British Airways - A Critical Analysis of Organizational Change and Relegated Issues.

It is clear from the above literature that Bob Ayling should have involved all the members of management and staff while making change in British Airways. They should have been convinced about the need of change for the improvements and encouraged to support this process. Despite of considering all that, he brought radical changes in organization without making his management and employees involved, like cost cutting activities, outsourcing of different departments and sale of operations etc.  

Buono and Bowditch notified that uncertainty during change processes is typically about the aim, process and expected outcomes of the change and implications for the individual employees (Buono and Bowditch, 1993).

Organizational Resistance & Readiness for Change

It is well known that people are, for the most part, resistant to change of any sort. This is especially true in the case of transformational change. In organizations, many factors come into play, such as fear of the unknown, habit, the possibility of economic insecurity, threats to social relationships, and failure to recognize the need for change (Nadler, 1988). Such reasons will result in change that is ultimately stamped out and equilibrium returned, unless organization leaders step in to facilitate acceptance of the change. Another issue of importance in change theory is the difference between how the organization looks at present and how it is expected to look after the change. Cameron et al. (1993) discusses “organizational readiness” for change. Depending on the existing culture and the degree to which a change (such as TQM) differs from that culture, an organization may be more or less ready for such a change. Tichy and Devanna (1986) discuss “creating a need for change”; in effect, opening up the organizational culture to be receptive to the change. They note that this is especially difficult when there is no apparent crisis, but rather the long-range vision of a leader who anticipates the time it takes to implement organizational change. Resistance to change is especially relevant if the vision of a leader differs from the values and beliefs of the existing organizational culture. If that is the case, then cultural issues must be addressed (Schein, 1991; Trice and Beyer, 1991). In the case of BA, Ayling’s vision was very good because organizations continuously need improvements and changes to maintain its competitive advantages. Bob Ayling started the change process and neither involved management nor his staff and stressed too much on cost cutting activities then these radical changes turned employees’ repercussion and resistance to change into aggression and they went on strike. Because employees thought that these changes were not needed and they were not convinced, also, they were worried about their future. After that Bob Ayling realized that  without employees’ willingness this changed would not been possible, he apologized with his employees and made the necessary change to uplift the moral of the employees as well as organization.

In this part of the paper author will now discuss the controversy of leadership and its effect on organization’s performance in the context of organizational change. 

Leadership

Leadership is defined as setting direction and influencing people to follow that direction. A person can lead themselves, other individuals, other groups or an entire organization. Modern change theorists often note the importance of the leader of change. However, leadership is important to organizations since without leadership even a well selected, well trained, highly motivated staff will not achieve the organization’s goal. Leadership emerges to be a significant determinant of organizational effectiveness. Still today the most pressing organizational challenges- leadership, empowerment, shaping organizational culture, building effective teams and managing change- hinge on communications activities (Auxley, 1996, preface). There are different schools of thought are as under:

“Leadership is about having a set of values and believing in them, but it is also having foresight, knowledge and intuition, especially about people. Leaders can not expect others to believe in them if they do not believe in themselves.”

(Malpas M., 2006 cited by Porter K. et al, 2006)

“Leadership is the process in which an individual influence other group members towards the attainment of group or organizational goal.”

(Shackleton, 1995 cited by Torrington D. et al, 2005)

“Leadership is about listening to people, supporting and encouraging them and involving them in the decision-making and problem-solving process.”

(Levine S. and Crom M., 1994, cited by Holbeche L., 1998)

Keeping in view the above statements, it is obvious that Bob Ayling neither recognized the significance and loyalty of his employees nor they were involved in the change process of the organization which become a cause of employees’ dissatisfaction and unfriendliness from the process of radical changes. Leadership of Bob Ayling was autocratic, task oriented and transactional. By his authoritative power he wanted to bring change but the interruption of employees in the form of strike, he began improving staff moral by changing his strategies to motivate his employees.

Motivational Theories

Understanding what motivated employees and how they were motivated was the focus of many researchers following the publication of the Hawthorne Study results (Terpstra, 1979). Five major approaches that have led to our understanding of motivation are Maslow's need-hierarchy theory, Herzberg's two- factor theory, Vroom's expectancy theory, Adams' equity theory, and Skinner's reinforcement theory.

According to Maslow, employees have five levels of needs (Maslow, 1943): physiological, safety, social, ego, and self- actualizing. Maslow argued that lower level needs had to be satisfied before the next higher level need would motivate employees. Herzberg's work categorized motivation into two factors: motivators and hygienes (Herzberg, Mausner, & Snyderman, 1959). Motivator or intrinsic factors, such as achievement and recognition, produce job satisfaction. Hygiene or extrinsic factors, such as pay and job security, produce job dissatisfaction.

Vroom's theory is based on the belief that employee effort will lead to performance and performance will lead to rewards (Vroom, 1964). Rewards may be either positive or negative. The more positive the reward the more likely the employee will be highly motivated. Conversely, the more negative the reward the less likely the employee will be motivated.

Adams' theory states that employees strive for equity between themselves and other workers. Equity is achieved when the ratio of employee outcomes over inputs is equal to other employee outcomes over inputs (Adams, 1965).

Skinner's theory simply states those employees' behaviors that lead to positive outcomes will be repeated and behaviors that lead to negative outcomes will not be repeated (Skinner, 1953). Managers should positively reinforce employee behaviors that lead to positive outcomes. Managers should negatively reinforce employee behavior that leads to negative outcomes.

Result of Motivation

The ranked order of motivating factors were: (a) interesting work, (b) good wages, (c) full appreciation of work done, (d) job security, (e) good working conditions, (f) promotions and growth in the organization, (g) feeling of being in on things, (h) personal loyalty to employees, (i) tactful discipline, and (j) sympathetic help with personal problems.

A comparison of these results to Maslow's need-hierarchy theory provides some interesting insight into employee motivation. The number one ranked motivator, interesting work, is a self-actualizing factor. The number two ranked motivator, good wages, is a physiological factor. The number three ranked motivator, full appreciation of work done, is an esteem factor. The number four ranked motivator, job security, is a safety factor. Therefore, according to Maslow (1943), if managers wish to address the most important motivational factor of Centers' employees, interesting work, physiological, safety, social, and esteem factors must first be satisfied. If managers wished to address the second most important motivational factor of centers' employees, good pay, increased pay would suffice. Contrary to what Maslow's theory suggests, the ranges of motivational factors are mixed in this study. Maslow's conclusions that lower level motivational factors must be met before ascending to the next level were not confirmed by this study.

In June 1997, Ayling praised a striking new visual identity supposed to be based on market research but that generated emotionally charged controversy. The change was radical; symbols were simply scrapped (new design, new colours, new motto, denial of the psychological national belonging) as if it was possible to start from scratch with new company identity and culture.

As strikes immediately showed it, BA's culture was still one of a public sector company. Instead of trying to negotiate, Ayling harshly condemned strikers without taking in account this public sector company background. In spite of Ayling's desire to eradicate " British-ness" from BA, employees and people in general (customers, the press, Margaret Thatcher) were not ready to accept it. Strikes were also the result of incomprehension from employees: were the new salary scheme (part and parcel of the efforts to reduce area costs) and the £60 million identity change coherent? Was it possible for employees to stay motivated and involved in BA under those conditions? Furthermore, 160 planes stayed with the Union flag instead of the new design in 1999 because BA lacked time to repaint it. The identity change was as a consequence first of all badly accepted and in addition badly implemented.

However, Ayling began to understand after the strikes the high necessity of human resources as part of cultural background in a customer-facing business . He launched a campaign to raise staff moral in October 1997 and started to think about focusing on people on the front-line through interviews and speeches praising communication between management and staff. He built a hotel and developed a new concept for BA's headquarter (no permanent desk-space). Again, in 1999, an opinion survey was sent to all employees, results were alarming, and Ayling introduced training and motivational programmes.

Cost cut is a very unpopular practice. Consequently, managers usually do it only when it becomes an emergency. Bob Ayling did not take it like that. He anticipated the future and he kept an unwavering stance to impose the BEP measures while a record profit was announced for the year: he sold sensible activities, relocated the accounting department…

He asked for volunteers to leave the firm not because he could not afford to pay them, but to replace them with flexible people having more appropriate skills.

At last he decided to concentrate BA strategy on high margins activities, and implemented a rationalisation program, paring down unprofitable routes and cutting excess capacity.

This anticipative approach triggered the admiration of financial analysts, but the consequences inside the company were not so positive. Many of the problems that occur in an organization are the direct result of people failing to communicate.

Roll of Communication

Communication is vital to the effective implementation of organizational change (DiFonzo and Bordia, 1998; Lewis and Seibold, 1998; Schweiger and Denisi, 1991). “The general importance of communication during planned change has already been empirically demonstrated and generally agreed among practitioners” (Lewis, 1999). Poorly managed change communication results in rumors and resistance to change, exaggerating the negative aspects of the change (DiFonzo et al., 1994; Smelzer and Zener, 1992). “The empirical picture that is slowly emerging indicates that communication process and organizational change implementation are inextricably linked processes” (Lewis, 1999, p. 44). Communication is a critical issue in any aspect of corporate life. This is even more accurate in times of great organizational change.

 “By specifying and communicating its goals to the others in advance, each party knows what the other is attempting to do. At the individual level this may mean clear job descriptions, while at the departmental level it could be statements of objectives. Parties can meet to ensure that they do not compete or interfere with the goal of others. Such discussions reduce the chance of each party misperceiving the others’ intentions”

Michael Mainelli suggested that implemented, a widespread communication of the need to change, by punctuating a crises-point- a trigger and justification, has provided the “compelling reason” to change (Mainelli, 1996, pp.123-128). Since, as John Kotter says, “By any measure, the amount of significant, often traumatic change in organizations has grown tremendously over the past two decades,” effective communications must be recognized as the vital component for organizational change.

According to Stephen Covey, “communication is the most important skill in life.” This is no less true for managerial efforts to invest everyone from the total corporate environment toward change, in these demanding times, on behalf of their organizational life (Kotter, 1993, 1996, p. 3 and Mainelli, p. 1).

Management’s ability to generate trust in the sensibility of their vision- the power of which can only be unleashed “when those involved in an enterprise or activity have a common understanding of it’s goals and direction”- including employees and customers (Miller p. 219 and Kotter, 1996, p. 85). Waltslawick et al. conclude: 1. Meanings are not transferred- they are created in the minds of the perceivers, 2. Anything is a potential message, 3. The message perceived is the only one that counts, 4. Interpersonal messages have “content” and “relational” components, 5. Communication interaction can be either symmetrical or complementary, 6. Effective communication is hard work (Axley, 1996, pp. 53-63).

More over (Daly et al., 2003) Internal communication is important in communicating change. Others focus on the constructional phases of change, where communication is vital to mutual understanding of the problems organizations have to face in order to meet the challenges, and need to change (Bennebroek Gravenhorst et al., 1999).

Literature suggested that communication is the incredibly important part of organizational change. Bob Ayling did not employed this vital factor effectively within the organization neither had he elucidated the process in which change process will execute. His credibility seems also to be affected by the gap between his speeches and his actions. He described for example his second objective for BA as “improving customer service in a more demanding environment". Few months after this announcement, the Marketplace Performance Unit (responsible for generating information on customer preferences and perceptions) was scrapped. After realizing the fact Ayling’s management set up a task force named The Way Forward, designed to learn from mistakes and create new spirit in employees. Restoring better relationship with customers, building the staff morale and motivation, and repairing company’s damaged credibility were the three main responsibilities of this task force.

Conclusion

For effective change management process, good communication between management and staff is imperative. In order to keep competitive advantages and to minimize fundamental effects of political and economical disturbance, the continuous change is required but this should be taken place with the involvement of each and every member of staff. In the process of decision making, if employees are taken into confidence and are convinced about the required change while taking them on board in decision making process, they would as a part of change management process adhere and admire the change. On the other hand, if they are left disconnected and aren’t motivated about this change process, subsequently their spirit and enthusiasm will go down. Certainly they will have apprehensions and impact about this change process. Senses of insecurity and uncertainty of job within the organization created due to lack of communication which spread out rumors. Thus little-convinced employee will give low output and will not remain loyal to the company. Having gone through the case study and examining it with different supportive theories, it is apparent that even though the British Airways was a well-run company, Ayling  decided to bring radical changes to compete in competent industry but he did not use communication techniques and therefore his employees were not communicated his ideas. He neither was successful to motivate his staff about change and have their confidence in him, nor he made them involved in change-management process. Job insecurity and dissatisfaction in his employees were created when he got involved in various cost cutting activities like job cuts, outsourcing and selling of different departments. At times when they resisted against this natural change, he dealt with them ruthlessly. He adopted an autocratic approach as his approach was not transformational, he took several measures after such distraction to lift staff morale but his all efforts went into ashes as he had lost his trust among employees, as a result of that he was terminated from British Airways.

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