Managing
Culture at
British Airways
The British Airways Story
History
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BA in 1981 was a Very Troubled Airline. Severe
Losses (145 m. Pounds), Overstaffed, Poor
Quality. Close to bankruptcy.
Voted airline to be avoided at all costs. Was
most unpunctual Airline in Europe out of its
own home base.
John King Appointed Chairman in 1981.
Initiates Survival Plan. Radical Steps Include
Reducing Staff From 52,000 to 43,000 in 9
months. Next to 35,000. Largely Voluntary.
Between 1981 and 1990, Total Transformation
From ‘Bloody Awful to Bloody Marvelous’.
Record Profits (245 m. Pounds) in 1990.
History
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History British Airways directed its change efforts by
focusing on customer service;
King and Marshall found an airline that was in the
‘transportation business’ and was not customer
oriented; responded by changing the culture of
the organization; training program, Putting People
First, for all staff with customer contact
Intensive management training for those
supervising front-line employees.
Each employee went through “Putting people
First” training between 1983- 86
All managers went through “Managing People
First” trainings.
They overhauled the human resource systems so
that policies for hiring, compensating, appraising
and promoting people were aligned with the new
strategy and the training received.
Riding High with Ayling
 Marshall
step up as Chairman and Ayling
was made the CEO in 1996.
 Ayling Objectives for building an BA’s
existing success :
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To sustain BA as “the world’s favorite airline”
To continue to improve customer services in
a more demanding environment.
To extend BA’s reach through alliances and
marketing agreements
To improve further our management;
to be the best managed company in the
UK by the year 2000.
Riding High with Ayling
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Record profit of 585 pounds with Highest
bonus payout in 1996.
Alliance with American Airlines. This would
give two carriers joint control over 60% flights
between US and UK.
In Sept 06, it was planned that 5000 volunteers
will be asked to leave BA in coming 18
months.
Higher management focused on pay freezes,
pay restructuring, early retirement and
introduction of practices promoting greater
efficiency.
Introduction of BEP – Business Efficiency Plan
based on projections of deregulated
competition.
Experiencing Turbulence
 Economic
crisis hit Asia in 1997 which hit
the airline industry resulting in capacity
glut which resulted in drop in revenues.
 Customer dissatisfaction.
 Ayling started focusing on profits rather
than people.
 In June 1997, about 300 staff officially
went on strike and 1500 called in sick,
disrupting BA’s schedule for days.
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Employee morale was all time low.
Experiencing Turbulence
 Ayling
pledged to the staff that he would
be more “caring” and declared that
people were back at the top of BA’s
agenda.
 Task force was setup called
“ The way forward”.
 BA
announced plans to build a 28 million
hotel at Heathrow just for staff.
 Launch of Good people management
framework with underlying message
being “manage as you would like to be
managed”.
Losing Altitude
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In May 1999, BA announced lowest annual
profits in 6 years.
New strategy involved phasing out half of big
Boeing 747s and replacing them with smaller
777s. Paring down unprofitable routes.
In August 1999, BA announced second plan
to trim overhead.
Tradition of innovation started with a concept
of “Lounges in the Sky”
Investment in e-commerce to lift online sales.
In early Feb 2000, the results of third quarter
was mixed. Turnover was up by 3.2% but there
was an operating loss of 2million pounds.
Share prices went below 261p and now Ayling
himself was gone.
What went wrong
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View 1 :
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View 2 :
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Ayling suffered bad luck with the Asian crisis in
1998 and a strong pound throughout 1999 and
early 2000.
Under him, the Airline has tried to fight on too
many fronts.
Management has been distracted from real job of
keeping passengers on seats.
He failed to take his staff with him.
He irritated the British flying public by removing the
U.K. flag from most BA tail fins.
As CEO Marshall had created a culture of
employee and customer care that was widely
admired even beyond the airline sector. That
culture seemed to go away fairly quickly as
service levels dropped and employees felt no
longer cared for
What should he have done
differently?
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Setting the priority (not opening too many fronts ).
Be more sensitive to Human aspect and job cuts.
During the tenure of Bob Ayling, BA had been too
much outward focused and neglecting the
inward focused aspect.
It became operations oriented, with low emphasis
laid on employees moral.
Bob should have involved people in the process.
change accomplished through people is far more
effective than change forced upon them
Ayling should have focused on the following
questions:- 1. Have the people helped to create
the new product? 2. Are they constructively
involved in deciding how to sell the product
better?
What should he have done
differently ?
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If everything is a priority
,then nothing is a priority
Focus on few themes
and concentrating on
them instead of covering
several themes
superficially
It must be able to
mobilize large number of
peoples
Themes may be Quality,
Throughput
,performance oriented
• Start with where you
want to end up
• Select which
expectation to change,
which to honor, and
which to defend
• New CEO face the
daunting challenges of
multiple expectations
• Recognize the
uncertainties created by
the facts of the transition
at the top.
Was he wrong person for the
right strategy
 Companies
need leaders with strengths
and talents that are different from those
of their previous CEO’s. This is not the case
with Ayling.
 His strategies were right but the execution
was wrong
Explain employee reactions
to culture change initiatives
in this case.
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The case study format shows the company’s
turnaround in a different light with
International agreements, competition with
other airlines, the state of the fleet and the
network of links between flights making a
contribution to improved performance that
was at least as significant as the cultural
change programme itself.
Equally, the structural improvements may
have served to enhance the cultural
messages just as Bob Ayling’s ‘Chicago-style
union busting macho management’ made his
support for the new culture seem hypocritical.
 Employees
do not ‘react’ to the
Management of culture in isolation, nor
does a ‘positive’ cultural rhetoric negate
problematic experiences of job design,
dis-empowerment, payment systems or
control mechanisms. Rather, responses will
be influenced by a person’s experience
of work as a whole
 and employees are more than capable
of noting discrepancies between
managerial promises and organisational
practice.
This is not to suggest that BA’s cultural change is
unimportant.
 Indeed, the move to ‘design’ employees, to
shape the way they think and feel about their
work rather than simply control what they
produce is a new development. A growing
service sector and an increasing focus on
customer service.
 Clearly, such a development has and will
lead to fundamental changes in the way
work is shaped. But these changes are not
attempts to make work ‘more fun’.
 They represent a new means of management
control targeted at staff emotions.
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Here, BA’s programme of culture change is not an expression of
mutual trust and reciprocal emotional obligations between the
company’s employees and its management.
Rather, it is an alternative control mechanism and should be
understood as such. The way that this control mechanism is
implemented and the consequences that it has, differ from other
forms of
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personal,
technical or
bureaucratic control,
but management by culture is not automatically either better or worse
than other forms of regulation and may inspire varied responses.
Employees may feel genuine pride in a culture management
programme or may desire to use it towards their own ends.
Equally,
they may feel embarrassment set up active opposition or use the
culture change as a vehicle for misbehaviour, and structural
factors may influence and inform these responses.
The ‘successes’ and ‘failures’ of these interventions are not
magical, nor do they occur in environments that have no legacy
of employee relations.
Question 2
What lessons can managers learn
from this case about managing
culture?
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Presenting an account of cultural change in
realistic terms does not necessarily mean that
culture management should not be attempted;
rather, it is a condemnation of rhetorical flourishes
unaccompanied by substantive change and of
seeking to use people as a means to an end.
The notion of mutual trust between employer and
employees underlies both the ideal type of
culture management and most forms of highcommitment human resource management.
In practice, this process is rarely reciprocal and
employees may find themselves obliged to
change their practices and beliefs to conform to
order while the senior management observes
and monitors.
This is not a recipe for increasing trust, no matter
how well it is packaged.
The recommendations for the
manager begin with:
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Practice what you preach.
However a culture is not a religion
A culture is both influenced by structures and it
also influences structures.
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Internally, this means that employment policies
and practices should be coherent and support
central message conveyed by the culture.
Inconsistencies here will provoke (justified)
accusations of hypocrisy and (at best) the new
culture will become the butt of employee humor.
Externally, the competitive environment will affect
the way that ‘cultural messages’ are interpreted
and enacted.
There are always structural tensions in the
employment
relationship.
Employees’
interests naturally differ from those of
employers and no culture management
programme can entirely eliminate these or
correct the asymmetry of power that exists.
However,
well-designed
employment
practices, introduced in an environment of
trust, can materially improve employment
relations, and that must be a welcome
development.
THANK YOU…