Management, Leadership and Change in British Airways and EasyJet
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Management, Leadership and Change in British Airways and EasyJet
Introduction
Management is very challenging concept in airlines industry because of low margin, constant threat of newcomers and permanent changes in the business environment (Clausen, 2010). Management and leadership theory has been applied to airlines industry because of the challenging nature of this sector. This paper will analyse the topic of Management, Leadership and Change in British Airways and EasyJet and show that both companies has succeeded because of the focus on transformational leaderships, promotion of flexibility and empowerment in management and focus on effective change management.
Management, Leadership and Change in British Airways and EasyJet
Heifetz and Laurie (1997) notices the example of British Airways and its leader Colin Marshall as the example which shows that business should effectively respond to the changes in the environment in order to survive. By focusing on customer needs and relationships with employees he has management to transform the company from self-discredited company “nicknamed as Bloody Awful” to an “exemplar of customer service." (Heifetz and Laurie, 1997). Sir Colin Marshall was the person who has managed to effectively privatize the company and transform it from the loss‐ridden, state-owned company to successful one during the period of transition of 1983‐1988 and onwards (Karsten et al., 2009). The focus was on the change of values and ensuring the trust throughout the organization (Heifetz and Laurie, 1997). The approach by Marshall and his team was to listen to the feedback from people inside and outside the organization, analyze the true reasons of the conflicts in the organization and focus on the change of the values of the top-management first (Heifetz and Laurie, 1997). Effective diversity management was also an important aspect of the new strategy of the company (Iles, 1995). The period of transformation lasted for five years and includes the major milestones related to "building a credible executive team, communicating and learning" in order to make the company focused on the customers. The period of transition had some of the signs of transformational leadership used by the top management of British Airlines (Burke and Litwin, 1992). Kasper (2002) notice that the success of British Airlines was due to the transformation to market‐driven organizations, which helped the company to become flexible and adaptable to the external environment. Different leadership approaches are used in market‐oriented service organizations, however, autocratic and instrumental leadership is more typical for non‐market‐oriented organizational cultures while market-oriented cultures usually have the employee‐oriented leaders who effectively use empowerment, delegation and coaching leadership methods (Kasper, 2012). Promotion of empowerment and autonomy is crucial to create a strong brand. In British Airways, the top management ensured that each brand manager has a certain autonomy in the design of own airplane interior and marketing activity, this resulted in the comprehensive program for redesigning seats even before the ideas was presented to the senior managers; this enhanced the differentiation strategy of British Airways, particularly in the premium classes (Loewe et al., 2011). Paton and McCalman (2008) notices that overly bureaucratic management and apathetic leadership of British Airways in the 1970s resulted in the organizational culture that was similar to the organizational cultures of British Railways and Fiat group, known for poor performance in that period. However, Paton and McCalman (2008) suggest that thanks to an effective change management with the focus on customer awareness programs, new brand image, and quality improvement initiatives proposed in the 1980s and supported by the Chairman, Lord King has resulted in the dramatic shift in the organizational culture. Such a focus on customer service and awareness thanks to an effective change management by British Airways has revolutionized the views on how the management should be used in market-oriented companies (Paton and McCalman, 2008). However, the competition with Virgin and revealed 'dirty tricks' used by British Airways' management has revealed that “change for change's sake and short-term competitive advantage” should be avoided, not only because of the moral reasons, but also due to an adverse influence on long-term competitiveness (Paton and McCalman, 2008). Hence, change management should be well-designed and focus on long-term goals.
Change management and cultural engineering in British Airways
Meanwhile, Knights and Willmott (2007) notice that the period of change of British Airways in 1982-1996 can be regarded as the example of 'cultural engineering with the help of different management styles. In 1981, John King was appointed as the Chairman of British Airways by Margaret Thatcher as the measure to transform the company. John King, together with Colin Marshal as CEO, has started with 20,000 staff redundancies, closure of unprofitable routes and despite cargo-only services (Knights and Willmott, 2007). The focus was done on promoting the commitment of the staff towards the customer satisfaction, thanks to training initiatives and new HR management methods (Tyson, 2014). The set of initiatives called 'Putting People First' was started in 1983, with the idea of promoting personal relationships and effective interaction among employees and interaction with customers (Campbell and Yeung, 1991; Goodstein and Burke, 1991). This was accompanied by the privatization of the company in 1987 and related elimination of ineffective bureaucratic management and promotion of cross-functional communication and cohesions (Knights and Willmott, 2007). Based on this story, Knights and Willmott (2007) notice that organizational culture can be the change towards more effective and flexible, with the help of the change in the style of management and introduction of new values. However, the rivalry with Virgin has revealed that management style and organizational culture of British Airlines is not flawless, as the company was not able to maintain cost effectiveness and quality of service resulted in the large staff cuts in 1999-2001 (Knights and Willmott, 2007). Grugulis and Wilkinson (2002) emphasise that some of the elements of Putting People First strategy has been used for about 20 years since their introduction. Colin Marshall's approach to leadership and management was an example of this new culture, during his flight he introduced himself to staff and passengers and discussed their experience of using British Airways, he also helped to deliver food to customers, acting as a symbols of this ‘new culture’ (Grugulis and Wilkinson, 2002). This new approach has focused on providing the positive work environment which in turn resulted in enhanced employee commitment and improved service quality (ibid). There are four major factors of the Managing People First program that were developed in 1984–1985 to help the senior and middle managers to promote the cultural shift, as the following Figure 1 shows (Grugulis and Wilkinson, 2002).
Figure 1. Four Factors of the Managing People First program. (Grugulis and Wilkinson, 2002).
Thus, Salama and Easterby-Smith (1994) notice that in the times of change, the major focus on the management and leadership should be done on the management of culture, which is a “complex, long‐term undertaking” and starts with the change of values/behaviour of top management and then signalling these new values to subordinates; “reinforced by shifts in management education, selection and promotion”.
Current situation in BA: Focusing on Change and Transformation Again
The recent analysis of leadership and management practices in British Airways has shown that the implementation of different tactics strategies and policies to motivate employees may have different motivational impact on diverse people, noticing the fact that different people have different needs as viewed from the model of Maslow Hierarchy of needs and later models (Shukla, 2013). Currently, employees in British Airways believe that management is not very effective in proper motivation, particularly in the reward management; informal recognition is not supported by formal recognition and group performance evaluation results in decreased motivation of individuals (Shukla, 2013). Willie Walsh, current CEO of International Airlines Group, the parent company of BA and Iberia, is described as having a “brutal honest” approach to leadership and management (Grundy and Moxon, 2013). Similarly to the famous leaders of British Airways, he can be regarded as the example of the leader focused on adaptation and change, he noted that “without change, British Airways will just shrink and shrink and shrink.” (BBC, 2010). The marge of BA and Iberia resulted in the establishment of International Airlines Group, which is a crucial organizational change since the privatization of British Airways. There are different signs that the current CEO, unlike John King, Colin Marshal, is not only a transactional leader, but also a rather charismatic one, while also having some of the traits of autocratic one to promote the changes (Grundy and Moxon, 2013). However, the CEO of British Airways itself, Keith Williams, notice that BA should focus on empowerment and autonomy in their management, as “each leader as an individual can’t do everything,” active dialogue and feedback is crucial for effective management (Nnaobi, 2012).
Management, Leadership and Change in EasyJet
While British Airways is an example of traditional airlines, EasyJet is the striking example of low-cost airline carrier that uses the business model pioneered by Southwest Airlines (Mason, 2001; Yip, 2004). It was established in 1995 by a serial entrepreneur Sir Stelios Haji-Ioannou, who focused on promoting the no-frills services on the most popular routes (Rerup, 2005). Due to the focus on cost reduction, the management and leadership prioritize efficiency at the cost of lower emphasis on service quality (Lawton, 2003). Sull (1999) notice that Stelios Haji-Ioannou is a striking example of adaptive transformational leader who is focused on innovations, as he noted that 'you have better opportunities to do things differently if you start from scratch.' With the `nothing for free, all for sale' idea, the top management first lived in two Spartan rooms opposite the reservation center, however, all the managers were very enthusiastic about beating the market leaders (Sull, 1999). Simialrly, Rae (2001) suggests that EasyJet is a prime example of entrepreneurial management. EasyJet, similarly to other low-cost carriers, focuses on creating a special ‘company atmosphere’ by emphasizing the ‘us against the others’ mentality, to boost loyalty and commitment (Hunter, 2006). This is often done by the combination of paternalistic methods and transformational leadership to create the high-performance teams with high autonomy, involvement in decision taking, and high commitment (Hunter, 2006). There were three CEOs in EasyJet and each has influenced the company significantly thanks to their leadership and management style. Ray Webster, first CEO of EasyJet, had the entrepreneurial management approach that resonated the approach of Stelios Haji-Ioannou, he was passionate, dedicated and enthusiastic and his management style was "not that different than a traditional start-up" (Messinger, 2008). Ray Webster notes EasyJet is a small start-up despite its huge growth since the establishment, he ensured the company has "friendly, no-blame and non-hierarchical company culture" (Creaton, 2014). Andrew Harrison, CEO of EasyJet in 2005-2010, was focused on maintaining the culture of radical change thanks to transformational leadership because the company needed to maintain the feel of a small organization while purchasing the scale and financial stability; the CEO was described as particularly good in continuous change management (Harrison, 2008). Current CEO, Carolyn McCall, was called the 'most admired leader' in Britain in 2015 because she managed to maintain the "flat hierarchy and an easy-going style" and the feel of a small airline, despite there are more than 50,000 people employed by the company (Leaders League, 2014).
Conclusion
In conclusion, the two studied companies have a different history and often adopted different management and leadership styles, however, both companies the benefited from more flexible, feedback seeking leadership and management approaches which also promoted empowerment. BA is an example of the company that successfully responded to four major stages in the aviation industry, namely, regulation, liberalization, deregulation and certain re-regulation. EasyJey has benefited from the liberalization and deregulation of the industry and benefited from the inflexible management of BA and other companies that have not realized the potential of low-cost carrier market.
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