British Airways – Flying Into a Storm

Alan Michael
F13066

1. Bob Ayling who succeeded Marshall was a lawyer by profession, who took care of drafting the bill for privatising BA .Bob Ayling was a visionary whose actions revolved around bring down the cost of operation there by to increase profitability even when BA was doing well. However on the other side he failed to value his employees, which ultimately led to the failure of him as a CEO.
Things went well during Ayling’s Tenure. * Identified the need to cut costs for becoming a better performing airlines * Initiated the industry transforming alliance with American Airlines * Held on to his stance despite strong oppositions showing a determined face of BA * Rebrand BA to make it more attractive to international travellers * Later, modified BA’s strategies as when problems cropped up
Things not went well during Ayling’s Tenure. * He implemented cost-cutting without taking into consideration the stakeholder’ point of view. The employees’ salary cuts will never lead to their better performance unless they are given any other incentive to perform better. Maybe he should have restricted their pay by putting more pay per performance quotient put into it. * No communication of the organization vision to the employees which led to their disillusionment * He missed out on the people touch points - both employee and customer wise. A fatal error in a service industry. * He failed to create a competent rung of top management around him. * He should have had an acceptability test before rebranding BA. He grossly failed to understand the British sentiments and pride and alienated opinion leaders like Thatcher.

2. Ayling is an Authoritative Leader. He has high concern for production and very low concern towards people. This makes him an Authoritarian manager. Indeed, if we look into the tactics he adopted in BA, they are mostly characterized by taking decisions which might not be stakeholder friendly but aimed at ensuring reducing costs to make BA a better managed company. His strategies always focussed on reducing costs by reducing the number of employees. He didn’t consulted with any of his employees before implementing his decision. He wanted his employees to follow his decision and faced retaliation in the company.

3. The main reason for the strike was BA's goal to save GBP 1 billion by 2000, but there were actually two separate disputes. The first was with the cabin staff over pay restructuring, while the second was dispute affecting ground staff, which was sparked off by the company's intention to contract out its catering services. The unions claimed that they were not properly consulted and feared that many jobs would be lost as a result.
Going through the case, it was very clear that * employee consultation was not sought before the decision, though they represented collectively by trade unions * no communication of the organizational goals happened
Thus, disillusioned, not well informed employees went for strike. Even the internal bulletin issued to the employees regarding the strike was threatening. Thus the strike was just the employee reaction to the callous HR policies adopted by the organization.

4. British Airways lost its customer service heritage mainly due to the following reasons

* Though a number of cost-cutting measures were initiated, the cost thus saved was not handed down to the customers in terms better value. Thus with the costs coming down, the quality of service is bound to best hampered. * Since there were pay restructuring, the employee morale was low leading to poor performance * Also, since it is a service industry, one must keep on improving their value propositions to their customers. BA did not do any such improvement in their value proposition to their customers * A lot of initiatives were scrapped including employee suggestions. Thus the company lost insights from actual employee experiences. * There was no investment in innovation and technology to improve its services.

5. Initially Ayling was fitting into the role, following the footsteps of his predecessors. Once he started making decisions and strategies, things began to work in his disfavour. It was mainly because: * He did not communicate properly. * He took decision without consulting employees, shareholders and wanted to implement it in an authoritative way. * He tried to implement poor HR policies which actually affected the employees morale and livelihood * He did not form a team of confidantes especially in the form of top and middle management. He further reduced the size of his executive team. * He did not seek the stakeholders consensus before implementing changes, which made the later feel left out and not valued