A merger is not always good news.
This lesson was learned the hard way by British Airways, created by a merger of four other companies – BEA, BOAC, Northeast Airlines, and Cambrian Airlines. The workforce consisted of 50,000 employees along with 215 aircraft.
The sheer workforce amount gave way to overstaffing leading to poor management and resultant loss. The oil crisis of the 1970s did not help either, as it reduced the customer base.
The company soon developed a reputation for its terrible service. It came to be known as a state-owned disaster and a paragon of inefficiency.
In 1981, British Airways appointed a new chairperson, John King. Upon noticing the company’s huge loss, King decided to restructure the entire organization.
This began by reducing its workforce from 59,000 to 39,000, modernizing the fleet, and taking steps to avoid unnecessary costs.
A massive layoff would have caused considerable controversy and backlash among the employees and the public alike. However, King dealt with it by explaining the layoffs’ reasons and maintaining a clear-cut clarity.
By the end of two years, Lord King had replaced over half of its board. He reinvented the airline’s image by bringing in a new marketing expert, but the best strategy was hiring Colin Marshall as the new CEO in 1983. Within ten years, the airline reported the highest profits in its industry, i.e., 284 million USD.
The success story of British Airways is a classic example of Change management.
What is Change Management?
Change management is defined as the discipline that guides how we prepare, equip and support individuals to adopt a change to drive organizational success and outcomes successfully.
It provides a structured approach for supporting the individuals in an organization or their effect to move from their current states to their future states or future endeavors.
There are three levels:
1. Individual level of management
The first step in managing any change in an organization is by employing strategies to accommodate the shift experienced by every single individual.
Individual change management draws on disciplines like psychology, sociology, and neuroscience to apply a structured approach to personal change.
2. Organizational/Initiative Change Management
Organizational or initiative change management provides the necessary actions to take at the project level to approach the several individuals who are likely impacted by the change.
This management level aims to create a customized plan to ensure that the impacted employees receive the awareness, leadership, coaching, and training to combat the change.
3. Enterprise Change Management
An enterprise change management means effective change management is embedded into its objectives.
The processes are consistently applied to initiatives, and all the employees at each level are well-equipped to handle change. The core philosophy of the organization is to adapt to the change.
Reasons behind change management
The main reasons for change management are:
1. Equipping the company and the employees for the future
To use a possible strategy, which may drastically change the industry’s course or that of the company, it has to be employed. When it is clear that the industry is changing rapidly, the company and the people involved cannot be left behind.
The organization’s growth and future success depend on many employees. These employees should have the ability to adapt to market forces in and out of control.
In turn, this would make the organization more effective and more profitable.
2. To rectify the mistakes made by poor management
There have been many examples of extraordinary organizations failing due to the inability to change or adapt to change.
Then there are examples wherein a considerable sum of money is spent on programs and projects to make the enterprise changes. However, they are not well-adopted as the staff and clients do not understand the difference.
The expected result will be that Return on Investment (ROI) would not be on par with the expectations. If there are many such events, then it is time to incorporate some changes and a customized plan to integrate change management.
3. Maximize the success rate of the projects
Change management has been found to significantly increase the likelihood of delivering favorable outcomes intended for a project. Having dedicated change management resources and proper integration of change management with project management can also help the cause.
4. Internal capabilities are developed
When change is a part of the organization’s core philosophy, it becomes necessary to prepare the goals and the employees for the impending future.
The change management should be then incorporated as a tool of empowerment, improvement, and personal satisfaction.
5. Minimization of costs and expenses
Considering a project, if change management is neglected, it can result in several missed milestones, failure to deliver on the business case, rework, and lost investment, to name a few.
Concerning an organization, poorly managed change can be even more disastrous. Some of the immediate negative impacts are opportunity costs, reduced morale, and increased absenteeism.
However, the worst part to deal with is the long-term effect a setback can have on an organization. A setback or a failure may cripple an organization’s potential from moving forward. It may also breed a culture of skepticism and resistance maliciously.