Part 1 Research Report- The BA Dispute
The issue of managing organisational change is of significant importance within management theory and practice. Therefore the purpose of this report is to analyse the British Airways (BA) change program, which resulted in long-running industrial disputes between its management and crew members in 2009-2011. Additionally this reports objective is to provide accounts on the following areas.
1.2: Internal and external contextual factors, which influenced the introduction of strategic changes at BA
It is important to note that change is a significant process with any organisation in order to survive and grow in today’s ...view middle of the document...
As in 2011, the oil prices increased to $110 (£71) per barrel. These increases in jet fuel prices have a massive downward effect on BA’s cash flow. Below the figure illustrates the fluctuations in oil prices from January 2009 to March 2011. The graph presents its findings according to price of oil in dollars per barrel of oil equivalent. While oil prices remained high throughout 2009-2011, customers had less disposable income to spend on holiday travel, therefore the demand for airline tickets fell as stated previously. This in turn majorly affected all airlines including BA.
(Chukwuemeka Obiago, 2012)
With oil price increases affecting the airline, job security was an apparent issue for all employees at BA. Job security in turn was a result of the change in corporate culture. The insecurity of jobs left the employees opposed to change of the corporate culture and it stimulated resistance and conflict.
BA also faced enormous pressure from their employees, as the cost of living within the UK in 2009 was increasing 4% (inflation rate), this was in stark contrast with employee’s income of 2.3%. Therefore BA encountered pressure from employee’s requirements of wage increase.
Due to these internal and external factors, which had a major impact on BA, these factors led the organisation to implement crucial changes.
1.3: Details and evaluation of the strategic changes at BA
In the interest of BA’s survival, the organisation had no other option but to cut major costs. BA had to implement immediate action in order to realistically achieve this goal. The first course of immediate action that BA implemented were the severe job cuts in October 2009. BA announced on 6th October 2009 that they would be cutting 1,700 cabin crew jobs from their strong 40,000-member workforce. They also revealed their plans to introduce a two year pay freeze which would begin at the start of 2010, this was in order to save 63 million of Euro per year.
BA also decided that ‘eight or so’ routes regarding their current flight timetables would be cut, however, the valuable routes to India would remain. By cutting this amount of routes it was inevitable that another round of redundancies would have to take place. In a bid to cut costs, BA offered staff to work without basic pay for an undisputed amount of time (however, it was insinuated that this would last between 4-6 months), unpaid leave or finally the option to switch from a full-time position to a part-time position. In addition to the 1,700 jobs cut, a further 800 were cut. From the total of 2,500 roles cut, a total of 800 members of staff ‘allegedly’ volunteered to work without basic pay. A total of 4,000 employees agree to unpaid leave and finally the remainders of 1,400 staff members were prepared to switch from full-time hours to part-time hours. As well as employees facing major cuts in pay and job security, CEO at the time, Willie Walsh offered to forgo his monthly salary of...