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What are the main contextual factors that have shaped employee relations at british airways

It was used in the exam last year and provides an interesting account of how ER at BA has shifted between collectivist and individualistic styles over the last 30 years.

Many of the highest earners amongst the cabin crew will have experienced this significant shift and this probably has significant bearing on the strength of feeling behind the current dispute. Although the companies strengths appeared to complement one another the merger was hardly an unqualified success as two companies with very different traditions and cultures were never fully integrated into a coherent whole.

Furthermore, it faced pressure from low-cost operators on its prized transatlantic routes from Laker Airways and People Express both of which have long since collapsedand from a combination of recession and rising fuel prices.

  • The agreement also included important concessions on flexibility, that staff would now be trained to work on four aircraft types rather than three, and an agreement on temporal flexibility, essentially to work on new shift systems;
  • Indeed, any improvements that did take place in performance were largely the result of favourable exchange rate movements;
  • After some eighteen months of discussion and negotiation with the unions in the BA Forum — the joint trade union body representing the four unions in the company, the company presented its proposals to the workforce in February of this year.

The combination of these factors led to mounting financial losses by the early 1980s, recording a single year loss in 1981 of 140 millions pounds. Predictably, the company responded by cutting costs, with staff cutbacks of 22,000 in the early 1980s, and with 14,000 in 1981 alone.

  1. Although the companies strengths appeared to complement one another the merger was hardly an unqualified success as two companies with very different traditions and cultures were never fully integrated into a coherent whole. The general problems highlight the fact that the global airlines and national carriers are caught in the difficult position of trying to reconcile or find a balance between, irreconcilable objectives — improved service quality and lower costs.
  2. Both issues require some response in terms of how, if at all, labour is used. The following is an extract from Will Hutton, writing in the Observer newspaper on the 30th March The problem is that airports, like power-plants, printing presses and car factories, are complex.
  3. Problems have also surfaced in recent years over other staff issues. Start studying ibus final learn in what type of culture does the context play a role just as important as the words british airways is a single-business.

These cutbacks were achieved with the help of generous redundancy packages but they did little to alleviate the deeper malaise afflicting the workforce. The cost-cutting exercise, though probably necessary, achieved little, with limited resulting improvements in efficiency and productivity.

What are the main contextual factors that have shaped employee relations at british airways

Indeed, any improvements that did take place in performance were largely the result of favourable exchange rate movements.

Alongside the comprehensive training and re-educative programmes went changes to management style, and moves towards a more flexible organisation structure. Here was an organisation that appeared to embody the customer service ethic more completely than most and that it was this that was contributing to a dramatic turnaround in performance for the company.

BA moved into profit and for much of the 1980s and early 1990s was one of the very few national airlines to consistently record profits. With the notable exception of KLM and Singapore Airlines, few other national airlines were as consistently profitable as BA at this time, and to a large degree, since.

This combination of factors unravelled in the early 1990s under the pressure of recession and latterly de-regulation of the European airline industry. This new context for the industry, economic slowdown and increased competition, marked a return to old concerns, and as BA sought to instigate waves of job cuts in the 1990s, older problems of industrial relations began to re-surface.

Developments 1995 — Present As the previous discussion has shown, in the 1980s and 1990s BA had become synonymous with customer service. Indeed, it had been almost a mantra among BA staff and managers, providing something very distinctive that differentiated BA from its main competitors.

Acknowledging that its cost base — staff costs, global airline and operating out of Heathrow — would make it difficult to compete on price, BA had set out its stall to compete on different terms.

To offer something that would set it apart as being distinctive, and difficult for other airlines to copy. However, by the late 1990s against a backdrop of sluggish growth and increasing competition, the strategy changed.

The company moved to cut out loss-making routes and reduce their reliance on Gatwick as a second hub.

  • For long haul it may not be unusual for staff to work 14-15 hour shifts, and rest periods and breaks between shifts have to be negotiated;
  • There was, and continues to be, a tension between exhortations to improved customer service on the one hand and cost cutting through contracting out and enforced bouts of redundancies on the other see below , and the climate engendered by the latter has made it increasingly difficult to deliver the real benefits to customers that BA claims it is in business to provide;
  • The GMB and TGWU in particular have threatened industrial action in 2006 and 2007 over the operation of the sickness absence scheme, management statements about absence levels and general concerns over what the unions see as worsening pay and conditions;
  • The company moved to cut out loss-making routes and reduce their reliance on Gatwick as a second hub;
  • The agreement also included important concessions on flexibility, that staff would now be trained to work on four aircraft types rather than three, and an agreement on temporal flexibility, essentially to work on new shift systems.

The context since the late 1990s has been one of a changed regulatory environment, particularly in Europe, that has pushed airlines towards more aggressive cost-cutting measures see below often leading to severe industrial disruption.

The general problems highlight the fact that the global airlines and national carriers are caught in the difficult position of trying to reconcile or find a balance between, irreconcilable objectives — improved service quality and lower costs.

Both issues require some response in terms of how, if at all, labour is used. BA Connect focused more on a low cost strategy operating out of a number of regional UK airports including Gatwick, Birmingham and Manchester. It is clear that while BA has decided that it cannot ignore the fast growing low cost segment of the market, it is unsure about what strategy to adopt to penetrate that market.

It seems convinced of the need to protect its quality brand image, but neither wholly owned subsidiaries, nor franchisees appear to be effective in securing market share. Currently BA is operating with two wholly owned subsidiary airlines, BA CityFlyer, a regional operator originally based at Gatwick now flies out of London City airport and which since 2007 has been fully incorporated within BA, and OpenSkies, which is due to begin flying in June 2008. There are plans to extend the service to transatlantic flights to Frankfurt and Milan.

Employment Relations at BA In the early 1980s, as a company located within the public sector, BA had many of the characteristics of public sector employment relations more generally. It was highly unionised, at one point recognising 16 separate trade unions, among which was BALPA British Airlines Pilots Associationa union with particular strategic influence within the industry.

By the 1980s the new strategic focus of the company meant this approach had to change but BA was careful to maintain relations with the unions alongside an approach to culture change that was more individualistic. In effect the company operated dual-arrangements for the period — communicating and consulting with staff and unions — an approach that largely continues today. However, throughout the period employment relations difficulties never remained far from the surface.

There was, and continues to be, a tension between exhortations to improved customer service on the one hand and cost cutting through contracting out and enforced bouts of redundancies on the other see belowand the climate engendered by the latter has made it increasingly difficult to deliver the real benefits to customers that BA claims it is in business to provide. Problems have also surfaced in recent years over other staff issues. In 2005, the company introduced new regulations to cut absence levels, which at the time were estimated to be averaging 22 days per staff member a year, a measure that did not lead directly to strike action but substantially worsened an already tense employment relations climate.

Threatened strike action took place in 2006, over changes to the pensions system, a threat repeated again in February of 2007 by members of the GMB who represent around 8,000 BA ground staff over proposed changes to pay and conditions and to policies on sick leave.

This action was called off but a court case, planned for mid May, is due to consider aspects of the dispute.

  1. These have often been difficult and protracted but have ultimately led in a number of cases to far-reaching changes in employment practices. What are the main contextual factors that have shaped employee relations at british airways Managing culture at british airways.
  2. British companies, BA included, almost always decide to improve capability on the hoof.
  3. Negotiations with the four unions concerned proved difficult given the very different constituencies they represent, and this has been reflected in their responses to the eventual proposals. Management style has toughened somewhat in recent years in the context of a more competitive operating environment.
  4. This leads us to believe that the BA management has a different objective. For long haul it may not be unusual for staff to work 14-15 hour shifts, and rest periods and breaks between shifts have to be negotiated.
  5. The current position is that a court case involving the union and BA is due to take place in mid May. Increased contributions to the scheme for those in their early years of service — rising from around 5.

The position of the unions within BA has meant that the company has continued to try and secure major changes through negotiation. These have often been difficult and protracted but have ultimately led in a number of cases to far-reaching changes in employment practices. For example, in the late 1990s negotiated changes with cabin crew involved agreement on a two-tier wage structure lower rates for newer staffa pay freeze and moves to greater functional flexibility.

The agreement also included important concessions on flexibility, that staff would now be trained to work on four aircraft types rather than three, and an agreement on temporal flexibility, essentially to work on new shift systems.

It should be noted that at Heathrow unions and management have also negotiated two agreements, one for long-haul, the other for short-haul operation.

British Airways Case Study

Despite its efforts, or perhaps in some cases, because of them, employment relations at BA retain the potential for serious disruption.

Management style has toughened somewhat in recent years in the context of a more competitive operating environment.

Recent allegations surrounding excessive drinking October 2000, and again of a drunk pilot in 2004alongside continuing threats of and actual industrial action, remain symptomatic of low morale in the organisation. It is important to stress that many of these problems are not unique to BA. Those with the most fractious industrial relations — Air France, Aer Lingus, TAP, Olympic, and Alitalia — are those with some of the biggest financial problems in the wake of the deregulation of the industry in Europe and the rise of the low cost operators.

These remain state, part-state-owned, or newly privatised and retain a legacy of public sector employment relations — highly unionised, strongly procedural and often with a sense of public service — qualities that sit less easily in a context of a competitive de-regulated industry.

For example, Air France experienced particular problems in the late 1990s as management initiatives within a highly complex public sector institutional framework met with significant organised resistance. There is therefore an ongoing tension between service delivery quality and efficiency for airlines such as these that by the nature of their business cannot compete solely on cost terms.

Furthermore, certain routes have now been opened up to competition. This raises particular issues for BA. Many of these also operate with relatively high costs but BA has made it clear that it wishes to use lower cost crews that will effectively operate outside of their existing arrangements with UK-based staff. This leads us to believe that the BA management has a different objective.

The current position is that a court case involving the union and BA is due to take place in mid May. What is clear more generally is that relations between BA and a key group of employees have worsened significantly in the last eighteen months as this and the pensions issue see below have begun to impact on employment relations. The Pensions Issue One of the major areas of contention within the airline at the present time relates to pensions. In 2003 BA announced that in light of a major pensions deficit in the company it would shut its final salary scheme to all new employees whereby pensions are linked to salaries in the final years of employment.

Throughout 2005 and 2006, the company organised almost 500 briefing groups with staff on this issue.

What are the main contextual factors that have shaped employee relations at british airways

Negotiations with the four unions concerned proved difficult given the very different constituencies they represent, and this has been reflected in their responses to the eventual proposals. After some eighteen months of discussion and negotiation with the unions in the BA Forum — the joint trade union body representing the four unions in the company, the company presented its proposals to the workforce in February of this year. The four unions at BA represent around 35,000 of the companies 45,000 staff.

A raising of the normal retirement age to 65 — for ground staff this means a rise from 60 or 63 to 65, and for cabin crew a rise of ten years. Pilots will have to fly until they are 60, rather than the current 55. Increased contributions to the scheme for those in their early years of service — rising from around 5. Inflation proofing of pensions in payment will be restricted to 2. Changes will affect some current staff, those with 20 years service and stay for another 20 years will have two pensions streams.

One under the current rules and those from 2007 onwards. After much discussion, BALPA and Amicus agreed to recommend the proposals to their members but the GMB, representing ground crew and baggage handlers refused to recommend them arguing that the company had favoured pilots and cabin crew rather than the interests of their members. There was concern that the TGWU, by some way the largest union in BA, would reject the deal but after consulting with its membership over the proposals, it agreed the deal in April 2007.

As a footnote, the consultation and negotiation over pensions at BA have, as we have seen, been conducted in a context of worsening employment relations within the company, a context that the pensions issue has only served to inflame further.

The GMB and TGWU in particular have threatened industrial action in 2006 and 2007 over the operation of the sickness absence scheme, management statements about absence levels and general concerns over what the unions see as worsening pay and conditions.

BA, the Future and Terminal 5 Of all the recent issues for BA, the one that the company had staked much of its reputation on was the introduction of Terminal 5 in March 2008. Ever since the appointment in 2005 of Willie Walsh from Aer Lingus as Chief Executive, it was clear that the intention was to use Terminal 5 as a means to bring in radical changes in working practices.

Walsh came to BA with a reputation for cost-cutting, having cut the Aer Lingus workforce by a third in his time there. Indeed Terminal 5 has been viewed by Walsh as critical to the future viability of the airline.

However as we have seen in light of the Open Skies policy between the EU and the USA, de-regulation may what are the main contextual factors that have shaped employee relations at british airways reduce profit for BA and its operating margin, this is before any account is taken of recent problems at Terminal 5.

In part he has made significant moves in this direction and through a series of negotiated agreements prior to the opening of Terminal 5 has secured significant new changes to working practices, particularly for those working in the baggage handling areas. In light of the hoped for impact of Terminal 5 on employment relations the debacle that has taken place since its opening on March 31st has caused considerable embarrassment to BA. The following is an extract from Will Hutton, writing in the Observer newspaper on the 30th March The problem is that airports, like power-plants, printing presses and car factories, are complex.

It is not just about having up-to-date equipment…it is about having the organisational capability to run them continuously, a question of skill, employee engagement, management dexterity, and punctilious observation of the right process. Any company that wants to improve what it is doing needs to invest in the skills of its employees……. British companies, BA included, almost always decide to improve capability on the hoof.

  • BA moved into profit and for much of the 1980s and early 1990s was one of the very few national airlines to consistently record profits;
  • Indeed, any improvements that did take place in performance were largely the result of favourable exchange rate movements.

BA needs to meet expectations and growing dividends and profits from owners who have no commitment to its long term future. There are City rumours that takeover predators are circling, with Emirates most frequently cited. Terms and conditions in airlines are notoriously complex.

For long haul it may not be unusual for staff to work 14-15 hour shifts, and rest periods and breaks between shifts have to be negotiated.

It should also be remembered that international aviation law regulates hours of work and rest periods so any negotiations must take account of these. These issues apply to pilots and cabin crew, with BA long-haul pilots working significantly fewer hours per year than those in many short-haul airlines. Given that long-haul also involves time away from home, allowances when away also have to be negotiated as do other travel concessions For short haul one of the issues relates to the number of flights per day, the arrangements of shifts and negotiation of hours.