This report focuses on explaining the change management at corporations. It includes the example of British Airways that has once successfully applied change management in their corporation. Change Management is the concept organizations apply in order to deal systematically with change.
When British Airways was formed after its merger, it wasn’t doing well. This was mainly because of the cultural and status differences of the employees of the corporations that were merged. There was no leadership and the company lacked the required competence to deal with the emerging problems.
In order to deal with that dilemma it was decided to appoint a new Chairperson and Lord King was appointed. He later on, appointed King Marshall as the Chief Executive. Both the leaders knew that change was needed within the company. They saw that valuable resources were being wasted, company was working inefficiently, cultures differences existed, needs of the customers were not identified correctly and attitudes within the company were to be changed. They took major change management steps and came up with different programs and strategies to deal with the situation. It was made sure that the employees are fully supported during the process of change and needs of everyone are catered. Hence, a successful change management was implemented that helped the company to come out of crisis and emerge as a strong competitor in the airline industry.
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Introduction:
Change Management is a word heard often now in most of the corporations. It has been around for a while now, but is famous in corporations that are interested in initiating a change to their processes which includes both culture and work tasks. Change management is defined commonly as employed set of the processes to ensure that considerable changes are implemented in a systematic, controlled and orderly fashion to result in organizational change. (Hiatt & Creasey 2003)
Five principles of Change:
While implementing change management there are five basic principles that the managers need to keep in mind:
Different people tend to react in a different way to the change.
Everyone’s fundamentals needs are to be met.
Change also involves loss at times and people need to go through the loss curve.
The expectations of all are to be met in a realistic way.
Fears of all are to be dealt with.
Organizational Change Management:
According to organizational change management both the tools used by managers and the processes are to be taken into consideration. Mostly organizations want the change to be implemented with least resistance. For this to happen change must be implemented with a structured approach so that the transition of one behavior to another is as smooth as possible.
Management’s Role in the Organizational change:
It is the responsibility of the management to spot out the behaviors and processes that are not proficient and come up with new ones that are more effective for the organization. Once these changes have been identified, managers should estimate the impact it will have on the organization and its employees.
Management should also assess the reaction of employees to the implemented change and try to understand the reaction as well. It is the job of the management to completely support their workers through the process of change. Finally the management should help employees to accept these changes and help them to adjust well and effectively once the changes are implemented. (Hiatt & Creasey 2003)
British Airways:
British Airways is the flag carrier airline for the United Kingdom with its head quarters in Waterside. The main hub of British Airline is at the Heathrow Airport of London; its second hub is at Gatwick Airport and the third one is at London City Airport which is served through BA CityFlyer a fully owned subsidiary of British Airways.
British Airlines happens to be the largest airline of UK on the basis of its international flights and destinations and their fleet size. In the year 1971 British Airways board was formed to manage the two airline corporations, BEA and BOAC, and relatively two smaller regional airlines Northeast Airlines from Newcastle and Cambrian Airways from Cardiff. But in the year 1974 all these airlines were dissolved to form one major airline British Airways (BA). The airline was created aiming at being the worldwide network and achieving economies of scale. The merger of these airlines resulted in 50,000 staff members and 215 aircraft, which are considered to be grossly overstaffed along with many levels incompatible management structure. Problems were being created because of the cultural differences between the airlines along with a ‘class’ distinction amongst the staff members.
When the middle oil crisis arrived in the world and resulted in reduction of market, it left the already overstaffed BA airline with massive losses, a very poor service reputation and 20,000 potential redundancies. The union was so strong in the company that it made difficult for the company to take any remedial measures. By the year 1980 the fleet was downsized to 174 aircrafts but still the company was loosing money at the rate of £200 pounds per minute. With the government supporting the company, there was no internal urgency for the change to take place and outside competition to be adapted. (Lundy & Cowling 1996)
By the year 1981 British Airways appeared to be a failing company making multimillion pound losses. It gained the reputation of being a major international airline giving the worst service. The only solution than was seen to make a change in the culture of the staff. For 13 years it remained a nationalized company and in February 1987 it became privatized as a plan of the conservative government of that time.
Major Problems being faced after the merger:
When British Airways was formed after the merger it faced a number of problems and issues. Main problem was encountered in terms of the culture differences of the companies. When the members of organizations belonging to different and diverse cultures interact with each other and one of the cultures is required to adapt the practices and methods of another culture it results in disruptive tensions. Same situation took place between he employees of BEA and BOAC the two emerging industries of that time. This problem can be explained as a culture clash or acculturative stress.
Another issue arrived in terms of the management system being imposed in the company. BA implemented a very inflexible, preoccupied and hierarchical management system creating status differences which was also evident from their uniforms. The company also had problems being rule oriented. The new management had problems in identifying and addressing the needs of their customers. The company emphasized more on their inward looking management approach and on maintaining their various routes and all this resulted in customers being unsatisfied.
Change in direction:
In the year 1979 Mrs. Thatcher’s new conservative government took the decision to privatize the airline. At that time the European airline market was developed majorly and most of the airlines were state owned. A whole process was put in place for the privatization of airline. Eight years of time was taken to make it happen, stand on its own feet and emerge to succeed as a commercial body. This included a whole process of culture change and cost cutting. Hence the different models of change process were being applied in the form of Theory O (through focusing on changing the behavior and culture) and Theory E (through cost cutting). Because of the restructuring of the airline there was a reduction in the number of routes served, the college of air training was closed, catering operations were transferred to outside contractors and property interests were divested. (Horner & Swarbrooke 2004)
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The airline was shown to be a peasant class of travel and showing general subservience to the pressures of trade unions. However, the internal studies showed that jobs of the managers of highly specialized, communications in between the departments were highly poor and technically the airline was bankrupt. Major management changes were being considered in order to change this reputation of poor services. This was known to be the change management which is incorporating change in to the working systems so that the company becomes more efficient is satisfying the needs of customers or clients.
This served as a basis for the appointment of Lord King as chairman and as Chief Executive King Marshall was appointed in the year 1980. Hence, first change took place in the form of leadership change where these leaders with their authority, later on made organizational changes. When this Chairperson started working, noticed that a lot of valuable resources were being wasted and the company was working inefficiently. In order to make the company more profitable, it was decided to restructure the whole organization and change methodology change management plan was seen as the best way to do that.
Measures of Change Management:
The second most important change took place at the group level in the form of operational change when it was identified by the leaders that there was inefficiency existing in the system. Measures like reducing staff level and cut in production costs were taking place and this change can be classified as fine-tuning. (i.e. Scale Type 1 of Dunphy and Stace (1993)). The company started decreasing their workforce very systematically. But before doing so, through the change management leadership of the chairperson, Lord King gave reasons for the privatization and restructuring so that the employees get prepared for the up coming changes. (Horner & Swarbrooke 2004)
In order to investigate the ways of improving customer service in the year 1983 a steering group was established in the British Airways. It was identified that for British Airway’s offering customer service is the key cornerstone in the market place. Two courses of actions were then recommended by the steering group which changed the way the company decisions were made. A marketing policy group was created for the re-organization of the company. Also, by the name of “Putting People First” a program of courses was employed throughout the whole organization. This program was aimed at improving self image, to achieve the greatest possible standards of customer care and to change attitude towards the external and internal customers. Another program with the name of “Managing People First” covering the perception of the contact staff and their managers was started. (Lundy & Cowling 1996)
After identifying the inward looking rigid culture existing at the top of management hierarchy, the Chief Executive appointed a new top management team whose job was to strength customer oriented culture within the company. Transformation in the management, culture, strategy and operations took place on a large scale. These changes were both organizational and strategic. An external audit company conducted a two way audit that covered the perception of customers of the services being offered by BA. The frontline employees were awarded with the required authority and also the information to deal with the customers. The process was started by eliminating layers of the management structure and emphasize from divisional was changed to a functional structure. The personnel function was restructured by Marshall and for the mammoth task ahead a human resource department was created.
To give a break from the old BA image Chief Executive’s two main image fronts which were the uniforms of customer contact staff and the company livery, were improvised. (Lundy & Cowling 1996)
But changing external face is never enough so attitudes within the company were to be changed. Time Management International designed a training program for BA in order to respond to the needs identified in the audit. The final step and the logical step which was taken was linking performance with pay. Strong leaders were recruited as a part of the change management. The segmentation policies were clearly defined and these were targeted in well developed branding programs. (Horner & Swarbrooke 2004)
All the actions can be seen as an amalgamation of both planning (revolutionary) and incremental (evolutionary) change. The evolutionary change is seen valuable in the short to medium term and revolutionary in the long term. These changes emerged to work for the company in the form of delivering excellent service and quality to the customers and developing relationships with them and in the long run the company appeared to be the largest airline for UK. (Clarke 2001)
Stakeholder’s Analysis:
In order to facilitate the stakeholders during the process of change the leaders gave their full support and time. The Chief executive and the Chairperson acted as the change agents for the company. The heavy support from the top management (Marshall attended a number of staff and management programs and spent 20% of his time in this activity) and the continued training softened the harsh impact of cultural and organizational change. Although this change was bumpy incremental as there were staff cuts this type of change is called “Adaptation” by Balogun and Hope-Hailey (2004).
As a part of the cultural change program two days were given to the employees and five to the managers. Around 40,000 of the workforce were put through this program and this was fully supported through evaluation and compensation in the form of bonus payments. (Clarke 2001) The leadership style here was democratic and the leader Other supported measures included, action groups, updated performance management, implementing total quality management (TQM), educational seminars and the staff newspaper “British Airways News”. (Lundy & Cowling 1996)
Success of the Change Management:
The main objectives of imposing the changes were to become competitive in the airline industry and survive in the market place. The changes which were implemented by British Airways helped it to become more customer oriented by delivering excellent services and quality to the customers. Also, these changes helped the company to improve their relationship with the employees as well as the relationship of the employees with the customers.
The expensive and time consuming investments which were a part of the change taking place also paid off when the company won in the year 1989 the award of “World’s Best Airline” which is a prestigious business traveler award. The company after changes became more competitive in the UK market. The implemented human resource management and the strategies served as a basis to help the company emerge as a strong competitor in the airline industry. (Lundy & Cowling 1996)
The company achieved reduction in their costs through savage labor cuts, concentrating on key strategic business areas and slimming down of the business. All the moves taken by the company and the programs being conducted resulted in revue of the management structure. The overall age profile of the team was decreased and only those were chosen having entrepreneurial abilities. The major aspect of success for the airline was their marketing strategies. Some of these were campaign of the “Advertiser of the year”, “Fly the Flag” and “We take more care of you” promotion, Red eye advertisement etc. All this and much more helped the company to come out of the difficult times. (Horner & Swarbrooke 2004)
Conclusion:
The leadership of the company directed it through difficult times by applying a change management in the company. British Airways still happen to be the major global airline but now its reputation is declining. This can be because of the inappropriate decisions taken by the management, but mostly it reflects the hard times and the difficult business environment that exits for all the airline companies.
The management again aims at implementing new strategies and programs within the company through a marketing communication in order to create a better image. Also, the current management realizes the need of leadership and entrepreneurial competence which could wipeout all the problems from the company. For the company to fully run again on the track of success the management should identify the problems existing within the company. They should try to resolve the issues and come up with effective change management programs that can again benefit the company.
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