CHANGING THE CULTURE AT BRITISH AIRWAYS (BA) In a background of increased competition and fuel costs, a diverse and aging

fleet, and high staffing costs, in the 1980s BAs senior management was faced with the following issues in order to prevent the airline from going bankrupt. Radically improving the companys financial performance pretax losses totalling more than 240 million in 1981 and 1982. In 1981 BAs CEO stated that their money was draining at a rate of nearly 200 a minute Convincing their workforce of the paramount importance of customer service, Dramatically improving BAs perception in the marketplace, and Maintaining momentum and recapturing the focus that would allow them to meet new challenges The main reasons given for BAs stumble into its 1980 state of inefficiency and profit losses were its history and culture. In 1981 British European Airways (BEA) and British Overseas Airways Corporation (BOAC) were brought together to form BA. They remained autonomous until 1976 when the group division was replaced with a structure based on functional divisions. Still a distinct split within BA persisted until the mid 1980s. This lack of proper integration disallowed BA to achieve the desired benefits of consolidation, prevented it from attaining a common focus, created management demarcation squabbles and resulted in a lack of a unifying corporate culture. As a large part of BEA and BOACs employees were war veterans, BAs culture was characterised by a military mentality with a purely operational focus. People believed that their job was simply to get aircraft into the air and get them down on time. Productivity, profit margins and people issues were not considered to be top priorities. Government financial support and a string of years in the 1970s of profitability made it even easier for BA to neglect its increasing inefficiencies and even more difficult to persuade the workforce and management that fundamental changes were critical. The companys purely inward focus on resolving industrial relation issues and organisational conflicts did not allow it to respond in a quick and effective manner to its rapidly changing environment. Changes at BA The 1981 Survival Plan It involved reducing staff numbers from 52,000 to 43,000 through voluntary measures, a 20% decrease, in 9 months, freezing pay increases for a year, and closing 16 routes, 8 online stations, and 2 engineering bases. It also involved halting cargoonly services and selling the fleet, and massive cuts in offices, administrative services, and staff clubs. In 1982, this Plan was amended to accommodate for the reduction of another 7,000 staff to bring the total number of staff to approximately 35,000. The voluntary severance schemes cost the company around 150 million and they ended up with more volunteers than necessary. Changing the airlines image BA launched its Manhattan Landing and The worlds favourite Airline campaigns and raised its advertising budget for 1983-1984 from 19 to 31 million in order to signal a clear commitment to changing the corporate image. Building its turnaround team. New blood was brought in to give the company a fresh perspective and to regain focus. In 1983, Colin Marshall, BAs CEO, made customer service a personal crusade. He wanted to achieve a shift from a strongly British, engineering, and

operationally driven culture to one that emphasized productivity and profits while increasing the value placed on customer service. Role Model the desired behaviours and strong communication from the top Marshall spend a lot of his time in terminals with staff communicating and reinforcing his desired culture for the company. Create an environment were people feel free to come out and express their ideas, they feel listened to, and they feel part of the companys success. Education and Training BA put in place, among others, the following programmes to reinforce the need for change and create the desired culture. Putting People First (PPF) This programme urged participants to examine their interactions with other people. Implied in the positive relationship message was a strong emphasis on customer service. Approximately 40,000 BA employees went through the programme. Managing People First (MPF) This programme stressed the importance of, among other topics, culture, trust, leadership, vision, and feedback. Make the change visible In December 1984, BA unveiled its new fleet livery at Heathrow airport and its new uniforms. In less than 10 years, the culture change programme in BA fostered a strong commitment to productivity, profits, and customer service, a much higher morale, and a better market image, lifting the company out of bankruptcy to become one of the worlds most respected airlines.