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 BA’s senior management was faced with the following issues in order to prevent the airline from going bankrupt. • Radically improving the company’s financial performance – pretax losses totalling more than £240 million in 1981 and 1982. In 1981 BA’s 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 BA’s perception in the marketplace, and • Maintaining momentum and recapturing the focus that would allow them to meet new challenges The main reasons given for BA’s 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 BOAC’s employees were war veterans, BA’s 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 company’s 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 airline’s image – BA launched its “Manhattan Landing” and “The world’s 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, BA’s CEO, made customer service a personal crusade. He wanted to achieve a shift from a strongly British, engineering, and

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

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