Introduction and background
British Airways (BA) is the UK’s largest international scheduled carrier and also one of the leading global airlines. Some figures to better understand British Airways’ importance in the economic landscape, it connects to 300 destinations and carried in 2009/2010 nearly 32 million passengers. The revenue during the same exercise was GBP 8 billion with 238 aircrafts in service (British Airways Plc. 2010).
As per the British Airways annual report 2009/2010 (British Airways Plc. 2010), the company has defined five main strategic objectives to transform British Airways into the world’s leading global premium airline:
• “Be the airline of choice for long haul premium customers.
• Deliver an outstanding service for customers at every touch point.
• Grow our presence in key global cities.
• Build on our leading position in London.
• Meet our customers’ needs and improve margins through new revenue streams.”
This shows that BA is currently undertaking major changes to achieve these objectives impacting human resources. It is thus interesting to determine the top three challenges that BA is facing, highlight the academic underpinning and compare with current behaviours to draw conclusions and detect areas of improvement.
Aims and objectives
This report comprises in four main parts. It will begin with the identification of BA’s main challenges, then a comparison between current behaviour and academic underpinning. Next it will be a critical analysis of areas of improvement. Only then can conclusions be drawn.
What are the main challenges to BA?
Ledwidge (2007) offers findings identifying one main challenge, the employees’ relation with their employer. He states that “BA’s drive for efficiency – in terms of relentless cost-cutting and outsourcing – came at a cost as the airline experienced industrial disputes and employee unrest that dented its image.”. Many examples of strikes are visible on the BBC website (e.g. http://news.bbc.co.uk/1/hi/8411214.stm for Christmas 2009 cabin crew strike) with the details of the reasons but most of them are related to changes in employment terms and conditions. Those issues are highly visible to the public as strikes usually hit passengers during peak season i.e. July/August or Christmas/New Year period.
Recruitment, selection and HR planning is another important challenge BA has to consider due to the amount of changes they go through. BA has gone through major changes like the privatisation in 1987 and the strategic turn-around in 1997 as described by Analoui (2002). But this is not all: BA keeps moving forward as they signed a merger agreement with IBERIA and, as per Chairman’s statement in the 2009/2010 Annual Report (British Airways Plc. 2010), “all the signs are that we can win anti-trust immunity from the US Department of Transportation along with regulatory approval from the EU competition authorities, to operate a joint business with American Airlines and Iberia over the North Atlantic.”. These changes imply new challenges as resourcing and planning gets more international and decentralised than it was in the past.
The third main challenge will be about Performance management for the resources. In his SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis, Robert Heller (2006) states that “So long as they ‘understand’ that BA wants to be seen as a global airline, not a national carrier, that’s fine. But consider this quotation: ‘At a recent employee gathering in New York, none of the 75 people in the audience could remember the company’s… mission statement’ – which was only a single sentence. To put it mildly, there’s not much point in a mission that everybody has forgotten.”. This shows the difficulty to get all the resources working towards the same vision… So it makes it more difficult to manage performance if they do not feel like owning the objectives. The following statement in the 2009/2010 Annual Report (British Airways Plc. 2010) “Our main aim is to develop a customer focused, high performing culture that offers rewards for great individual performance but also recognizes different people in the business have different needs in terms of benefits, training and development.” And this shows that BA is on a journey i.e. it is recognised that it is still a challenge.
Comparison between current behaviour and academic underpinning
As stated in the CIPD factsheet (2007), “For the most part, people have belonged to trade unions because they offer protection – in the early days to provide help in the absence of a welfare state, and then to counteract the greater economic strength of employers, to provide legal and other support to members who believe they suffer injustices, and to campaign for reform”. Even if the Unions are in decline (Torrington, Taylor and Hall 2008) from 13 million at its peak in 1979 down to 6.4 million in 2005, Purcell and Sisson (1983) define five management styles in relationship with employee relation including unions: traditional, paternalist, consultative, constitutional and opportunistic. Unions like The GMB, BALPA or Unite are recognised and involved in BA’s life and change process. The CEO recognises the negotiations and the collaboration between the different bodies by stating in the annual report 2009/2010 that “Our position is clear. We’ve done some excellent work with the unions over the years and we’re happy to work with them. But we can’t let them stand in the way of the progress that’s needed to make our airline’s future more secure.”. So, clearly, we have here a constitutional management style as we look for formal agreements between powerful protagonists, unions and the BA board. This will lead to a negotiated type of consent of a multi-union bargaining, as the unions can commit on behalf of the workers (Torrington, Taylor and Hall 2008). This analysis is confirmed in the 2009/2010 annual report stating that “We negotiate with a total of three trade unions representing colleagues across the business. We seek to work constructively with colleagues and their representatives to improve productivity and performance.” and “We have a large unionised workforce. Collective bargaining takes place on a regular basis and a breakdown in the bargaining process may disrupt operations and adversely affect business performance. Our continued effort to manage employment costs increases the risk in this area.”.
Another key aspect of the employees’ relationship with the employer is the pay scheme, including profit sharing and encouraged share ownership. This is an effective way for employees to feel more involved in the company’s results (British Airways Plc. 2010). This type of remuneration package clearly has a “unitarist” influence i.e. that business organisation can be seen “as a team united by shared interests and values, with senior management as the sole source of authority and focus of loyalty.” (Rowley and Jackson 2010). This is interesting because the general behaviour of BA can be seen as “pluralist” (opposite of “unitarist”) as it is recognised that BA values the variety of sociological diversity in the company e.g. the following statement “We are proud to be a business that welcomes and nurtures difference. Diversity and inclusion are a way of life for us.” (British Airways Plc. 2010).
A third aspect is the international perspective of the employee relations in BA. In total the BA group has 5,574 resources overseas and 35,920 UK based (British Airways Plc. 2010). Torrington, Taylor and Hall (2008) state that “there is a great deal of variation within as well as between national systems in all the above areas. It is also true that things do not remain static over time and that prevailing norms within any country evolve in new directions. However, it remains the case that certain approaches remain associated with particular countries.”. This also has an impact on where to locate resources and how to manage tasks, as some characteristics will influence these decisions:
– “high – low union membership
– single employer – multi-employer bargaining
– interventionist – non-interventionist government role
– adversarial – social partnership role
– autocratic – democratic management role”
(Torrington, Taylor and Hall 2008). This brings an introduction to the next topic about recruitment, selection and HR planning.
BA is basically in the middle of an organisational change. , There are 3 main approaches to organisational change: planned, emergent and contingency (Internal Approaches to Change – Change Models 2009). Lewin (1947), Bullock & Batten (1985) and Kotter (1995) defined steps in the Planned approach, but based on the change that has been implemented and also the way it had been done shows a mix of the Planned (top-down) and Emergent approach, as they will change the structure, the culture, the learning and the managerial behaviour. The CEO also involved the E and O theory in the process and built a shared vision i.e. the overall approach used is the Contingency one, which means seeking to use the best method available for a specific environment.
In theory, one would recruit once the Refreezing period kicks in or a little before that to ensure the new organisation will be optimally resourced once the change is complete. To achieve the goals, BA changed its recruitment policies to cope with the current situation as they are still implementing changes.
HR planning is a key point for BA, as one major part of its scope is forecasting future human resource needs i.e. “translate the strategic objectives of the organisation and environmental influences into qualitative or soft human resource goals” (Torrington, Taylor and Hall 2008). Reading the vacancy details on the Explore our working world website, BA developed a methodology looking at competences, behaviours and knowledge to recruit both experienced resources or new graduates.
BA uses a Resource-based Model to achieve above-average profitability by developing VRIN (Value, Rare, Inimitable, Non-substitutable) resources (Barney 1991). To substantiate this (Parker 1999), let us go back to the mid-nineties when the group started a portfolio analysis and defined the level of criticality of its operations. Based on this analysis, decision has been made to outsource resources that are not key to the core business. As other major corporations, they retained the strategic components (VRIN) and outsourced the routine activities, this decision helping the group to achieve outsourcing goals i.e. costs reduction, higher quality of services, agility and better focus on core business to meet the business objectives. Retention is thus important to ensure talents remain in the company and growth opportunities are made available for these resources. This is the reason why, even if a third of the managers left (voluntary severance) in 2008, others have been encouraged to change function to widen their skills and capabilities for further moves in the organisation. This should offer the possibility to develop succession plans and help the forecasts but, as Hirsh (2000) points out, “this model is appropriate to a stable environment “ and BA is in an environment change jeopardising this type of planning.
A job application can only happen through the website and the assessment will include different types of tests, “The assessment methods we use include group exercises, interviews, psychometric tests, presentations, fact-finding exercises and one-to-one role play” (British Airways Plc. 2010). This complies with what Torrington, Taylor and Hall (2008) state i.e. “A combination of selection methods is usually chosen, based upon the job, appropriateness, acceptability, time, administrative ease, cost, accuracy and the abilities of the selection staff.”
Performance management has been identified as the third main challenge BA is facing. Clark (2005) defines performance management as “Establishing a framework in which performance by human resources can be directed, monitored, motivated and refined, and that the links in the cycle can be audited.”. The key part of the framework is the performance management process (system) to be put in place, as described by Torrington, Taylor and Hall (2008) page 299 meaning that mission statement has to be provided to the system to initiate the circle of stages i.e. definition of business roles, planning performance, delivering & monitoring and formal assessment & reward. As explained in the 2009/2010 Annual Report, BA has a mission with “Compete 2012” and developed business goals towards this. Specific metrics have been developed to track progress against the business plan, three of which are used to set targets for the basis of remuneration (customer recommendation, operating margin and network punctuality). To achieve this, BA made the link between the mission statement and the individual targets by communicating the common vision (weak point), agreeing accountabilities (visible in job descriptions) and motivating and inspiring others.
Performance appraisal determines the new salary level, bonus and shares, but also current performance versus agreed objectives, areas of growth, training/development plans, agreements on future objectives i.e. a holistic review of the employee profile. BA does not mention a 360 degrees type of feedback i.e. using a full range of sources to be collected about the individual (Torrington, Taylor and Hall 2008) but a one-to-one type of appraisal with the manager.
Performance management reflects the company culture i.e. “the collective programming of the mind.” (Hofstede 2001) and the culture will drive an attitude i.e. “certain regularities of an individual’s feelings, thoughts and predispositions to act towards some aspects of their environment” (Secord and Backman 1969) that will then lead the capacity of delivering towards objectives.
The company’s culture is then key to foster better performance. There are different ways the culture can manifest itself e.g. Deal and Kennedy’s corporate culture (1982), Hofstede (1997) or Johnson and Scholes (2008) but they all converge saying that the way of working (organisation, controls, practices, environment, …) is one of the main attributes of the culture. BA adapted its culture to cope with the different events depicted before and subsequent different visions-missions e.g. from “To be a safe airline” to “To be a competitive airline” i.e. the values and beliefs had to shift from a technical, bureaucratic and authoritarian orientation (Royal Air Force background) to a customer facing, market orientated organisation. To ensure implementation of this new culture, it implied a change in ways of working and a shift of attitude, measured through performance management, to achieve the new objectives.
Areas of improvement
As per Mullins (2005) and Buchanan & Huczynski (2004) change is generating resistance, and that can be attributed to different factors as e.g. misunderstanding, fear of the unknown etc… What is important is how to handle and overcome the resistance to change in order to deliver the change itself.
Resistance to change becomes a restraining factor as they have to fight against people losing part of their power as the organisation is flattening to transform from a technology based company into a learning one. To achieve this though, it will be necessary to improve the communication to cascade the vision and mission of the company to all layers to also implement the new culture and modify employees’ attitude. This would also improve the performance of the employees as this will drive towards the desired attitude.
BA should improve the employees’ relations by, even if the style is constitutional, spending more times to get stakeholders, including unions, on board and get their buy-in before going to implementation. This means involving stakeholders in the decision process and convincing them on the rationale behind the change.
Refreezing the organisation may become necessary at least for a period of time in order to have a new baseline from where to start fresh and develop the two main new views i.e. “As is” and “To be”. This will allow HR to do proper planning and adapt policies and processes to recruit the right people with the right skills and competences for the right jobs at the right time.
In conclusion, HRM practices have definitely helped in all areas of the BA metamorphosis. It has been in the centre of the change process to review the organisational structure, hire the right resources, develop the redundancy programme, etc… Without implementing proper HRM processes, BA would have failed to improve their organisational effectiveness and, even if not perfect, it should give a long-term competitive advantage against the competition by its resources’ heterogeneity and deployment of the key resources to increase the returns. It also makes the whole coherent to become the world’s leading global premium airline.
References and bibliography
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