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9ect ept Sales lsLrlbuLlon and MarkeLlng CommunlcaLlon of
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Table of Contents
nLroducLlon and Company 8ackground 4
rganlzaLlonal SLrucLure (11 dlmenslons) 3
rlvaLlzaLlon 6
Change ln CulLure 7
Lmployee and 8ecrulLmenL ollcy 8
ndusLrlal ConfllcL 10
Alrllnes ndusLry and 8ecesslon 11
berla Merger 12
luLure uLlook 14

4

Introduction and Company Background

3

Current Organizational Structure (11 dimensions)

6

Privatization

7

Change in Culture

8

Employee and Recruitment Policy
Till 1970s, British Airways (BA) enjoyed the support oI the British government, low level oI competition
and cheap Iuel prices which enabled it to enjoy proIits despite its ineIIiciencies. BA had a hierarchical and
militaristic culture, with a purely operational Iocus and little Iocus on customer satisIaction. However, in
1980s it Iaced strong competition, privatization pressure and skyrocketing Iuel prices which brought it to
the brink oI bankruptcy.

To Iace the changing environment, BA decided to Iocus on productivity, proIit margins and people issues.
The Iocus was on customer and employee satisIaction. It introduced programs such as 'Putting People
First and 'Managing People First to achieve this. It also changed group based hierarchical structure to a
Ilat type structure with only one level separating Managing Directors Irom bottom-line employees. This
policy reduced hierarchical levels, gave more autonomy to operating people, and allowed work to get
done more easily and allowed to improve organization perIormance. A new perIormance appraisal system
based on behaviour and results was created to emphasize customer service and subordinate development.

BA cut down size oI the workIorce with the number oI employee reduced Irom 52,300 to 35,000. A
number oI internal British Airways structures and systems were changed such as a new bonus system and
opening Terminal 4 at Heathrow airport. Furthermore, BA`s symbols were introduced to support those
changes such as new employee uniIorms, reIurbished aircraIts, and new corporate coat oI arms with the
motto 'We Ily to serve. The employment and recruitment policy oI BA can be understood as under.

(I)RECRUITMENT, 1OB PLACEMENT, TRAINING AND PROMOTION POLICY:
In the past, BA was considered to be bureaucratic, large, awkward, and ineIIicient. According to
privatization, it changed corporate culture Irom bureaucratic and militaristic to service-oriented
and market-driven which made the company to be eIIective in the airline industry. These changes involve
HR Policies as Iollowing-

1) Recruitment, 1ob Placement Policy-
Recruitment and job placement policy involved in 'ReIreezing stage oI Lewin`s model.
According to this stage, BA had to stabilize changes and make the behavioural pattern in the
organisation. As a result, BA needed to redesign and improve the recruitment policy and process
in order to increase new employees who will be able to share organisation`s new management
style and value system. For achieving this objective, BA changed the recruitment and job placement
policy which supported by equality and diversity concept to identiIy right candidates to Iit in new system.
For the same it Iollowed the recruitment process as Iollows.

1.1)Employee Recruitment Scheme and Process
In recruitment and job placement policy, BA developed recruitment methodology which is based on
looking at competencies oI candidates including behaviors, skills, and knowledge. Using competency-
based interview made BA to ensure that candidates will be successIul in their job and they will be Iitted in
new organisational system. For instance, selecting right people to work in business Iield, BA need to
Iocus on high motivation, strong leadership qualities, passion Ior customer service, team working skills
and so Iorth. ThereIore, BA developed assessment methods in recruitment and job placement process Ior
9

new entry-level and senior-level positions such as group exercises, the interview, psychometric tests,
presentations, Iact-Iinding, and role play. (British Airways, 2006)

) Training and Promotion Policy-
Privatization transIormed BA to be more service airline industry that emphasize on customer service.
According to the unIreezing stage, BA had to stop present pattern and introduce new behavior and culture
to employees; thereIore, BA launched a new training program which is 'Putting People First Ior bottom-
line employee. Next, in the movement stage, BA also introduced a special training program which is
'Managing People First Ior management-level employees as well. All training programs had objectives
to identiIy the organisation`s dysIunction management style and begin the process oI developing a new
management style that would Iit BA`s new and competitive environment.

.1)~Putting People First Program-
According to corporate goal, BA wanted to be 'The World`s Favorite Airline in the airline industry. In
the privatization period, BA changed itselI to be a market-led company rather than a process-driven
company as it had in the past. To achieve this objective, BA launched a training program 'Putting People
First that aimed to create employees` awareness regarding marketplace and competition and educate
employee to know the importance oI teamwork, the awareness oI customers` expectations, and also the
contribution oI each individual makes to organisation. As a result, this program might make the
organisation to reach the goal in order to be the best and most successIul company in the airline industry.

.)~Managing People First Program-
In the second stage oI change (Movement), BA needed to bring vision oI the top managementinto its
employee. One oI programs that were implemented during this stage was a special training program
'Managing People First Ior management level. The module oI the program includes training, multi-
source Ieedback, active senior management participation, support team, and a linked perIormance
appraisal system. AIter participating, some top management-levels state that this program made BA to
have a new leadership which Iocuses on customer service and this is the key Iactor in better customer
retention and it can increase more revenue.

(II) EMPLOYEE PROMOTION POLICY:
In 1987, BA successIully changed to be private company because there was one Iactor that
Iacilitated change within organisation which is 'Employee Promotion policy. To ensure that
change became 'Iixed in the system, BA`s top management levels used promotion policy to
promote employee who clearly was a role model oI the new BA values in higher level. This
strategy was used Ior promoting employees especially in higher management-levels to cement
the new belieI and value in organisation.

10

Industrial Conflict
The staII working Ior British Airways are represented by a number oI trade unions. Pilots are represented
by British Air Line Pilots' Association, cabin crew by British Airlines Stewards and Stewardesses
Association, while Unite the Union Ior other employees. Some oI the key industrial conIlicts oI BA are
noted below-
(I) In 1997, BA`s management, Iaced strike action by cabin crew over a 1 billion cost-cutting
drive to return BA to proIitability; this was the last time BA cabin crew would strike until
2009, although staII morale has reportedly been unstable since that incident. In an eIIort to
increase interaction between management, employees, and the unions, various conIerences
and workshops have taken place, oIten with thousands in attendance.
(II) In 2005, wildcat action was taken by union members over a decision by BA to not renew the
contracts oI 670 workers and replaced them with agency staII; it is estimated that the strike
cost British Airways 30 million and caused disruption to 100,000 passengers.
(III) In October 2006, BA became involved in a civil rights dispute when a Christian employee
was Iorbidden to wear a necklace baring the cross, a religious symbol. BA's practice oI
Iorbidding such symbols has been publically questioned by British politicians such as
Iormer Home Secretary John Reed and Iormer Foreign Secretary Jack Straw.
(IV) Relations have been turbulent between BA and Unite. In 2007, cabin crew threatened strike
action over salary changes to be imposed by BA management. The strike was called oII at the
last minute, British Airways losing 80 million.
(V) In December 2009, a ballot Ior strike action over Christmas received a high level oI support.
Action was blocked by a court injunction that deemed the ballot illegal. Negotiations Iailed to
stop strike action in March, BA withdrew perks Ior strike participants. Allegations were made
by the Guardian newspaper that BA had consulted outside Iirms methods to undermine the
unions, the story was later withdrawn.
(VI) A strike was announced Ior May 2010, British Airways again sought an injunction. Members
oI the Socialist Workers Party disrupted negotiations between BA management and Unite to
prevent industrial action. Further disruption struck when Derek Simpson, a Unite co-leader,
was discovered to have leaked details oI conIidential negotiations online via Twitter.
(VII) May`11 The dispute between BA and some oI its staII has been long-running and bitter. The
long-running dispute between British Airways and some oI its cabin crew could be close to a
resolution aIter the airline and the Unite union reached a deal on some oI the key issues. As
part oI the deal BA has agreed to restore travel concessions to staII who went on strike and to
award some lower-paid employees top-up payments.Yes, as part oI the deal, cabin crew
would receive a two-year pay rise worth up to 7.5. This is expected to be dependent on staII
meeting productivity targets.
The dispute started back in October 2009, when BA reduced the number oI cabin crew on
long-haul Ilights Irom 15 to 14 and introduced a two-year pay Ireeze Irom 2010. The Unite
union said this would hit passenger services, as well as the earnings and career prospects oI
cabin crew.
11

BA's years of industrial turbulence:

:

Oct 6 BA announces 1,700 cabin crew job cuts and pay Ireeze
Dec 14 Cabin crew announce 12-day strike aIter thousands oI staII vote by a ratio oI 9-1 Ior action
Dec 17 High Court rules strike cannot go ahead aIter BA wins legal challenge

1:

Mar 15 Prime Minister Gordon Brown calls plans Ior new strikes "deplorable"
Mar 20 Start oI 3-day strike, with dispute inIlamed by BA decision to withdraw perks
May 17 BA wins injunction against Iurther 20 days oI strikes aIter peace talks collapse
May 20 Unite wins appeal and strikes back on
May 21 BA posts annual loss oI 531m
May 22 Talks to avert strikes end in disarray aIter demonstrators storm building, and chieI executive
Willie Walsh escorted away Ior protection
June 25 AIter more strikes and bitter war oI words, BA makes new oIIer
July 20 Cabin crew reject oIIer by 3,419 votes to 1,686
July 31 It emerges that more than 80 cabin crew have been suspended and 13 sacked because oI incidents
related to the dispute
Nov 23 Employee suspended Ior holding a collection Ior colleagues Iacing disciplinary action

11:

Jan 21 Cabin crew vote Ior Iresh strikes, but action halted by new legal wrangling
Mar 28 Cabin crew vote by a ratio oI 8-1 Ior strikes in new ballot
April 14 BA and Unite agree a 28-day extension beIore any Iurther strike action is called
May 11 BBC discloses that dispute is on the verge oI resolution Iollowing breakthrough in talks
12

Airlines Industry and Recession


1

Iberia Merger

14

Future Outlook