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Wednesday, 30 May 2007

Analysis of Organization: British Airways By T.Raktabutr (20 Dec 06) 1) Introduction

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This report is written to give details about organisation overview and organisation process of British Airways Plc. and provide the critical analysis on the organisation process. First, it will look at company profile and the history of the organisation including the organisational chart in order to give an overview of organisation and then will explore the evolution of the organisation. Next, it will continue to focus on the organisational processes including (1) Change within organisation (2) Organisational Culture (3) Recruitment, Job Placement, Training and Promotion Policy. These organisational processes will be provided in details regarding what are organisational change, HR policy, and organisational culture? How these processes are related and affected in each other? Moreover, it will critically organisation on these processes in order to know their problems and benefits toward the organisation. Finally, it will give recommendations for the organisation to use as a guideline to deal with organisational process in the future. 2) Company Profile British Airways (BA) is the worlds leading international airline in United Kingdom which provides international and domestic air services for passenger and cargo. BA has airline route which approximately comprise of 150 destinations in 75 countries including North America, Central and Latin America (plus Spain), Western Europe, North and Eastern Europe (plus the Eastern Mediterranean), Africa, and Asia. The corporate headquarter is located in London and its main hubs are London Heathrow airport and Gatwick airport which both short haul and long haul flight are operated in these airports. (Datamonitor, 2005) Moreover, BA has more than 280 aircrafts, which mainly are Airbus and Boeing jets and it has more than 40,000 employees to work for the company. (Hoovers, 2006)

2.1) Organisational Chart For organisation chart, the structure of organisation is flat type because it has only one level of hierarchy that separates Managing Directors at the top from bottom-line employees. (Buchanan D. & Huczynski A., 2004) The head of the company is Mr. William M. Walsh. Currently, he is working as a Chief Executive position. For other managers, the organisation has divided management-level positions into ten departments and each department has own subordinates. The organisations departments include Planning, Investment & Alliances, Commerce, Ground Operation, Engineering, Flight Operation, IT, Finance, Law, and Human Resource. 3) History of Organisation The history of BA is traced back into 1930s-1940s. At the beginning of the Second World War, two airlines between British Airways and Imperial Airline merged together and formed new subsidiary companies which are the British Overseas Airways Corporation (BOAC) to provide the international long haul services and the British European Airways (BEA) to operate short haul service in Europe. (Papadogiannis, 2006) In 1974, BOAC and BEA were combined together and was operated under one company British Airways. Next, in the early 1980s, BA ran the financial problem and Sir John King (the former CEO) was appointed to handle privatization project which the privatization was successfully transformed the organisation in 1987. (Datamonitor, 2005) 4) Change Within Organisation Most organisations will adapt themselves when internal and external environments change. The factors that initiate the need for organisational change can be categorized into two factors. The first factor is External Trigger which is activities and innovations of competitors, change in customers requirement and tastes, legislation and government policies, and so forth. The second factor is Internal Trigger including new product and service design innovations, appointment of a new senior manager, new ideas about how to deliver services to customers, and so on (Buchanan D. & Huczynski A., 2004) When these triggers have an impact on BA, the company responded by initiating Privatization program to change the ownership of the company from the government to the private sector. This program has a purpose to improve the organisation performance in order to

overcome with fierce competitors. According to Lewins model of change, change within organisation will occur in three stages. The first stage is Unfreezing which is reducing the forces of change which maintain behavior in its present form, recognition of the need for change and improvement to occur. Next, the second stage is Movement which is the development of new attitudes or behavior and the implementation of the change. The final stage is Refreezing which is stabilizing change at the new level and reinforcement through supporting mechanisms. (Mullins, J., L., 1999) 4.1) Privatization in British Airways In 1980s, BA has a tremendous change within its organisation which is Privatization project. At that time, the company faced the financial problem. It is a long term debt which is worth more than 1 billion and the British government was not willing to give public money to wipe out companys debt because of the fear of criticism. Moreover, the growth of airline deregulation that allows companies in airline industry to set fares and start or cease service on route as their desirability made problems for BA to overcome with other competitors. These are reasons why BA decided to make change within organisation. (Shibata, K., 1993) The privatization made BA to change many things in organisation such as organisational structure, corporate culture, mission statement, and so on. 4.2) Lewins Change Model in British Airways According to Lewin, there are three stages of change in organisation including unfreezing, movement, and refreezing which can make both positive and negative affect on employees and organisational structure. Unfreezing Stage The first step of organisational change in BA is to unfreeze present pattern of behavior as a way of managing resistance to change. In this stage, organisational change made an impact on individual level. For example, BA implemented Downsizing of Workforce policy in order to restructure the organisation which made the company to cut down the number of employee from 52,300 to 35,000. As a result, this policy reduced hierarchical levels, gave more autonomy to operating people, and allowed work to get done more easily which it would finally improve organisation performance. (Shibata., K., 1993) At that time, the downsizing policy was accomplished with compassion. Early retirement which is another policy to reduce

employee was introduced in this stage and it was got a good response from many employees. Moreover, there was major change in BAs top management. In the privatization period, Colin Marshall was appointed to be CEO by Sir John King which the appointment of new CEO made the old corporate culture disappeared and replaced by new culture which focused more on marketing and customer service. To support this stage, BA introduced new training programs such as Putting People First and Managing People First to help line workers and managers to understand the nature of the airline industry services. (Goodstein., D., L. & Burke, W., W., 1991) Movement Stage The second stage of Lewins Model is movement. In this stage, the company involved in making any change to be actual which the company developed tactics and programs to bring the vision of the top management-level to the bottom-line employees throughout the organisation. To support this stage, a number of internal British Airways structures and systems were changed such as new bonus system and the opening of Terminal 4 at Heathrow airport. Besides, BA also purchased Chartridge House as a permanent BA Training center to permit an increase in and integration of staff training. (Goodstein., D., L. & Burke, W., W., 1991) Refreezing Stage The final stage is Refreezing. In this stage, the company had to stabilize changes by establishing systems that can make behavioral pattern in the organisation. For example, a new performance appraisal system based on behavior and results was created to emphasize customer service and subordinate development. Furthermore, BAs symbols were introduced to support those changes such as new employees uniforms, refurbished aircrafts, a new corporate coat of arms with the motto We fly to serve, and so forth. (Goodstein., D., L. & Burke, W., W., 1991) 5) Recruitment, Job Placement, Training and Promotion Policy In the past, BA was considered to be bureaucratic, large, awkward, and inefficient. According to privatization, it changed corporate culture from bureaucratic and militaristic to service-oriented and market-driven which it made the company to be effective in the airline industry. (Poole, R., 1988) These changes also involve in HR Policy as following.

5.1) Recruitment, Job Placement Policy Recruitment and job placement policy involved in Refreezing stage of Lewins model. According to this stage, BA had to stabilize changes and make the behavioral pattern in the organisation. As a result, BA needed to redesign and improve the recruitment policy and process in order to increase new employees who will be able to share organisations new management style and value system. (Goodstein., D., L. & Burke, W., W., 1991). For achieving this objective, BA changed the recruitment and job placement policy which supported by equality and diversity concept to identify right candidates to fit in new system. Employee Recruitment Scheme and Process In recruitment and job placement policy, BA developed recruitment methodology which is based on looking at competencies of candidates including behaviors, skills, and knowledge. Using competency-based interview made BA to ensure that candidates will be successful in their job and they will be fitted in new organisational system. For instance, selecting right people to work in business field, BA need to focus on high motivation, strong leadership qualities, passion for customer service, team working skills and so forth. (British Airways, 2006) Therefore, BA developed assessment methods in recruitment and job placement process for new entry-level and senior-level positions such as group exercises, the interview, psychometric tests, presentations, fact-finding, and role play. (British Airways, 2006) 5.2) Training and Promotion Policy Organisational change (privatization) transformed BA to be more service airline industry that emphasize on customer service. According to the unfreezing stage, BA had to stop present pattern and introduce new behavior and culture to employees; therefore, BA launched a new training program which is Putting People First for bottom-line employee. Next, in the movement stage, BA also introduced a special training program which is Managing People First for management-level employees as well. All training programs had objectives to identify the organisations dysfunction management style and begin the process of developing a new management style that would fit BAs new and competitive environment. (Goodstein., D., L. & Burke, W., W., 1991) Putting People First Program

According to corporate goal, BA wanted to be The Worlds Favorite Airline in the airline industry. In the privatization period, BA changed itself to be a market-led company rather than a process-driven company as it had in the past. To achieve this objective, BA launched a training program Putting People First that aimed to create employees awareness regarding marketplace and competition and educate employee to know the importance of teamwork, the awareness of customers expectations, and also the contribution of each individual makes to organisation. As a result, this program might make the organisation to reach the goal in order to be the best and most successful company in the airline industry. (Street, M., 1994) Managing People First Program In the second stage of change (Movement), BA needed to bring vision of the top management into its employee. One of programs that were implemented during this stage was a special training program Managing People First for management level. The module of the program includes training, multisource feedback, active senior management participation, support team, and a linked performance appraisal system. After participating, some top management-levels state that this program made BA to have a new leadership which focuses on customer service and this is the key factor in better customer retention and it can increase more revenue. (Tosti, T., D. & Jackson, F., S., 2006) Employee Promotion Policy In 1987, BA successfully changed to be private company because there was one factor that facilitated change within organisation which is Employee Promotion policy. To ensure that change became fixed in the system, BAs top management levels used promotion policy to promote employee who clearly was a role model of the new BA values in higher level. This strategy was used for promoting employees especially in higher management-levels to cement the new belief and value in organisation. (Goodstein., D., L. & Burke, W., W., 1991) 6) Organisational Culture It is difficult to define what organisational culture is but the most popular way to explain organisational culture is to consider each organisation and try to describe how thing are done around here because each organisation has

a different culture, belief, and value. To explain easily, organisational culture is the collection of traditions, values, policies, belief, and attitudes that constitute a pervasive context for everything we do and think in an organisation. (Mullins, 1999) 6.1) Cultural Change in British Airways Organisational culture is very important for an organisation today for setting organisations direction and creating tradition, value, and belief for its employees to behave, and building harmony within organisation. Organisational culture is considered to be a central to companys change and revitalization. When organisations external or internal environments change (for instance, the increase in competitive competitors, the organisations structure and system), an organisation must adapt its present culture in order to survive in the industry. (Salama, A. & Easterby-Smith, M., 1994) BAs Culture (Historical/Pre-Privatization Decision) Prior to privatization, BAs culture was considered to be technically biased, authoritarian, bureaucratic, and the relationship between employees and management-level is impersonal. At that time, management-levels usually encouraged formality within organisation to keep themselves away from staff. This made the organisation not believe in participative management. Besides, employees such as pilots and managers were recruited from the Royal Air Force (RAF) which the organisation belongs to the government; therefore, most employees feel that they are arrogant which the concept of customer-oriented hardly find in these employees. Importantly, the organisation tended to focus safety operation only and lacked of service and market-led oriented (Salama, A. & Easterby-Smith, M., 1994) As a result, it leads the organisation run into crash and faced the financial problem. It is because not only corporate culture itself but also the competitors in the industry which enable to provide better service to customer superior compared to BA. BAs Culture (Prevailing/Post-Privatization Decision) After privatization, BA replaced some of its main historical values and beliefs by new corporate culture and mission. BA tried to introduce new corporate and mission into the organisation by launching many new training programs and new appraisal system to stimulate new changes in order to improve organisation performance. New corporate cultures include informality,

innovation, customer/commercially-oriented, participative management and so forth. For example, BA tried to change corporate mission from To be a safe airline to To be a competitive airline in responding to the change of the external environment. (Salama, A. & Easterby-Smith, M., 1994) It is necessary for an organisation to adapt itself when external environment changes in order to survive; hence, changes in culture and mission are done for transforming an organisation to be the effective organisation in the industry and for improving organisation performance in order to overcome with fierce competitors. The table below shows companys characteristics from the historical period to prevailing period or post-privatization decision. It is obvious that, after privatization, the loss of companys profit reduced from 466 million in 1982 to 225 million in 1987. 7) Recommendation It is general accepted that it is not easy for any organisation to make changes in its structure and system. Any change in organisation sometime leads to have a resistance from its employees. Change could be resisted because it involves confrontation with the unknown and loss of the familiar which Arthur Bedeian cites that there are four reasons of resistance from employee to organisational change including 1) Parochial self-interest, 2) Misunderstanding and lack of trust, 3) Contradictory assessments, and 4) Low tolerance for change. (Buchanan D. & Huczynski A., 2004) In privatization era, BA tried to change behavior both in individual and organisational levels such as changing the management style from authoritative to participative. New behavior or pattern sometime make employee feel awkward and unfamiliar that it can make them to reject and slip back to the familiar and comfortable pattern instead. For instance, BA needed employees to have more participation in management decision; but when a difficult decision arises, it may not be possible to get a consensus decision. (Goodstein., D., L. & Burke, W., W., 1991) In the history of BA, there are evidences that BA put an effort to deal with chaos and resistance during the organisational change period. Tactic that was used in BA to manage conflict and resistance mostly was HR policy such as training policy. HR policy is an effective tool to educate employee and convince them to comply with new system. Although, BA has an effective HR policy to facilitate change and manage resistance from its employees, there is still a case regarding organisational change in BA. For example, during 1990s, many new competitors emerged to overcome with incumbents in the airline industry such as Easyjet and Ryanair. These companies used pricing

strategy to gain the market share from existing companies. To response this threat, BAs CEO declared that the organisation itself may need a second revolution. BA tied to counter with the threat by sourcing new alliance with American Airlines, reducing labor cost in both non-core staff and core staff by recruiting newly hired employees on lower pay to replace existing staff, and restructuring payment system. Although, BA claimed that this is done for majority and for improving organisation performance and benefit in 2000, some employees feel that it is unfair and unsecured in their jobs. Finally, the strike occurred and cost BA 125 million especially employee morale never entirely recovered since then. (Wilkinson, A. & Grugulis, I., 2002) Many organisations including BA desire to make change in their organisation when problems arise and they is seeking means to make change successfully in the harmless or less conflict way. In the past, BA often used HR tool such as manpower planning, recruitment, and training policy to facilitate change and reduce resistance. However, HR policy is not only effective tool to make successfully change in organisation. Another way to help organisational change is to use Change Agent which the change agent is a person who leads a change project by defining, researching, planning, building business support. (Bhardwaj, M., 2003) Change agent is external consultant that an organisation hires him/her to take responsibility for a specific project or sometime is a manager in the organisation who combines change responsibilities with their regular duties. It is better to use the change agent especially external consultant to handle organisational change because, first, an external change agent may possess some skills and specific knowledge that can be handled management project effectively such as workindependently, effective collaborator, and the ability to develop high trust relationships. (Buchanan D. & Huczynski A., 2004) but internal consultant may have more bias and narrow view; this may result in solving not effective as an external consultant who has less bias and broader view (The International Department Research Center, 2004) To use an external change agent is another way to handle change project effectively.

8) Conclusion British Airways is the worlds leading airline which has a long history regarding organisational change. Because of internal and external pressure, it force BA to adapt itself such as corporate culture, value, belief, and company mission in order to improve the organisations performance.

Organisational change gave a huge impact on organisation both individual and organisational levels which create positive and negative effect on organisation. The most popular tool to handle and facilitate change and resistance is HR policy. It seems that privatization in BA is success in 1987; but there was a strike case occurred during that time, which gave an expensive lesson to BA in 1990s. Finally, the other way to help any organisation to facilitate change is to use Change Agent which it is better to use external consultant than internal consultant. Bibliography Bhardwaj, M., 2003, Change Agent, http://www.isixsigma.com/dictionary/Change_Agent-393.htm (27 December 2006) British Airways, 2006, Leaders For Business: What are we looking for?, http://www.britishairwaysjobs.com/baweb1/?newms=info196 (22 December 2006) British Airways, 2006, Our Recruitment Process: The Assessment Process, http://www.britishairwaysjobs.com/baweb1/?newms=info48 (22 December 2006) Buchanan, D., & Huczynski, A., 2004, Organizational Behaviour: An Introductory Text (5th edn), Essex, Pearson Education Limited. Datamonitor, 2005, British Airways Plc: Company Profile, http://web.ebscohost.com/ehost/pdf?vid=28&hid=20&sid=e3c8e78c-c7b34487-bab4-848f87d32e03%40SRCSM1 (21 December 2006) Goodstein., D., L. & Burke, W., W., 1991, Creating Successful Organization Change, Organizational Dynamic, 19 (4): 4-17. Hoovers, 2006, British Airways Plc., http://www.hoovers.com/britishairways/--ID__41761--/free-co-factsheet.xhtml (11 December 2006) The International Development Research Centre, 2004, Selecting and Managing an Evaluation Consultant or Team, http://www.idrc.ca/uploads/user-S/108550007718Guideline.pdf (22 December 2006)

Mullins, J., L., 1999, Management and Organisational Behaviour (5th edn), London, Financial Times Management. Papadogiannis, D., 2006, British Airways Information, http://www.aircraftphotos.net/BA.aspx (20 December 2006) Poole, R., 1988, Privatization: Providing Better Services With Lower Taxes, http://www.isil.org/resources/lit/privatization-english.html (18 December 2006) Salama, A. & Easterby-Smith, M., 1994, Cultural Change and Managerial Careers, Personnel Review, 23 (3): 21-33. Shibata, K., 1993, Privatization of British Airways: Its Management and Politics 1982 1987, EUI working paper. EPU; no. 93/9, Florence, European University Institute. Street, M., 1994, Training People to Deliver Service Excellence in British Airways, Training for Quality, 2 (3): 18-21. Tosti., T., D. & Jackson, F., S., 2006, Targeted leadership, http://www.vanguardc.com/articles/targetlead.pdf (17 December 2006) Wilkinson, A. & Grugulis, I., 2002, Managing Culture at British Airways: Hype, Hope and Reality, Long Range Planning Journal, 35 (2002): 179-194.
Posted by Thanabut at 15:30 Labels: Academic Writing

2 comments:

Anonymous said... There's someone named Mr. Smith representing himself as a reqruiting manager at British Airways. He's trying to reqruit peolpe using yahoo messenger, asking 400$ for the visa. My worry is he's having victims using the name of your organization. I'm bringing this to your atention for you to make actions. And the worst thing is he's using the name of God.
28 March 2009 20:15

Anonymous said... LOL!!!!!

4 March 2010 06:24

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