British Airways (BA) faced diverse problems in 1980. Following World War II BA inherited numerous war veterans who brought their military mentality with them. BA initially formed through the merger of two government agencies. These two factors created an organization that provided the cut and dry service of taking off and landing on time. Nothing else mattered.
In the early 1970’s BA turned profits. This caused neglect to foster amongst BA’s overseers. During the 1970’s, BA focused only on minimizing cost to the state. Like government agencies, BA had become extremely inefficient due to too many employees and too many managers. BA’s productivity level was about half the average of the other eight foreign airlines. BA management recognized that 58,000 employees were too many; however, unrealistic passenger growth forecasts allowed management to overlook their obesity year after year.
Customer service was not of much importance at BA. The rigid culture at BA did not infuse its employees with a need to put the customer first. BA treated customers as though the customer did not have a choice in service and as though the customer had received a benefit in getting to ride the airplane. Numerous bad experiences tarnished BA’s public image.
In 1980 external problems revealed the festering internal problems. In 1980, Britain soaked in its worst recession in 50 years, which reduced passenger numbers and sent fuel costs through the roof. Faced with a recession teamed with an archaic fleet and high staffing costs, BA was running out of funds at a rapid pace and teetered on the verge of bankruptcy. Due to its soiled image, the planned privatization of BA to the investing public would not save the airline. British Airways needed immediate radical change in order to survive.
British Airways, one of the most prominent airlines in Europe, had a major crisis in the late 1970s and early 1980s. It was on the verge of bankruptcy. Management had to make drastic changes to get rid of their “bloody awful” image, to get the airline back to profitability. The change process implemented at BA reflected most of the features mentioned in John Kotter’s eight-step model for implementing a successful change. Following is a description of these steps.
Establishing a Sense of Urgency: In 1981 BA’s management realized that it needed a drastic change in its business model and culture to avoid bankruptcy. The challenge was to change the operational culture of people who believed that their job was simply to get an aircraft into the air on time and to get it down on time. As Roy Watts (CEO of BA) stated in his special bulletin to the staff, there was a high possibility of BA going out of business unless they took decisive actions to cut their costs sharply and immediately. The problems at BA became worse when Britain’s worst recession in fifty years reduced passenger numbers and raised fuel costs. These situations created increased sense of urgency for BA management to bring about a transformation. The first step taken by BA management to address this problem was the hiring of Sir John King as the Chairman who believed that a change was necessary. King had a successful track record of starting businesses and restructuring companies in trouble. King was a respected individual in society with government connections. This fostered his ability to implement a change process. Thus by hiring King, BA successfully implemented the first step in Kotter’s eight-step change model which states that “Transformation often begin, and begin well, when an organization has a new head who is a good leader and who sees the need for a major change.”
Forming a Powerful Guiding Coalition: One of the first steps that King took was to surround himself with a group of people with enough power to help him start the change process. King hired Gordon Dunlop as the CFO. As CFO, Dunlop’s contribution to the recovery years was significant. The second step was to break the 36-year-old contract with Foote, Cone & Belding and to hire a new advertising agency, Saatchi & Saatchi. This was an important step to change the airlines image to “The World’s Favorite Airline”. King also recruited Colin Marshall, as CEO of the company, who proved to be the single most important person in the implementation of the change process. Marshall brought with him two tremendous advantages. First, he understood customer service, and second, he had worked with a set of customers similar to the airline segment. Thus based on eight-step model, King built a successful turn around team of individuals who were powerful in terms of title, information and expertise, relationship and reputations.
Creating a Vision: According to Kotter, a vision helps clarify the direction in which the organization needs to move. BA started the change process with a vision to be the “World’s Favorite Airline”. BA started developing strategies to achieve this vision. The first step King launched was to implement a Survival plan to cut cost and save airline from bankruptcy. BA accomplished its reductions through voluntary measures by offering generous severance pay. This offer was very well received and BA ended up with plenty of volunteers. The layoffs didn’t leave a bad feeling amongst employees. King then hired a new ad agency to change the image of airlines. BA launched the “Manhattan Landing” campaign sowing the seeds for achieving its vision of becoming the world’s favorite airline. Finally, he recruited a new CEO whose specialty and focus was on customer service. This was one of the important strategies in accomplishing the vision.
Communicating the Vision: Kotter states that in order to achieve a vision the company needs commitment and belief from its employees. Credible communication to the employees increases their belief in the change process. BA management started communicating its vision by sending out personal invitations to gather employees so that they could tune in to the inaugural of its “Manhattan Landing” advertisement campaign. Some BA offices also held cocktail parties to celebrate the new campaign. BA management also introduced the PPF (Putting People First), which emphasizes customer service. This program had an extraordinary impact on its employees because of the strong support from management and the honesty of its message. Every program ended with a question and answer session conducted by a Senior Executive to address any employee concerns. This program increased the confidence of the employees in the change process. BA constantly reinforced its changing image to its employees and public by putting together celebrations such as the unveiling of its new fleet at Heathrow airport.
Empowering Others to Act on the Vision: Once the vision is communicated it is important to encourage employees to act on the vision. In order to change its image, BA management got rid of its 36-year-old relationship with the ad agency. BA management also started empowering its managers by launching a program called Managing People First (MPF). This program stressed the importance of trust, leadership, feedback and vision. BA management also encouraged employees to go beyond their normal job responsibilities. As stated by a veteran engineer, “Now I can go and do a lot, whatever I need to do, I don’t call someone else to do the job. Now you just get on with it”. Another important step taken by BA was to separate itself from the design of the PPF and MBF training programs.
Planning for and Creating Short Term Wins: To implement a vision takes time, it was necessary for BA’s management to renew employee motivation and efforts in the short-run. BA sent personal invitations, flew in thousands of global employees, and made strong efforts to treat all employees with respect. BA’s management celebrated its changes in more visible ways. They put together a big celebration when they unveiled a new fleet at Heathrow Airport. The celebrations went on for eight weeks and four times per day to ensure that all employees were included. These celebrations helped BA to keep the momentum going during the change process.
Consolidating Improvements and Producing Still more Change: The BA management continued to maintain its momentum by introducing additional programs such as “A Day in Life” and “To Be the Best”. They implemented the “Brainwaves” program to encourage employee input and also introduced the “Awards for Excellence Program” to recognize outstanding contributions by employees. The success of change process was exhibited when the government passed legislation to make BA a public company. BA shares were 11 times oversubscribed which showed the confidence of the public in the new image of British Airways. After privatization, BA management made globalization a major priority. This was evident as they bought major stakes in other airlines and forged alliances with various airlines to increase their network. They also bought substantial stake in Galileo, an advanced computer reservation system servicing other major carriers.
Institutionalizing New Approaches: Institutionalizing change involves showing how new approaches, behaviors, and attitudes help improve performance. Different scenarios within BA exemplified this point such as celebrating successes with celebrations and including employees of all levels within these celebrations. These celebrations promoted the value of the change process and increased its visibility to everyone in the organization. When BA faced a battle with British Caledonian over route transfers, King and his team were able to rally signatures of over 26,000 employees for submitting a petition. This overwhelming support to the management signified employee commitment and belief in the change process. BA management nurtured new behavior and shared values by introducing various programs like Putting People First (PPF) and Managing People First (MPF). These programs helped in promoting management vision to the entire organization. Thus BA’s management was able to make the change process endure by gradually anchoring it in a supportive culture over a period of time.
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