Impact of Change Management on British Airways (BA)

Impact of Change Management on British Airways (BA) Executive Summary This report identifies the Leadership Theory and The Change Management with its impact on British Airways. It clearly outlines the external and internal factors which the new Chief Executive, Willie Walsh, has to consider in order to successfully drive the company forward. In this report different change models are explained as well as the reasons for the change. Leadership Theory: Leadership is actually a process of social influence for the accomplishment of a common task in which one person enlist the aid and support of others. Alan Keith of Genentech states that, Leadership is ultimately about creating a way for people to contribute to making something extraordinary happen. According to Ken SKC Ogbonnia, effective leadership is the ability to successfully integrate and maximize available resources within the internal and external environment for the attainment of organizational or societal goals. All above leadership definition and scholars views about leadership interpret that leadership is a unique quality which works in uniting different people on the same point and plate form to win the certain goals and objects. Different theories including power, vision and values, behaviour traits, charisma and situational interaction, intelligence were evolved by the students of leadership. For centuries the search for the characteristics of leaders has been in progress. The early detection of significance of the leadership was the basis of this search and the theory that leadership is embedded in the characteristics that few individual seize. This thought that leadership is based on individual characteristics is called Trait Theory of Leadership This view subjugated experimental and theoretical work in leadership for centuries. Between 1940-1950 reviews of these studies provoked researchers to consider different view for the definition of leadership. There are various models for the theories of leadership. MODEL 1: This model comprises of three effective styles of leadership: Authoritarian leadership style: This style gives the criteria of leadership style in which the working environment is managed by the leader using the strong directives, instructions and controlling actions by enforcing the rules. Democratic leadership style: It is very important style through which leaders take such actions which are collective, interactive and responsive. Laissez-faire leadership style: Let the things and tasks be done by the followers as they want is the essence of this style. The leaders give liberties but no guidance and framework to the followers to perform actions and accomplish the task themselves. MODEL 2: This model bears the great characteristics, the task versus interpersonal. INTEPERSONAL -ORIENTED STYLE OF LEADERSHIP: According to Clark, Donald, 2005, there are certain characteristics of this style of leadership. It offers the style of leadership that gives the opportunity to the leaders to ask the followers for opinions and suggestions and motivate the followers. The leaders give much priority to the thoughts, ideas, and the feelings of the followers. In this style the leaders give liberties of free communications. They have good listening skills and not much oral communication TASK- ORIENTED STYLE OF LEADERSHIP: According to YUKL.G, 2002, the task oriented style of leadership has certain characteristics: In this style, the leaders distribute information. The leaders do not pay attention to the ideas, thoughts and the feelings of others. The rigid sort of communication is exercised. Related to performance, the demands are made by the leaders. In this style written communication works. Model 3: There are four important theories of leadership in this model that are acted upon by any organization to update the business and for extensive management decisions. Michigan leadership studies. Ohio state leadership. McGregors theory X Y Blake and Macaneses leadership study. Importance of leadership skills in 21st Century The leaders of the 21st century are finding it hard to manage the progressively more multi faceted and constantly fast paced nature of the businesses. Engrossed in the unpredictable markets, leadership failures continue to rise even among highly eminent CEOs. Leaders have always developed their skills through, training courses, seminars and coaching-and attaining 21st century leadership skills are no different. In business management, leadership plays a successful role in identifying strengths and weaknesses of an organization and utilize them efficiently to accomplish the goals and objectives set by the organization. Other than decision making, leader has to encourage and lead his team on the road to success. 21st century leaders have many roles to perform due to changing trends in markets, cajole organizations, numerous stakeholders and splited job where they persistently face tradeoffs in focus, energy and time. With a new set of leadership qualities a blended 21st century leadership style is rising: Their leadership style matching to a complex, fast-moving technology based business Skilled in oral communication is a key element of good customer service Articulating a convincing future vision Guiding different groups of people to deliver business goals Cutting unnecessary overheads today while building for tomorrow. Bringing new perspectives and confronts threats without being overloaded Searching for new solutions outside conventional areas Open-minded and inquisitive about their environment To take advantage of new market opportunities organizes the company Works across boundaries and view business as a networks for communities To maximise sustainable growth uses partnerships and collaboration Have the ability to identify and define problems, invent and implement solutions, and trail and assess results. Another key to success is good personal management, self motivation, and career development skills are critical. Irrespective of whether a company is running with ten people or with ten departments the importance of leadership is obligatory. These leadership skills play a vital role in increasing the competence of the available resources and achieving the set goals of an organization. Organizational Change Management: Change management is defined as, to prepare, commence, recognize, organize, and stabilize change processes on both, corporate and personal level There are two types of changes: 1. Organizational Change: It is more steady and evolutionary approach and is based on the hypothesis that it is possible to ally company objectives with the individual employees objectives. This is rarely possible in actual practice 2. Reengineering Change: Known as business transformation or corporate transformation. It is the more fundamental form of change management, since it challenges all elements of processes or structures that have evolved over time. CHANGE MODEL: Bechard and Lewin introduced the most famous and important change model in 1951 and 1969. In 1980 Quinn and Lewian further explained this task. LEWIN: According to Lewin 1951, the introductory methods to manage the change are as follows: Unfreezing, existing attitudes are supported by the change in the present equilibrium. New responses can be developed according to new information. Refreezing, by introducing new responses in the personality concerns, can stabilize the change. THE FIELD FORCE ANALYSIS is the only methodology observes change suggested by Lewin that involves: The transition to the future state is affected analysing the driving forces. The differentiation between driving and restraining forces is necessary. Measures should be taken to give rise to critical driving forces and diminish critical restraining force (Martin, 2006). In order to conclude the need and capability of Organizational change management should begin with the identification of the current circumstances, deep understanding about leadership skills, group dynamics, and creative marketing. RESISTANCE TO CHANGE: May be external or internal. EXTERNEL: External resistance defiantly affects the process of change. The cultural, social and political environment all resist to change. Effective Communications with various stakeholders explaining them the reasons for the change (why?), the benefits of successful implementation (what is in it for us, and you) as well as the details of the change (when? where? who is involved? how much will it cost? etc). INTERNEL: At the time of implementation of change, organization can face some resistances to change internally from the workers like: Lack of knowledge Deficiencies in training Fears to lose something. Absence of trust. Communication problems. Normally, people perceive change processes in seven typical stages. Introduction: This report reviews the understanding of the concept of Organizational Change and its long term effect on the organization with regard to changes brought in British Airways British Airways is the fourth largest and one of the fastest growing airlines in the world. Leadership qualities and its unique culture helped in the growth of the company. Chief executive Bob Ayling, brought changes in the company without its employees support. At the time when BA was making record profit he thought change was necessary as some long term decision were to be made. He brought the change by outsourcing departments like engineering, information technology and maintenance to developing countries and by raising the morale of the staff by introducing training programmes and establishing hotel for the staff at Heathrow airport. Our aim is to be benefiting the customers, employees and shareholders, and to fulfil our commitments to the society. (http://www.guardian.co.uk). Background of British Airways British Airways aims in bringing people together by taking them wherever they want to go. This apply not only to the 36 million passengers that travel with them but also to their employees.Inspite of having challenges over the past few years the company is very competitive travel industry. They believe that they have firm strategy which keeps them moving forward. Based in London at Heathrow Airport British Airways PLC is the leading intercontinental airline in the world. Being UKs sole network carrier globally it serves 95 million people a year approximately to 550 destinations in 97 countries using about 1000 planes and 441 airports. British Airways feels proud in providing full range of services to their customers whether they are in air or on ground. British Airways A Snap shot 1916: Establishment of Predecessor Aircraft Transport Travel Ltd. 1919:Worlds first scheduled international air service was inaugurated 1933: Establishment of service to India and Singapore. 1935: The merger of three smaller airline companies forms the basis of British Airways. 1939: British Overseas Airways Corporation (BOAC) was formed by the union of British Airways and Imperial Airways and also nationalized. 1949: BOAC imbibe British South American Airways (BSAA) 1958: Successful completion of first jet trans-Atlantic service. 1962: Supersonic transport (SST) is build by BOAC and Air France agreement to commit funds. 1967: Second around-the-world route is established by BOAC. 1974:Company is restructured under the British Airways name 1976: The first SST Concordes service was inaugurated simultaneously by British Airways and Air France. 1987: Privatization of British Airways. 1987: British Airways buys British Caledonian (BCal). 1988: Marketing alliance of British Airways with United Airlines that two years later collapses. 1992:44 % of USAir Inc is purchases by British Airways. 1998: Between British Airways, Cathay Pacific, Canadian Airlines, Qantas and American Airlines One world global alliance is launched -a group that grows to eight members. 2000: Opening of British Airways London Eye observation wheel; in its first year of operation 3 million people ride the wheel. 2006 and 2007 award of the year for SKYTRAX and OAG airline. 2007 award of best airline based in Western Europe. 2007 best trans-Atlantic airline award. 14-03-2008 at a cost of 403 billion pound Heathrow terminal 5 was opened to be used exclusively by BA. Additional Details Public Company Frequent Flyer Programme :Executive Club Premier (Invitation) Key People :Willie Walsh (CEO) Tense Relationships :Virgin Atlantic, Formed 1984 Employees: 65,157 Sales: Â £9.278 billion (US $13.151 billion) (2001) Stock Exchanges: London New York Frankfurt Munich Ticker Symbol: BAY (London); BAB (New York) NAIC: 481111 Scheduled Passenger Air Transportation; 481112 Scheduled Freight Air Transportation; 56152 Tour Operators Changes in British Airways: To improve the future of the organization and reputation against the competitors British Airways chairman and board of directors decided to downsize the organization. The changes were totally revolutionary and dominantly strategic. Vast resistance was faced by British airways from department of labour and development, local and environmental NGO and unions both internally and externally against these changes. As BA marketing value changed at 15% due to fierce competition with other international airlines they had huge pressure to bring this change. The change started in 2005 by changing its top management and appointing Willie Wash as CEO. The main focus to change is followed: Reduction in cabin crew Internal and external change. Financial losses. Drop in profit. Increased Competition. Loss of Market Share. Technological Development. Cultural change. Vision of change The vision of British Airways is One Destination seeks to ensure our customers fly confident that, together, we are acting responsibly to take care of the world we live in. Mission to change In its words: British Airways is aiming to set new industry standards in customer service and innovation, deliver the best financial performance and evolve from being an airline to a world travel business with the flexibility to stretch its brand in new business areas. (http://www.britishairways.com) Objectives of change To face the global economic and market environment give new ideas and innovation to the individuals so that they are competitive. Changing internal and external culture of the organization Offer good services to the passengers Introduction of the continental food. According to market conditions introduction of new technology and packaging. To have profound effect on the character and personality of the BA individuals give them comprehensive knowledge of managerial and technological skills. To increase the productivity of the units fabricate leadership qualities in individuals. Creating a positive and dynamic learning environment to bring a paradigm shift. The hub for the introduction of MBA programme by BA was that the knowledge and training should be thoroughly applied within the organization and future growth and development of the employees should be related to this training. Strengthens of Change in British Airways: Before change a clear and set objectives are there. Specific issues and problems were focused in planning and involvement. Before introduction of new technology collection of data and marketing survey was done. Every employee got incentive in the shape of Golden handshake and transfer in other units by downsizing strategy. According to market demand introduction of new technology. Weaknesses of Change in British Airways Identification of the problems that were surfacing in the organization. In some areas lack of policy direction. Need of cross functional communication Long distance between communication chain like the decision-making unit and the primary sources of information. Senior executives were over worked Power structure was weak. Top management was difficult to reach. Decentralized structure Lack of sufficient training. SWOT Analysis: Strengths: Well-established brand name British Airways gained loyalty and trust from the customers. With strong international alliances BA has a global geographic exposure with excellent communication. BA took full advantage of technological development through innovative culture e.g. online sales, drive thru check in. Purchase of the new fleet and the appropriate aircrafts to make travelling comfortable for the passengers gave BA advantage over their competitors. Weaknesses Soaring debts are still BA main concern. Events like 2001 Iraq war and 2005 terrorist attacks had negative effect on BA due to its reliance on the international air travel and this threat still persists. Job cuts may have negative effect on the BA as previous experience with the cost -cutting exercise resulted in understaffing and 2004-2005 industrial actions. Exposure of the rule that adult male passenger cannot sit next to the child led to sex discrimination allegation against BA. Unions threatening to go on strike against downsizing. BA was declared by AEA as the worst airline for lost and delayed baggage due to clogging of belt carrying bags and malfunction of baggage handling system. Worst airline for the arrival and departures of the short and medium haul flights. In 2007 Heathrow as voted worlds least favourable airport as it being overcrowded and subject to delay. Shortage of the staff car park space due to non availability of space Delays in getting to work due to long queues for security check up. Opportunities BAs online customer base expanded further by the growth of internet worldwide. As customers expectations are raising value added and innovative flight services will attract more customers. Opening in 2020 of a third short runway and sixth terminal will benefit BA and make Heathrow a global gateway. Threats BA market share is under threat from the low cost airlines which continuously enjoy strong growth and power in the market. Fluctuations and continuing growth of the fuel prices pose another threat to BA. Customers are still vigilant of the threat of repeated terrorist attacks. More companies are focusing on high quality in their strategy plan which increases competition in low cost airline market. Conclusion: Organizations decision making both informing and enabling strategic direction should be fully incorporated in the Change management approach. Organizations history, readiness, and capacity to change forms the realistic review for the management change. British Airways is one of the leading international airlines in the world. The organizational Change brought by the British Airways were effective not only in introducing modern technology but also improved the performance of the airline. To defeat the competitors BA introduced different options for its customers and tried to stabilize its position in the airline market. By encouraging its employees through different incentives tried to improve their skills and knowledge which is beneficial not only for them but also for the organization.