example, in 2010, the airline’s management decided to withdraw cabin benefits of the workers.
Most of the employees considered this move as bullish and went on strike. In fact, for the period of the strike, the company threatened most of the workers with job termination and the withdrawal of fringe benefits (Melville, 2011). Consequently, most of the workers believed that the airline’s management was out to gag some of its workers and cripple the worker’s union.
The strikes caused significant losses for the company because BA was still experiencing the effects of fierce competition and rising costs of operation. The strike affected BA’s operations at different levels because customers reported significant delays in flight operations and lack of baggage services. The check-in staff was also not on duty, thereby affecting the company’s sales.
In some major airports around Europe, the strike affected the airline’s operations for more than 24 hours. For example, the strikes affected Heathrow, Gatwick, Birmingham, Manchester and Glasgow airports with significant delays of up to 24 hours (Smith, 2012).
In fact, at Heathrow alone, the company cancelled more than 150 flights (Smith, 2012). At Gatwick airport, the strikes caused the cancellations of more than 45 flights (Smith, 2012). The effect of the strike was so severe that the company had to cancel more than 1,100 flights out of a possible 1,900 flights that the company scheduled to do within the strike period (Smith, 2012).
Moreover, even as the strike continued, periodic collapses in negotiations between the workers and the airline managers occurred. Analysts say that for the period that the airline company witnessed the industrial action, the company incurred more than 264 million Euros in losses (Werdigier, 2010).
Similarly, during the strike, the airline’s brand suffered a significant dent in its image after customers shunned BA and decided to book flights with its competitors. As the strike continued, its spillover effects started to be felt by other airlines as well. This standoff caused many analysts to fear for the airline’s future, especially as the competition in the airline sector grew fierce, and the costs of operations continued to rise (Smith, 2012).
The 2010 industrial action witnessed at BA has not had a long-term solution. In fact, the industrial action is not the first in the company because a similar strike in 1997 occurred after workers complained about managerial insensitivity to the plight of the workers (Smith, 2012). While BA’s managers solved the 2010 strike, the threat of a new strike is always not far away from reality.
For example, BA recently collaborated with a Spanish airline company, Iberia airlines, as part of its expansion plan. However, since the merger has not been profitable for the company, BA considers restructuring the company to make it leaner and more efficient (WSN, 2012).
Unfortunately, this strategy requires the company to dismiss hundreds of workers. This has been the latest battlefront for BA and its workers because the workers are threatening the company with more industrial action if it intends to proceed with its plans. Therefore, BA faces a tougher future as it is involved in a fierce battle with its workers, who oppose its restructuring plan.
Tools used for Data Collection
The main data collection method was the online questionnaire. Ten BA employees received the questionnaires. We gathered the data as a survey to understand the opinions regarding the human resource issues at British Airways and their possible solutions.
The unavailability of some respondents for a face-to-face interview informed the selection of the online questionnaire as the main data collection tool. Indeed, online questionnaires transcend geographic boundaries that would prevent a face-to-face meeting with the respondents (McDonald, 2003).
Moreover, the use of the online questionnaires provided a cheaper approach of data collection because of the simplicity in administering them. Certainly, the respondents easily keyed their opinions through the online questionnaires without having to meet with the researcher in person. Therefore, there were no travelling and printing costs incurred. Another motivation of adopting the online questionnaire was the limited probability of errors occurring in the data collection method (McDonald, 2003).
A comprehensive regulation of the online questionnaire occurred through a data input software that disallowed the input of “unacceptable” information. Moreover, in some instances, the respondents had to select their answers from a series of available choices. This option created a lot of flexibility in the collection of data because answers displayed through check boxes, pull-down menus, pop-up menus, help screens and sub-menus.
The use of the online questionnaires also enabled an easy and prompt review of the participants’ responses because it was easy to get information from the respondents (promptly) without waiting for the physical delivery of the questionnaires (McDonald, 2003). Furthermore, since the data collection process occurred through a central database, the data analysis process was also faster than physical questionnaires. It was therefore easy to understand the views of the respondents because their answers were more direct.
The use of the online questionnaire often poses significant challenges in data collection, but most of these challenges did not occur in the research. For example, McDonald (2003) says that online questionnaires normally have a low response rate when researchers use them in areas that do not have an internet connection. However, all the respondents who were involved in this study had a working internet connection in their offices.
It was therefore easy to avoid this challenge. McDonald (2003) also says that online questionnaires have a bias towards young people and have a lower reception to their completion. These challenges were equally avoided because the respondents were young people aged 40 years and below. Moreover, they did not exude any hesitation to participate in the study or to use online questionnaires.
Analysis of Data Gathered
The biggest issue identified by the BA workers sampled included managerial insensitivity. Many of the respondents believed that the company’s management was running the company single-handedly without considering their thoughts.
When the respondents stated their greatest grievance in the company, they affirmed that managerial insensitivity, coupled with poor pay and bad working conditions were their main concerns. As seen from the graph below, managerial concerns formed the greatest grievance of the workers (60%), followed by bad working conditions (21%) and poor pay (19%) in that order.
Many respondents therefore believed that their managers were largely arrogant and insensitive to their plights as workers. The withdrawal of some of their fringe benefits was also an issue of serious concern for most of the workers. The lack of job security and the uncertainty that prevailed in the workplace also stood out as serious concerns for the workers.
The workers were therefore not sure about their employment status in the workplace because the fear that they would lose their jobs always lingered over their work. One respondent said that the company intends to dismiss about a quarter of their workforce without any consideration to the welfare of the workers, or any proper notice for such actions. Another respondent said that the company intended to reduce workers’ pay by about 25%-30% without any consideration to the prevailing financial hardships that most workers faced.
This uncertainty demoralized them and prevented them from fully engaging in their duties. They therefore lacked enough focus to dedicate their services to the company. The main indicator of this lack of employee commitment was the low level of customer satisfaction with the services of the company.
The employees no longer experienced the need to satisfy their customers because they lacked the commitment to do their job well. One person said, with the fear that they would no longer be part of the company; they could no longer devote all their energies to the company’s activities.
When the respondents suggested what the mangers could do to alleviate their problems, many of the respondents answered that the managers should demonstrate empathy and concern for the plight of the workers.
Other respondents said that the company’s management should adopt more consultative approaches when formulating their decisions, so that whatever decisions they came up with, demonstrate the input of all the parties involved. However, there was the unwillingness of the respondents to appreciate the factors that led the managers to make their decisions.
More specifically, the respondents did not understand the external and internal factors that were privy to the managers, which forced them to make the decisions that they did. Moreover, the workers did not refer to the competitive pressures and the growth of competitive forces that forced the company to make hard decisions about its staffing problem. The workers therefore never appreciated that the company had to be more efficient and leaner to make more profit and compete with other airline companies in the industry.
When the respondents stated who would better solve their problems (between the managers and the union) an almost equally opinionated response highlighted the potential for the worker’s union and the company’s management to solve the company’s problem.
As seen from the above pie chart, 49% of the respondents said that the union should continue to pressure the company’s management for better working conditions, while 51% believed that the managers had the sole discretion of solving their problems (better than the unions would do).
Broadly, the employees believed that the union’s role was mainly to advance their agenda to the management, but the management had the mandate to solve their issues. Indeed, there was a clear understanding that the union did a good job to organize the workers and formulate a collective bargaining agreement with the company’s management.
The role of the union could however not be undermined because without their opinions in the negotiations, the workers would not stand a chance of effectively receiving a favorable response from the company’s management. Therefore, through such an understanding, the employees believed that the union’s input was instrumental in the decision-making process. Therefore, the solutions to the staffing issues had to mirror the union’s input.
When the respondents explained if their industrial actions were effective in advancing their plight, all of them answered affirmatively. In fact, most of the workers believed that this strategy was the only “language” that the managers understood. WSN (2012) said that during the 2010 strike, the industrial action cost the company about 7,000,000 Euros, daily. For most companies, such (daily) losses would be significant enough to warrant a careful reconsideration of the plight of workers.
Nonetheless, so far, the company has made some effort to open its communication policies to include the trade union, but such efforts are still insufficient. For example, a planned exercise to dismiss more than 400 cabin crew has been ongoing because BA’s management has tried to engage with the workers’ union about this plan to no avail (Melville, 2011).
So far, the company is facing a situation where the union demands that the management should only dismiss workers who are unwilling to work for the company (Melville, 2011). Therefore, the union would oppose any attempts by the company to dismiss workers who are still willing to retain their jobs. Such hard-line positions require a well-thought approach to solving them.
Conclusion and Recommendations
Stakeholder Involvement
The importance of companies to maintain a good relationship with their stakeholders cannot be overemphasized. This is because stakeholders support most company activities, and without their support, organizations would seize to exist. BA has managed to maintain a good relationship with most of its stakeholders (Werdigier, 2010).
For example, suppliers have provided the company with crucial goods and services that support the organization’s activities. Indeed, since the company is a service-centered company, BA buys many goods from its suppliers, including food for its customers and fuel to power its airplanes (Werdigier, 2010).
The company’s suppliers are always keen on nurturing a good relationship with the company because as BA expands, they will also expand and enjoy greater profits. Some of the company’s main suppliers are Boeing and Airbus because both companies manufacture airplanes and sell them to the company. Both companies therefore have a big stake in the London-based organization (Werdigier, 2010).
Creditors also surface as an important stakeholder for BA because most of them are interested in receiving regular and periodic payments. They need to know that the company can pay its debts on time, so that they can lend the company more money to make more profit. Such stakeholders are more interested in the financial performance of the enterprise (Werdigier, 2010). Therefore, BA’s creditors would be more concerned with the company’s profitability, cash flow, balance sheet and the likes.
According to the context of this paper, employees are the main stakeholders for BA. Employees are normally interested in the company’s activities because it provides them with an income and a livelihood. Besides this advantage, workers are interested in the company’s activities because it provides them with fringe benefits and an opportunity for advancing their careers.
However, BA has failed to understand the role of its employees in the company’s decision-making process. Consequently, it has failed to include all stakeholders in its decision-making process. Some of the sampled respondents mirror this weakness because some of them feel isolated and vulnerable to managerial excesses. They also feel that most of the company decisions do not reflect employee input.
The importance of stakeholder engagement at BA cannot be overemphasized because the management needs to realize that it needs to consider the inputs of everybody that it influences through its decisions (Welch, 2011).
Stakeholder engagement may offer the company a good opportunity for aligning its operations with the needs of the employees and the organization. Through this process, the company will also find it easier to improve stakeholder value and improve the company’s long-term sustainability. Welch (2011) says proponents of stakeholder engagement intend to encourage organizations to exploit the opportunities of full stakeholder engagement that is associated with the process.
Through this engagement, Welch (2011) says that BA may find it easy to enjoy an employee buy-in. Moreover, such a strategy may improve the motivation of the workers, thereby improving the company’s overall productivity. This way, the company may also improve its services and improve customer satisfaction. In fact, BA has long suffered from the lack of customer satisfaction, which has also significantly eroded its profitability from low sales.
The improvement of these organizational functions will also lead to the improvement of the company’s competitive standing. Such a development will be an important addition to the company’s brand because BA continues to face stiff competition in a fiercely competitive aviation sector. At the same time, the company will be introducing new and procedural changes to the company’s operations.
Better Communication
Based on the analysis of BA’s internal and external environments, there is a clear understanding that the company’s management faces tough choices regarding the maintenance of the company’s long-term sustainability (profitability) and keeping its employees happy. While the company may not have the power to change its external environment (which influence its decision-making process), it needs to do more work to make its employees understand the prevailing market conditions that influence their decisions.
For example, increased competition is a significant challenge for the company because it threatens its long-term sustainability. The company is helpless to such forces. Similarly, the rising cost of operation is also a significant challenge for the company because it erodes the company’s profitability. Issues like rising fuel costs are equally beyond the company’s control.
BA’s management therefore needs to communicate such challenges to the employees, better than it has done in the past. Relatively, the main problem that arises throughout the analysis of this paper is the presence of a closed system of communication between the company and its employees. The communication mainly seems to be a top-down approach, where the company communicates managerial decisions “down” to the employees, without their participation.
While a top-down communication channel may be undesirable for the company, BA’s decision to make the company more efficient by reducing its workforce is not new to modern-day companies. Indeed, many companies have downsized their workforce without much opposition from workers’ unions. In fact, in the last two decades, most major companies in the world have downsized their workforce (Strain, 2013).
For example, HSBC holding (an international banking and financial services) has downsized its workforce without widespread public opposition. The company dismissed more than 5,000 employees, in 2011, and it intends to lay off more workers in the future. Another company that has adopted BA’s downsizing strategy is General Motors (American car automaker). Necessitated by a drop in sales, the company’s management had to dismiss more than 75,000 – 100,000 workers (Strain, 2013).
Interestingly the company dismissed the workers between 2008 – 2010 when BA wanted to reduce the workers’ fringe benefits and salaries. Examples of other major companies that have downsized exist. Therefore, compared to BA, other multinational companies have dismissed more workers that BA intends to do.
While there is a danger in generalizing the managerial decisions of different companies, across varied industries, the above analysis shows that there is no strange difference in what BA intends to do and what other companies have done. Communication is the only difference that exists for BA and other companies (Powis, 2012).
BA needs to adopt an open strategy of communication because the current communication strategy is uncomfortable and unproductive for everyone. While many people may identify different reasons for the ideological differences between the worker’s union and the management, it is important that BA’s managers do not allow past disagreements with the workers to influence its future decisions (Powis, 2012). So far, past animosity between the union and the management seems to overshadow future company operations.
The company needs to mitigate this concern by embracing an open and clear communication channel with the employees, to build a more productive environment for everyone in the organization (Powis, 2012). Furthermore, the company also needs to demonstrate that it is proactive in solving employee issues. Indeed, as the workers said, the greatest responsibility for solving the company’s problems rest with the management and not the workers, or their unions.
References
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Powis, A. (2012). A journey to award-winning employee engagement. Human Resource Management International Digest, 20(5), 31 – 34.
Smith, J. (2012). Travel & Tourism: AS Level for OCR : GCE AS Level Double Award. London: Heinemann.
Strain, M. (2013). Examples of Downsizing in the Business World. Web.
Welch, M. (2011). The evolution of the employee engagement concept: communication implications. Corporate Communications: An International Journal, 16(4), 328 – 346.
Werdigier, J. (2010). British Airways Strike Effect Disputed. Web.
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