British Airways is one of the leading airlines around the globe in terms of operations because it boasts of an extensive root network running internationally. Accordingly, the 2009-2011 global financial crisis pushed many companies to implement changes to survive the difficult economic times. British Airways witnessed a dramatic decline in its revenue and operating profits during this period, and thus, decided to embrace a change program that would help it restore its dwindling fortunes in the airline industry. The change management strategy at the British Airways was implemented in three key stages including unfreeze, freeze and refreeze. Upchurch (2010) affirms that the decision to make changes in the company did not impress most of the crewmembers, as it led to a 22-day strike. They resisted changes such as retrenchment of some staff members and the reduction of employee pay to satisfy low costs for customers.
This essay explicates the change management strategy at British Airways highlighting the internal and external contextual factors, the nature of the changes, the change strategy used, and the challenges experienced by management in managing these changes.
According to Plehwe (2013), the most significant internal contextual factor that influenced the introduction of change was the decline in the operating profit of British Airways in 2009/2011 period. For instance, Ali (2012) opines that the company had made an initial profit of 875 million pounds in 2008, which was followed by a loss of 401 million pounds in 2009. The internal loss made it apparent that the company was running a financial crisis that needed urgent address. The low financial performance prompted the company to change its strategy in the market to ensure its long-term development and restore the financial success that had been experienced in the previous years by one of this largest carrier. Overall, the internal financial situation prompted the strategic management change in the company to restore lost glory.
Several external contextual factors influenced the introduction of change at the British Airways. Prassl (2010) agrees that one of the key external contextual factors was the overall decline in the global economic performance. As noted earlier, the financial crisis hit most countries, and the UK was no exception. In light of the global economic challenges, the cost of living increased rapidly, thus, employees needed an increase in their incomes to cater for their daily livings. There was pressure from employees for a pay increase at the company, hence prompting it to implement this. Jarvis (2014) reiterates that apart from increasing employee demands, the oil prices increased to about $100 per barrel, hence increasing the overall cost of operation at the company.
Another vital external contextual factor that influenced the change was competition from other low cost carriers. It is worth understanding that most customers were shifting to low cost carriers, and the British Airways had to make relevant changes to ensure it survives in this competitive market. For instance, low cost carriers such as Easy Jet and Ryan Air in the UK were taking over the market and British Airways needed a perfect strategy of charging low fares to counter this competition and survive in the market.
Upchurch (2010) indicates that the first actual change made by the British Airways was the adoption of a retrenchment strategy meaning that an estimated 4900 employees would lose their jobs. This was aimed at cutting the overall costs of the company. From an economic perspective, this change was vital because it would have reduced the amount of wages and salaries paid to these employees. It was envisaged to pave way for the success of a low-cost carrier at the company. Furthermore, there was an idea that the company was overstaffed, and the large number of employees was not commensurate with the operating costs. On the other hand, a critics’ perspective indicates that retrenchment programs worsen the growth of the country because they subject many citizens to unemployment. A large companies, like British Airways had to think about the welfare of its employees before implementing such a step.
Another actual change was to freeze the pay rises for its employees for the next two years. In 2010, the company stated that it was going to freeze additional payments to its employees and members of the management. From an evaluative perspective, the freezing of payments was justified by the fact that it needed to accommodate lower fares for customers whose need for low-cost carriers was increasing. Ali (2012) affirms that most customers would only travel around in low cost carriers, hence making it necessary for the company to reduce the salaries of its employees over a period. Additionally, the freezing of payments was justified by the understanding that oil prices were increasing at an alarming rate and an urgent decision needed to be taken. However, this did not serve the best interests of employees who are primary stakeholders responsible for the delivery of services. It is always crucial for any company to prioritize the needs of its employees to realize the required goals in the industry.
British Airways used the change management model proposed by Kurt Lewin to implement these changes. Here is an outline of this change management strategy used by British Airways.
The first stage of the change management process was unfreezing. The company needed to make its employees aware about the upcoming changes. Therefore, Willie Walsh, the CEO of British Airways tried his best to inform all employees and other stakeholders of the company of the upcoming changes. Wensveen (2010) asserts that this awareness came in tandem with the existing economic crisis during the 2009-2011. He was on the leading line in the establishment of a clear vision relating to the proposed changes to improve the operation of British Airways. The CEO outlined relevant benefits that would be enjoyed by the organization once these changes are implemented.
The second stage entailed the introduction of the desired changes. British Airways did not hesitate in terms of introducing change despite the apparent resistance from cabin crewmembers. Jarvis (2014) informs that the introduction of change began in 2009 when the company retrenched 1,700 cabin crewmembers, and reduced the number of long-haul flights from 15 to 14. Another change was the freezing of additional payments to employees starting in 2010. Thus, change was real at the company, and needed to be observed by every member of the organization.
The last stage was refreezing where the company tried to reinforce, stabilize and solidify the new state of affairs. In its course of reinforcement, it made more changes that would lead to the attainment of low costs of operation. The management was keen on the attainment of lower costs, and they accepted a reduction in their salaries. Other changes that were reinforced included the increase in the cabin crew’s working hours and the scrapping of meals except breakfast.
The key challenge and difficulty faced by management in implementing these changes was the high resistance from the cabin crew. It is clear that the crew staff was against the retrenchment plan and the extension of working hours by the company. Prassl (2010) opines that the cabin crew was quick to announce a 12-day strike to resist these changes. However, the strike went on for 22 more days and the stalemate lasted for 18 months. This hampered effective operations within the company because it happened during the Christmas period when many customers are supposed to move from one country to another. According to Burnes (2014), this challenge came about because these crewmembers had not been involved in the making of decisions relating to the intended changes. The management had used the authoritarian system to communicate with employees about the upcoming changes, hence denying them the opportunity to contribute to any changes. It was not easy for management to enforce this change on their own employees, as they had not given their approval. This explains the significance of the democratic style of leadership in any given organization.
In conclusion, the introduction and implementation of change in any given organization is never easy. In the above case, British Airways was focused on cutting down its costs by retrenching part of its staff and freezing the increase in payments to the remaining employees. The low revenue and a reduction in profitability necessitated these changes. Additionally, difficult economic times and increasing competition made the company think about the need for these changes. British Airways remains one of the largest airline companies around the globe. Nevertheless, the approaches adopted to the introduction and implementation of changes seems to have been autocratic. Most of these changes were enforced on employees without their consent and involvement in the process. The change process can only succeed in cases where employees are directly involved in the decision-making and understanding the elements of the change. Companies in the contemporary world need to review their change mechanisms to ensure they avoid any instances of resistance of change as witnessed in British Airways.