Managing Change at British Airways, An Introduction

British Airways A Change Story
Friday, 21 March 2014

Change at BA
We Brieﬂy chart the history of Change
Management at British Airways by developing a
timeline of key change events.
We then apply introductory concepts of change
management to the company’s history in order to
draw out points of further interest.
2

Change Timeline
1974-2010
Formation
‘Offensive’ Consolidation
Privatisation
Expansion
‘Defensive’ Consolidation
3

Formation
1974
Originally a private company formed by merger of small
UK airlines in 1935
Nationalised along with Imperial Airlines to form BOAC
in 1939
1971 Civil Aviation Act ofﬁcially merged BOAC and BEA
on April 1st 1974
4

‘Offensive’ Consolidation
1970s
New company a huge mix of aircraft and corporate
cultures
Majority of 70s spent consolidating aircraft and staff
inherited in the various mergers
Concorde flights launched in 1976, initially a financial
burden with few profitable routes until early 80s
5

Privatisation
1980s
Beginning of privatisation with new chairman and CEO expressly
given this mandate
Major changes to fleet, brand and corporate culture transform BA
into highly profitable global airline
E.g. 23,000 jobs cut with generous payoffs for voluntary
redundancies. Funded by taxpayer allowing the soon-to-be
privatised firm to operate with large cost savings without directly
incurring the costs.
Floated on the LSE in 1987, the most successful of a number of
privatisations initiated by the conservative government in this
period
6

Expansion
1990s
As #1 most proﬁtable airline in the world, entered new markets
by acquiring stakes in local airlines ( Australia, U.S, Germany,
France etc.)
Richard Branson’s Virgin Atlantic (1984) Emerges as a serious
#2 competitor leading to bitter ongoing rivalry.
E.g.1993 Virgin and Branson sued BA and King for Libel
winning a total of £650K in awards
Faced increasingly aggressive competition from new budget
airlines Ryanair (1985) and EasyJet (1995) as industry is
deregulated
7

1990s-00s(1)
Persistent Decline in profitability due to high oil prices, intense
competition and clashes with unions over restructuring.
Profits falling 50% in 1999 and share price falling from
760p to 150p after 9/11 attacks
BA retreated from several markets and engage in flurry of
capacity reduction and changes to management
Expensive maintenance and safety made future Concorde
flights untenable forcing BA to end service in 2003
8

1990s-00s (2)
Largest losses in ﬁrm history reported in 2009 and
considerable opposition from unions to job cuts and
employment contract amendments meant to claw back proﬁts
Merged with Spanish Iberia Airline to form ‘International
Airlines Group’ in a move that was seen as largely defensive
by observers.
In-line with an industry-wide pattern of high concentration
meant to help mitigate the effects of high fuel costs and
intense competition with economies of scale.
9

Cultural Change in BA (1)
Two main programs were implemented: Putting People First (PPF)
and Managing People First (MPF)
PPF attended by all 40,000 employees and aimed to restructure
their attitudes by:
1.Challenging hierarchal and militaristic culture of BA
• Employees instructed not to attend PPF meetings in uniform.
• Employees allocated to cross-functional and cross-grade
groups.
2.Encouraging staff to be more positive with themselves
• Taught how to better handle stress, and how to set personal
goals.
• Lapel badges were made with the motto “We’re putting people
ﬁrst” inscribed on them to act as a constant visual reminder.

Marshall showed great commitment to PPF program where he
attended 95% courses. Ensured that all of the symbols of the new
culture were in place.
PPF paved the way to reformation of company policies and
practices which carried on to the 1990’s such as:
• Direct contact with staff considered crucial and down route
brieﬁngs introduced to ensure no staff member neglected
• Cabin crew assigned to ‘families’ that shared same work shifts
to improve employee relations
• The role of ‘Passenger group Co-ordinator’ introduced where
staff were appointed based entirely on personal qualities

MPF targeted managerial employees and aimed to change behaviours according
to a list of factors constructed by consultants:
• Clarity and helpfulness
• Promoting achievement
• Inﬂuencing through personal excellence and team-working
• Care and trust
Managerial incentives introduced where bonuses as high as 20% of base salary.
Calculated on a 50:50 split between displaying desired behaviours and
achieving goals.
All programs paved the way to creating a corporate culture that focused on staff
personal qualities and close relations amongst employees, which led to overall
employee satisfaction, making all other changes occurring in BA more easily
received by its employees.
Other programs introduced to continue the effect of PPF and MPF such as
‘Winning For Customers’ and ‘To Be the Best’ which included conﬁdence
building exercises such as the ‘Love Bath’.

Role of HR in BA Change
Major change in 1987 – new mission statement: “to be the
best and most successful company in the airline
industry.”
Aim to keep employees in the centre of HR planning.
2 Training programmes
• “Putting People First” – align training to the
company’s strategy.
• “Managing People First” – to breakdown the
strict behavioural boundaries.

HR Models for Change
Hard HRM Michigan Model Soft HRM Harvard Model

Leadership Changes Inside
British Airways (1)
1981 Sir John King - Chairman
1983 Colin Marshall - CEO
• Transferring from transportation business to
customer services business
• Signiﬁcant downsizing
• ‘Lead from the front’
• Cost reductions
• Increased proﬁtability
• Customer satisfaction
• Perceptible increase in staff morale

Leadership Changes Inside
British Airways (2)
1996 Bob Ayling
• Strategic alliance with American Airlines
• Investment in Iberia
• Low-cost carrier, Go
2000 Rod Eddington
• "Future Size and Shape"
• Decrease in turnover
• Proﬁt of £135m
2005 Willie Walsh
• Reduced the numbers of managers
• Increased productivity
• International Airlines Group

UNFREEZE
First Four steps correspond with Lewin’s Change
model.
•Make sure employees are ready for change
•Create an action plan
•Decrease strengths of old values, attitudes, and
behaviours
Kotter’s (1996) Model
Lewin’s (1951) Model
Managing Employee Resistance
(1)
1. Establish a
sense of
urgency
4.
Communicate
the Change
Vision
3. Develop
Vision and
Strategy
2. Create the
Guiding
Coalition

6. Generate
Short Term
Wins
5. Empower
Broad Based
Action
7. Consolidate Gains
and Make more
Change
CHANGE
Execute the change
Support Change
Facilitation of
training to reduce
resistance
(2)

8. Anchor New
Approaches
REFREEZE
Reinforce the change
through operating
procedures and
supporting mechanisms
Monitor and adjust
in response to
problems
(3)

Conclusion
Historically, change often forced upon BA
externally. First by the need to privatise
and later by intense competition
BA’s HR department successfully
adapted to the change of the
privatisation process in 1987 by applying
2 formal HR models.
Cultural programs introduced promoted
employee satisfaction and hence,
efﬁciency; however, cultural changes
often neglected necessary structural
changes
The ability to effectively manage
employee resistance was an essential
part of transforming BA

Managing Change at British Airways, An Introduction

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Managing Change at British Airways, An Introduction