In the almost 25 years since its privatisation, British Airways has achieved some remarkable results. At times when other European airlines were resting on state aid and their US counterparts resorted to bankruptcy protection, BA remained financially independent.
It achieved this by relentless cost-cutting and outsourcing and there can be no doubt that much of that was absolutely necessary. However, that drive for efficiency has come at a cost as the airline has experienced ongoing industrial disputes and employee unrest that have severely dented its image.
Two summers ago BA’s outsourced catering company, Gate Gourmet, went on strike. This resulted in severe disruptions in operations and a significant loss in revenues. Last year BA got caught up in a row over the wearing of religious symbols at work. The recent reversal of its corporate policy on that issue only serves to underline the futility of that whole episode and how unnecessary it was to court the bad publicity that accompanied it. Finally, just last week, the airline’s cabin crew voted overwhelmingly to go on a three day strike.
In time, these and future disruptions will have their own impact on operational and financial efficiency, ultimately neutralising them and destroying value.
While cost-cutting can bring immediate benefits, unless it is underpinned by a human and social model of the organisation, it leaves an organisation open to the risk of disruptions. Such a model recognises that the value of an organisation is largely determined by the quality of the relationships between its various stakeholders or human assets – cabin crew, pilots, caterers, managers, the public etc, and their individual and collective interests.
Approaching efficiency from a human and social perspective provides organisations with a more sustainable and effective business model where it is values that drive the efficiency and productivity necessary for success.
This value-driven approach is essentially the framework adopted by Toyota in the development of Lean Production – a business model based entirely on providing people with the skills and the collaborative environment necessary for them to give of their very best.
Another example is that of US airline Jet Blue, who use “homesourcing” to boost productivity and efficiency. While most companies outsource i.e. place people around technology, Jet Blue decided to take an alternate route by building technology around people, allowing as many of its employees as possible to work from home.
There is no magic formula for developing a human and social model for a particular business. It requires a thorough analysis of the needs of its human assets, and the principal factors and values that drive the quality of the relationships between them. However, if BA wants a future that is financially and operationally sustainable, and if it wants to regain the hearts and minds of its customers, then what it needs is a human and social makeover.
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