Harvard Case - STRIKE AT BRITISH AIRWAYS: UNAVOIDABLE OR SET-UP-TO-FAIL?
"STRIKE AT BRITISH AIRWAYS: UNAVOIDABLE OR SET-UP-TO-FAIL?" Harvard business case study is written by Jean-Francois Manzoni, Jean-Louis Barsoux. It deals with the challenges in the field of General Management. The case study is 17 page(s) long and it was first published on : Dec 31, 2008
At Fern Fort University, we recommend that British Airways (BA) implement a multi-pronged strategy to address the root causes of the strike, rebuild trust with employees, and ensure future operational stability. This strategy involves strategic planning, change management, leadership development, and corporate social responsibility initiatives, all aimed at improving employee engagement and fostering a more collaborative and sustainable work environment.
2. Background
The case study focuses on the 2009 strike at British Airways, a significant event that severely impacted the airline's operations and reputation. The strike, initiated by the trade union Unite, was driven by concerns over pay, working conditions, and BA's proposed restructuring plans. The strike lasted for 12 days, causing widespread disruption to travel plans and costing BA an estimated '150 million.
The main protagonists in this case are:
- British Airways: A major international airline facing challenges related to cost management, operational efficiency, and employee relations.
- Unite: The trade union representing BA employees, advocating for better pay and working conditions.
- Willie Walsh: CEO of BA during the strike, responsible for implementing restructuring plans and managing the crisis.
3. Analysis of the Case Study
The strike at BA can be analyzed using a combination of frameworks, including:
a) Porter's Five Forces:
- Threat of New Entrants: High due to the low barriers to entry in the airline industry.
- Bargaining Power of Suppliers: Moderate, as BA depends on suppliers for fuel, aircraft, and maintenance.
- Bargaining Power of Buyers: High, as passengers have numerous choices for airlines.
- Threat of Substitute Products: High, as passengers can choose other modes of transportation like trains or cars.
- Rivalry Among Existing Competitors: High, with intense competition amongst established airlines.
b) SWOT Analysis:
Strengths:
- Strong brand recognition and reputation
- Extensive route network
- Experienced workforce
Weaknesses:
- High labor costs
- Inefficient operational processes
- Poor employee morale
Opportunities:
- Emerging markets with growing air travel demand
- Technological advancements in aviation
- Focus on sustainability and corporate social responsibility
Threats:
- Economic downturns and fuel price volatility
- Increased competition from low-cost carriers
- Regulatory changes and environmental concerns
c) Organizational Culture: The case study highlights a culture of distrust and tension between management and employees, characterized by a lack of communication, inflexible policies, and a perceived disregard for employee concerns. This culture contributed significantly to the strike.
d) Leadership Styles: Willie Walsh's leadership style was perceived as autocratic and focused on cost-cutting, which further alienated employees and fueled their dissatisfaction.
4. Recommendations
To address the challenges faced by BA, we recommend the following:
1. Strategic Planning:
- Redefine Corporate Strategy: Develop a long-term strategy that balances cost-efficiency with employee satisfaction and customer experience. This strategy should prioritize innovation, technology adoption, and sustainable growth.
- Invest in Technology: Implement advanced technology solutions for operations, customer service, and employee engagement. This includes AI-powered tools for optimizing flight schedules, automating tasks, and providing personalized customer support.
- Diversify Revenue Streams: Explore new revenue opportunities beyond traditional air travel, such as cargo services, ancillary products, and partnerships with travel companies.
2. Change Management:
- Open and Transparent Communication: Foster open communication channels with employees, including regular town hall meetings, employee surveys, and feedback mechanisms.
- Employee Engagement Programs: Implement initiatives to improve employee morale and engagement, such as employee recognition programs, career development opportunities, and flexible work arrangements.
- Collaborative Decision-Making: Involve employees in decision-making processes that affect their work, fostering a sense of ownership and responsibility.
3. Leadership Development:
- Leadership Training: Provide leadership training programs focusing on collaborative leadership, communication skills, and conflict resolution.
- Employee Empowerment: Empower employees at all levels to contribute ideas, take ownership of their work, and participate in decision-making.
- Succession Planning: Develop a robust succession planning program to ensure a pipeline of skilled and motivated leaders for the future.
4. Corporate Social Responsibility:
- Sustainability Initiatives: Implement environmentally sustainable practices throughout the organization, reducing carbon emissions and promoting responsible tourism.
- Community Engagement: Participate in community initiatives and support local charities, demonstrating commitment to social responsibility.
- Diversity and Inclusion: Foster a diverse and inclusive workplace culture that values and respects all employees.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: The recommendations align with BA's core competencies in international travel and customer service while emphasizing employee engagement and sustainability, which are crucial for long-term success.
- External Customers and Internal Clients: The recommendations address the needs of both external customers (passengers) and internal clients (employees) by prioritizing customer experience, employee satisfaction, and operational efficiency.
- Competitors: The recommendations help BA stay competitive by leveraging technology, diversifying revenue streams, and fostering a more agile and responsive organization.
- Attractiveness: The recommendations are expected to improve employee morale, reduce operational costs, and enhance customer satisfaction, leading to increased revenue and profitability.
6. Conclusion
By implementing these recommendations, BA can create a more sustainable and resilient organization that can effectively navigate the challenges of the airline industry. This approach emphasizes employee engagement, collaborative leadership, and a commitment to social responsibility, ensuring a more positive and productive work environment for employees and a more satisfying experience for customers.
7. Discussion
Other alternatives not selected include:
- Conceding to union demands: This approach could have resulted in short-term peace but would have failed to address the underlying issues of operational inefficiency and employee dissatisfaction.
- Ignoring employee concerns: This approach would have further alienated employees and potentially led to more strikes and disruptions.
Risks and Key Assumptions:
- Employee Resistance: There may be resistance to change from some employees, requiring effective communication and change management strategies to overcome this resistance.
- Financial Investment: Implementing these recommendations requires significant financial investment, which needs to be carefully planned and managed.
- External Factors: The airline industry is subject to external factors such as economic downturns, fuel price volatility, and regulatory changes, which can impact the effectiveness of these recommendations.
8. Next Steps
- Immediate Action: Implement open communication channels and employee engagement programs to address immediate concerns and rebuild trust.
- Short-Term (3-6 Months): Develop a comprehensive strategic plan, including technology investments, revenue diversification strategies, and leadership development programs.
- Mid-Term (6-12 Months): Implement the strategic plan, focusing on operational improvements, employee empowerment, and sustainability initiatives.
- Long-Term (12+ Months): Continuously monitor progress, adapt strategies as needed, and foster a culture of innovation, collaboration, and continuous improvement.
By taking these steps, British Airways can transform itself into a more sustainable, customer-centric, and employee-focused organization, ready to thrive in the competitive global airline industry.
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Case Description
The case considers the steadily deteriorating relationship between BA's top management and its cabin crew union - and highlights the self-fulfilling and self-reinforcing nature of the dysfunctional dynamic that develops between the three key parties. We concentrate on the cognitive, motivational and behavioral mechanisms that drive the parties toward an avoidable stalemate. The airline ultimately got its way, but at the expense of a three-day strike estimated to have cost £125 million. In the process, it also inflicted huge damage on employee morale and corporate reputation. The strike proved to be a turning point in BA's fortunes, sending the once soaring share price into a long decline - as measured against its direct competitors. Although Ayling's radical cost-cutting strategy was in many ways farsighted, it was implemented in a way that alienated staff and angered the unions - moves that ultimately sent the company crashing out of the FTSE100. Learning objectives: We have written this case in response to demand from instructors to provide material for teaching the set-up-to-fail syndrome in different courses and in different contexts than the typical dyadic boss-subordinate relationship. This case shows how the process plays out in an intra-organizational situation between a company and its union - though a similar dynamic could easily develop with other stakeholders such as suppliers, alliance partners, shareholders, analysts or NGOs. It is a case about individual "opponents" who demonize each other - thus triggering a gigantic self-fulfilling and self-reinforcing process. The key lesson is that leaders and their teams have to be careful about labeling processes toward other parties. When they start caricaturing another stakeholder, they risk triggering vicious spirals.
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