AQA BUSS4 Section B Practice Question - British Airways

Question 2: Cultural Resistance to Change

Willie Walsh, the combative CEO of British Airways, has faced significant industrial action as he implements a change programme designed to improve the competitiveness of the airline. To what extent do you agree that resistance to change is largely determined by the prevailing culture in an organisation? Justify your answer with reference to British Airways and/or other businesses you know. (40 marks).

Background reading / viewing
Management Today - Interview with Willie Walsh
BA: ‘Absolutely no signs of recovery’ in airline industry - Excellent CNN video interview with Willie Walsh
British Airways chief says strike is an ‘over-reaction’ - BBC video interview (Dec 2009)

Outline answer

Possible Paragraph Points include:

All large & complex businesses like BA have to address the need to change in the face of a rapidly changing and often hostile external environment. It is inevitable that a CEO will face some internal resistance to whatever change is proposed, regardless of the prevailing culture. The issue is the relatively importance of culture as compared with other causes of resistance.

Organisation culture does play a key role in whether change can be implemented and managed successfully. A business where employees are used to ongoing change and where internal communication is effective can handle significant change well, even in a hostile market environment. Good example: the restructuring of professional services firms such as KPMG & PwC during the recession. Similarly, employees in a business with a prevailing culture of resistance and confrontation to change will typically respond predictably during a period of major upheaval.

The way in which the employer/employee relationship is managed is a key determinant of whether culture influences the degree of resistance. Role of trade unions: in general, industrial relations in the UK are much less confrontational than in previous decades, with substantially less time lost to industrial action. But not every industry is the same. Some remain heavily unionised - like the airline industry - which increases the risk of stakeholde resistance to change. Compare with other industries where low levels of unionisation?

BA has a long history of industrial disputes and a corporate culture which might be seen to encourage confrontation & resistance. The leadership style of the existing CEO (Walsh) may be part of the perceived problem - his autocratic, uncompromising style has done little to encourage employee stakeholders to accept and embrace the change required. Leaders like Howard Schultz at Starbucks or Adam Crozier (Royal Mail, and now ITV) have had more success in driving change programmes forward - perhaps as a result of their different leaderships styles? but, to what extent does the leadership style of the CEo determine the prevailing culture? Is culture something which is embedded much deeper than the management methods of the CEO?

Factors other than culture might be even more important when it comes to determining resistance to change. A key issue is the scale and nature of the change required. Major causes of resistance include the “fear of the unknown” and possible economic loss, which increases the sense of insecurity amongst employees.

In the case of BA, the external environment is particularly hostile which makes the changes required tougher than normal. Few industries face the same adverse conditions experienced by airlines: long-term excess capacity; volatile operating costs; highly elastic demand; tough regulatory regime (including environmental legislation). The risk of business failure in the airline industry is much higher than in less hostile industries. The implication for change? Change is essential, but stakeholders have potentially got much to lose. So, should they resist (whatever the implications) or should they accept that change is essential in order for their employer to remain competitive?