Changing the Culture at British Airways
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Life at “old” British Airways lacked a unifying corporate culture. The 1971 merger of British European Airways (BEA) and British Overseas Airways Corporation (BOAC), by the British Airways Board, only succeeded in putting an umbrella over two separate mature entities. The focus of the BEA had been to build a European airline infrastructure. BOAS was an innovator and pioneered the first jet passenger service. Neither company was concerned with cost or profit. British Airways was government run and according to Jick & Peiperl (2011) “success had less to do with net income and more to do with ‘flying the British flag” (p.26).
This inefficient government structure was bogged down with bureaucratic red tape. “There were a lot of people doing other people’s jobs and there were a lot of people checking on people doing other people’s jobs” (Jick 2011.p.28). The British Airways Board failed to obtain a “buy-in” from the merged company employees. According to Jick (2011) “a deceiving string of profitable years in the 1970’s made it even easier for British Airways to neglect its increasing inefficiencies”(p.28). Kotter (2012) illustrates this under “Error #1: Allowing Too Much Complacency”. Why would anything change when there was money being made? People are short-sighted and without a plan for the future, British Airways was heading for financial failure.
The difficulty in making changes at British Airways started with it being a complacent behemoth government company. The company had moved from a mature company to a company in decline, Kotter (2012). Sir John King instituted a “Survival Plan” that promised “tough, unpalatable and immediate measures” Jick (2011), to stop the hemorrhage of losses and avoid bankruptcy. In a years’ time staff was reduced by 15,000 and $150,000,000 in severance pay was paid. Pay increases were frozen for a year and offices, administrative services, and staff clubs were cut. King was beginning the process of restructuring. Jick (2011) says that “Organizational renewal generally begins with a turnaround effort focused on restructuring by downsizing or delayering, or both” (p.45). While working on the inner structure of the company, a huge hurdle was the airline’s image, the proverbial “elephant in the room”. This was an airline that handed out food boxes as you boarded the plane. They had a “bloody awful” image Jick (2011), that needed an overhaul to appeal to the consuming public.
The critical factors in the successful transformation of British Airways were changing the culture of the organization for the employees and the consumers. British Airways embarked on an aggressive media campaign that helped change the “face” of the airline. Their new tag line was “The worlds favourite airline”. Customer service became the number one priority for all employees. Lead by Colin Marshall, “an enabling culture (was put) in place to allow customer service to come out, where rather than people waiting to be told what to do to do things better, it’s an environment where people feel they can actually come out with ideas, that they will be listened to, and feel they are much more a part of the success of the company” Jick (2011)(p.30). A “Putting People First” (PFF) program was instituted for all front line employees. This helped to unify the employees with the new vision of customer service first for the company. During these two day mandatory meetings, all front line staff interacted with all levels of managers and leaders on an even playing field.
This helped to reinforce the commitment from management to support the employees and consequently, the employees felt bound to the new company structure. Jick (2011) explains this clearly by stating that “When meeting customer needs becomes more important to the organization than preserving political boundaries, employees will be more willing to renew themselves and their company” (p.41). All the bureaucratic “red tape” of old was streamlined. It had to be since less people were doing the same amount of work. This streamlining helped to empower employees to make their own business decisions in regards to their departments. Jick (2011) illustrates this in “Stage 2: Bureaucracy Bashing” “….attempts are made to get rid of unnecessary reports, approvals, meetings, measures, policies, procedures, or other work activities that create backlogs”(p.46)
British Airways would find it harder in the future to make changes. During the renewal and restructuring process, British Airways cut the fat from the company and focused resources on customer service. As they reformed and grew, acquiring other airlines along the way, their employee base grew along with overhead and payroll. In order to cut costs in the future, they would need to have a greater employee awareness, previously facilitated by the PFF program. Balancing customer service while still managing the bottom line in such a large company can be a daunting challenge. It is hard to cut costs and still provide excellent customer service without streamlining and re-trenching. A failure of the British Airways was not being able to sustain the cultural change began in the 1980’s. Future models of the PFF program failed to engage the employees and a new approach needed to be taken to solidify the company culture as it grew. They celebrated their victories in the late 80’s and this led to complacency. Kotter (2012) says in “Error #7: Declaring Victory Too Soon”, that “After the celebration, the resistors point to the victory as a sign that the war is over and the troops should be sent home…..Soon thereafter, change comes to a halt and irrelevant traditions creep back in” ( p.14).
Jick, J.D. and Peiperl, M.A. (2011). Managing Change: Cases and concepts. (3rd ed). Boston: McGraw Hill/Irwin Kotter, J.P. (2012). Leading Change. Boston: Harvard Business School Press.