Leadership Styles Within British Airways Management Essay
The problem proposed in the case study is : The shrinking profitability of the BA, loss of market share, reputation and weakening of the faith of employees working for BA(Brand) as a result increasing absenteeism and resentment in the workforce.
Perhaps the leadership style of Sir Colin (Marshall) focused on primarily two stake holders as a way of increasing profits. One-Customers and Second-Employees. His vision seems to be clear to achieve customer satisfaction first stepping stone is employee satisfaction as Airlines being a service industry and BA one of the world’s premier airlines it was all the more mandatory that employee’s needs had to be listened to and taken care of. And that was being done successfully under the leadership of Sir Colin.
After the appointment of Robert (Bob )Ayling as CEO in 1996-2000 the leadership style changed with the new leader, the goal as perceived by Ayling was ‘Profitability’ but the route was different this time it involved cutting the variable cost of employees salary which resulted in redundancies and employee resentment which lead to an unrest and strike, after which the employees morale never recovered as stated widely. What is it that Ayling missed, although having a background in Law and Head of Marketing and Operations he understood that to maximize profit the cost must be reduced, but probably he targeted a wrong stakeholder which lead to a loss of BA £130 million and more importantly the employees morale. Ayling was manipulative, calculative and diplomatic in defending his own ground, he was ambitious enough to establish employee empowerment by implementing “consensus decision making” but all in theory. The communication was Top to Bottom and autocratic what really important was numbers and not ‘People’. Ayling came under pressure as Virgin Atlantic was posing a serious threat to BA’s most lucrative routes in Europe and US and he reacted very quickly without much strategic planning and resorted to cost cutting and did not estimate the after effects of such an ad hoc policy.
Even if the cost cutting measures had to be implemented there should have been much rationale and strategy in the implementation and very importantly there should be some foresight at the side effects. The formal communication in the organization at times does not give enough cues about the health of the organization which sometimes as commonly said has to be deduced from the informal communication which tells tons about the employees state of affairs and their engagement and commitment. As an HR manager instead of throwing people off a better policy could be to reduce a percentage of the employee’s salary till the profitability rose which could check the commitment of the employees and sanity and soundness of the management. Employees who had been non-performers or disguised employees (in terms of performance) could be tackled separately by giving a warning to perform or quit. That would send a very positive message across, that management is fair and what they look at is Performance and not politics played by employees who just talk more than work. Such a programme could have been more effective as it would have at least kept the employees motivated by keeping the trust of employees alive in the system. And gradually as the external pressure of the competition or the economic slowdown would have ended the employee’s faith have been restored that the management will reward those who stuck with the organization in the bad days.
The employee satisfaction is directly proportional to the customer satisfaction and it is more pronounced in the service industry as there is a direct interface between the customer and the employees. So if the employee is not happy he can never delight the customer. Which is a ‘Big Challenge” and the goal of all the organizations in the service sector. As rightly said by Howard Schultz the CEO of starbucks, the first thing is to put a smile on the employees face only then he will be able to transfer it to the customer by providing exceptional service. Another case is being propagated by the CEO of HCL Technologies, where it is employees first and customer second, the case has also been published by HBR in 2010.
So we see that employee will only be happy when he is given either of the three-Power(Empowerment),Recognition or Money(Increase in salary) And as the research says need for appreciation is higher than need for money. Especially in the industry where the cabin crew is servicing top class businessmen and passengers as they are the most frequent flyers in the Premier Airlines. And Once the employee’s self esteem is pumped up his self efficacy also doubles resulting in benchmarking quality of service standards. Customer awareness for quality has increased manifolds and due to competition the price has been falling down considerably leading to decreasing profit margins so the hope lies in the engaged employee who discharges his duties fairly to the utmost satisfaction of the customers.
HR has a very strategic role to play as a Business Partner especially in the turbulent conditions as HR can pave the way for a sustainable competitive advantage (SCA) by appreciation in value proposition of the human resources as a common saying in management goes that HR is the asset that appreciates with time and all other assets depreciate with time.
HR can upgrade the skills of the employees by learning and development and provide innovative solutions to the problems at operational level or at customer service level. By imparting right training to the employees after conducting a SWOT analysis in conjunction with the PESTLE analysis and developing an HR strategy in line with the corporate strategy which translates the vision into action for the organization. As observed in the case of Ayling he had a wonderful vision to understand employees and empower them by incorporating their suggestion in decision making, but he miserably failed in the implementation. The real challenge lies in the implementation of a GRAND VISION and that is achieved by the people in any organization. How do organizations become great? It is the people who make it great and that is the difference in world class organization or a Long term player where the Rules of winning the game are defined by happy and satisfied people. And that is why the organizations like these are considered as ‘People Centric’ not ‘Product Centric’ or ‘Profit Centric’.
In the turbulent situations the there is “TRUST DEFICIT” in the employees and they do not know what is coming next which results in disturbed behavior of people in increased absenteeism, resentment, occasional anger due to customer handling stress etc. All these things play badly on the Brand perception and the word of mouth publicity which ultimately leads to losses and loss of the goodwill for the brand and both the customers and employees turn out being unhappy and dissatisfied by the organization’s product or service.
Thus in these times the HR can play a pivotal role in reversing the trust deficit and turning it into a positive image where people would like to work and being seen as a ‘Good Brand’ whose products or service people will be keen to buy on premium.
If we reflect on Vroom’s expectancy theory in context of the case study it is very clear that as the future of the employees became uncertain when cost cutting was started by Ayling, the fear ate up the trust that the personal goals of the employees could hardly be met by the management as no one knew his future with the organization which resulted in bad performance and bad performance resulted in no rewards to the employees. Thus we see the behavior in the workplace is a function of management policies, trust and personal goals. Perhaps Ayling could not successfully gel the Organizational goals with the personal goals of the employees that could be coming from his lack of experience with the HR function as we know that he had been and Legal Director and Marketing and Operations Head so his focus was more on profit maximization by cutting cost and not on developing People as a resource for the organization which ultimately lead to a huge unrest and strike in 1997 at BA. Ayling is known for his saying that’ Lawyers always achieve things through other people. To be able to achieve things for yourself is a rare opportunity and one I am currently enjoying a lot.’ Which proves the point that Ayling’s approach is manipulative and not constructive, he uses people as a means to an end and does not appreciate them for who they and are thus fails in motivating them to achieve results by uplifting their self esteem.
Ayling is also known to have been autocratic to implement what he thought was right by dropping the Union flag design in favor of the unpopular ethic art livery. He is known to start the low cost airline, GO which further substantiates the point that his focus was on product / service and never on People, who take the service forward.
In 1999 BA reported a 50% slump in profits under the leadership of Bob Ayling and that is when he in March 2000 Sir Colin Marshall removed him from his position and announced Rod Eddington as his successor.
What comes through in the case study is that for long term sustainable growth of the organization it is extremely important to focus on all the stakeholders and not to have a lopsided vision to increase the shareholders value at the expense of another stakeholder especially the employees because ultimately the employees are the ones that are going to do the turnaround even if the waters are not so smooth in the beginning. Alying has not succeeded in keeping the faith and morale of the employees high even though he had the caliber to rise to top management position in a relatively short period of time. He has been doing whatever he thought is right without taking into account the side effects of the actions/decisions taken by him. And as he never really could ‘Connect’ with the employees even after claiming big about overt programme of visible management, he could not grasp the feeling of the employees. As result the decisions which he took were based upon some fanciful imagination of Alying which proved disastrous in the end for the organization and for him as well.
If he could have guided himself by the metrics of Sir Colin, the customers and the employees picture would have been quiet different for the organization and the BRAND equity would have grown.
Strong Top leadership is extremely important for the organizations growth and in turbulent times it is the test for the leader to steer the organization out of the bad time smoothly without any major losses. And what we witness is a case where the leadership was not effective in delivering to its cause. The judgments were partial to the stakeholders, the decisions were lacking foresight and the trust of the people in the system weakened. What Ayling saw as a solution, the massive cost cutting raised complex problems which were immaturely handled by the management under his leadership at BA. Alying is also reported of getting caught in controversies in regards to Richard Branson of Virgin Atlantic. Thus what we witness is a faltering on the ethical context as well. The professional sphere did turn into some personal angle which is amateurship and such an act is far from appreciation by a leader of such a premium airline of the world.
In the end to conclude what we learn from the case study is Ayling started a game but could not end it well so in business it is very important to finish beautifully. And set an example as leader that this is what was expected of you and this is what you have delivered much above the expectations. So here we witness a contrast where Sir Colin Marshall was recipient of awards for his distinguished contributions to commercial aviation and Robert (Bob) Alying had to be removed from his position as BA reported 50% loss ever in 1999.