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This report is based on the case study conducted on the WestJet Airlines. The purpose of this report is to critically analyze the fleet expansion decision at WestJet Airlines. The specific objective was to identify a change model and apply it for the diagnosis of the change process. Research was done in the general area of change management. The recommendation is based on the comparative analysis of the available models and approaches given in the change management literature.
Table of Contents
This report was commissioned by Dr. Lee Mathias to study the models of Change Management. Its purpose is to review the available information on WestJet, analyse the models of change and offer recommendations to effectively implement the change plan.
WestJet is a low cost airline and was founded in 1996 by group of Calgary businessmen. It is the second largest operator in the Canadian aviation industry with a 36% domestic market share in Canada. WestJet uses Boeing 737 aircrafts. The use of single fleet has kept the overhead costs low. As a part of its business review exercise, the senior executives at WestJet considered adding a second fleet of smaller Bombardier or Embraer planes. WestJet also has a reputation of being a fun employer with an bold corporate culture, upbeat commercials and low fares (Mark 2009).
Strategy is a way of tracking the vision and mission of the organization (Gill 2003). Defining a strategy for opting for the second fleet, WestJet needs to answer questions like "What are they trying to change? Is it the right change? Can it be executed successfully?" (Burch H. 2005). Change in any organization requires addressing the strategy (what needs to be changed), skills (what are the required competencies of the change recipients) and the structures (long term and short term tools to support the change). If these three areas are not aligned, the end result may not be appropriate (Carter 2008).
To be able to operate in the airline industry it is important to have a strategic management team that can to react to rapid change effectively. It also needs to have a competent and efficient internal management system to sustain in the dynamic airline industry (Ferriera and Lyonb 2004).
3.0. SWOT Analysis
To be able to implement the strategy, WestJet needs to do some stock taking in terms of weighing the strengths and weaknesses (SWOT Analysis). This will help the organization assess whether their strategy is consistent with the problems or threats in the external or internal environment of the organisation.
WestJet understands the need for effectively managing the company to lead it through the economic downturn. It is branded as a no-frills airline with superior services. It has low staff levels coupled with another advantage that it has a non-unionized workforce which helps it in keeping the personnel costs low (Newman Aug 1, 2005).
Financial Security: An analysis of the financial data in the case shows that WestJet is financially secure. Its debt equity ratio is at 1.09, which is relatively lower the industry standards. It also has a cash reserve of $820 million.
Seat or Capacity Utilization: The small 100 seat aircraft will be better utilized compared to the larger 737s.
Cost Optimization: Using the single fleet of larger planes means the same planes are being used for short haul flights as well. This causes fuel inefficiencies. Using the second fleet of smaller planes will remove such inefficiencies.
Customer Satisfaction: The main USP of WestJet is hassle free journey for its passengers. In words of Mr. Cummings "WestJet's strength is its corporate culture, and the competitive advantage of friendly service, which would be transferable to a second fleet, we believe we would do well in shorter haul markets." The smaller planes can be used for domestic flights as well bringing the overall utilization to around 95% without compromising on the customer satisfaction.
WestJet does not have to deal with any major labor issues however, the cost cutting measures and funds being diverted for fleet expansion plans can lead to unhappy workers and raise industrial relation conflict. WestJet is not one of the best paymasters in the industry. Their key source of employee retention is their vibrant culture. This may lure the younger generation for a little while but eventually, they will demand better compensation (Newman Aug 1, 2005).
Aviation is a very dynamic industry and it allows a few operators to evolve, lead and compete. WestJet signed a memorandum of understanding with Air France and KLM on new commercial relationship. Forming alliances globally is a strategic way to experiment and investigate opportunities domestically as well as globally. WestJet has achieved it by capitalizing on these opportunities.
A strategic alliance can open doors to many opportunities but it also exposes WestJet to the nature of the global airlines industry as such alliances are susceptible to domino effect and sensitive to the economic turbulence prevailing in and outside the country (Newman Aug 1, 2005).
4.0. The Plan Ahead:
'Airline Industry has evolved from being a slow moving stable one to a highly competitive environment , in which competitors are extremely slick and have unconventional means of competing' (D'Aveni 1998). Any global event can have its impact on the travel industry. For example, the 9/11 tragedy, SARS outbreak and most recently swine flu adversely affected the travel industry in general and airlines in particular. Faced with the world changing at the speed of a supersonic jet, it is only fair that one of the largest shareholders of the Canadian Aviation industry re-invents itself. It cannot assume that the old ways of operating will survive. The changes required are insidious and encroach on every facet of business. There is no straight demand for a cultural change. The change is about a fundamental shift, a new business model while keeping the core values intact (Leigh 2007). To opt for a second fleet of smaller planes is a big strategic move for WestJet. Since WestJet operates in a dynamic environment, the associated change process will be continuous, emergent and decentralized (Biedenbach 2008).
Special managerial attention is required to operate in a competitive environment as the environment is dynamic and competition is fierce. To bring about a change WestJet needs to respond to this environment in a flexible and dynamic manner. They need to maintain a high pace for managing this change.
WestJet has made a strategic decision to expand its fleet by adding smaller planes. This decision has its own impact on the philosophy, character, culture and the entire brand called WestJet. It has an added advantage in terms of financial strength (it's been profitable in 12 out of 13 years of operations), a highly motivated and engaged workforce and a loyal customer base. Based on the nature and composition of a business, there are many theoretical models available to successfully implement a change process. Some of these models are suitable for transformational changes and the others for fine tuning; these models also take into account the change approach. For example: Lewin proposed a three step model of planned change that describes change in the phases of unfreezing, moving and refreezing (Lewin, 1952) however, this model cannot be applied in the case of WestJet as it is a an open-ended and continuous process of adapting to an altering environment. The available models have been compared and analysed in the table below. Kotter's model is the most suitable for managing the change plan at WestJet. However, there are elements of the choice approach, which is based on Burnes model which have been used to design an effective change plan. (Biedenbach 2008).
5.0. Change: The Model Perspective
Based on the analysis of the characteristics of the different models, it is best to utilize a combination of different approaches. In case of WestJet, the most suitable approach would be the emergent and choice approach of change. Occasionally, the sought change may be planned; however, in this case the change, with the expansion of the fleet, will affect the whole organization and will constantly evolve. The emergent approach is in line with the perspective where change builds up incrementally (Pettigrew 1997; Pettigrew 2000; Dawson 2003).It has been established that WestJet operates in a dynamic environment, where in there is an ongoing challenge of creating a new competitive advantage. Change that is triggered by competition leads to specific demands according to the organisational form, capability and strategy. Kotter's (1996) eight-step model is used in the transformational changes in an organisation. Kotter learned that a majority of the changes failed across various organizations and he developed his model in such a way so as to avoid any major errors in a change process. His model concentrates on the key phases in the change process and is best viewed as a vision for the change process. The model proposes that each phase in a change process takes considerable amount of time and any mistake in one phase can have a substantial impact on the pace of the change. Kotter's model targets the strategic level of the change management process (Thomas. Biedenbach and Soderholm 2008).
6.0. Kotter's Strategic model for Transforming Organisation
The first and foremost element in any change effort is to identify what needs to be changed or what is being introduced and what is the competitive advantage the proposed change will bring. The strategy to improvise and lead can come through creative tension (Senge 1990). "Senge notes that creative tension evolves from clearly seeing where we want to be, our vision, and telling the truth about where we are now, our current reality". There is a difference in implementing ideas that arise out of creative tension and simply executing the fixes to ongoing problems in an organisation. Recognizing change (the need for, the idea of, and the context thereof) is just the first step.
In view of this first step, WestJet should develop a shared vision for change. It has to communicate with the stakeholders and show why maintaining the status quo is not right. To do this they need to use evidence and statistics from the external environment like market competition, pressure to excel and the threat of missed opportunities to back up the initiative (Biedenbach 2008; Young January 2010).
6.1. Define the change initiative
It is important to identify the key players and define their roles in the change efforts which include the implementers and recipients. Strategists are accountable for the preliminary work. WestJet management has identified what needs to be changed and has a vision of the desired outcome. They need to define who will sponsor it. The implementers are the ones who will work out all the mathematics and will make it happen. Their job is to ensure that there is a structure and facilitate successful progress. They need to progress with the conviction that the change will be beneficial to everyone.
WestJet needs to have a group that acts 'champions of change' to help inform people about the benefits of change and explain the scope and timelines. Individuals need to be encouraged to participate since a change of such proportions will impact every department and member in the organization (Kotter 1995).
6.2. Develop a change plan
The plan should consist of precise goals and present detailed and clear responsibilities for strategists, implementers and recipients. A proper balance between rigidity and elasticity is important; too much rigidity can lead to a plan that does not engage well with developing organizational needs. A change will entail the efforts of people at various levels in the company with a variety of roles. Each person will be guided by their own need, motivation and frame of reference which will determine their acceptance or resistance levels. The approach also depends on the needed speed of implementation. Active involvement of all the stakeholders will lead to the smooth flow of the later steps of the change process. The staff needs to be provided with a platform to express their opinions and tackle their insecurities (Kotter 1995).
6.3. Dominant Coalition
This step in the change process refers to Kotter's (1995) notion that a strong coalition needs to be developed to implement a change. Kotter suggests that the support of influential line executives is important in creating a critical support base for the change.
The line executives or any identified individual who is appointed as the sponsor of the strategic initiative should be able to communicate, model and emphasize on the initiative for the maximum effect. He/she should be able to generate strategic union both vertically and horizontally in the organisation. WestJet has a culture wherein every member in the organistion is actively involved in the business. The decision of fleet expansion is a strategic one and the implementation of such a decision is typically down using a top down approach. However, in this case using a sponsor will generate a more widespread acceptance in the staff and help create a better understanding of the objective.
6.4. Prepare the target audience, the recipients of change
Change is not effectively possible unless the recipients of change accept it and are willing to change themselves. Usually, the perception of the nature of change does little to mitigate the resistance. The resistance is generated when the status quo is affected. The fear of unknown leads to stress in people. Kotter has suggested various approaches to deal with resistance. He advocates the use of focus groups, discussions and surveys to bring the issues of resistance to fore. Resistance is a natural emotional reaction which needs to be dealt with effectively. WestJet management needs to have a good communication plan. It is vital as rumors start circulating if the staff is left in dark about the premise, progress and implications of the proposed change and insecurities rise and the motivation plummets (Kotter 1995).
7.0. Sustaining the Change
Buchanen et al. have done a thorough review of the literature on sustainability of change and have come up with three issues that affect the sustainability of change. These recommendations almost work as a prescription for sustaining change (Buchanen, Ketley et al. 2005).
7.1. Create the cultural fit - Making the change last
In the development of any change endeavor, the change must become entrenched in the existing culture. People in the organisation should accept and appreciate the fact that change is in reality 'the efficient way of doing things'. The suggested change model refers to starting change with tangible actions and formulating long-term plans to guarantee that change continues. Changing systems and structures requires changing communication, resourcing, training, development, and reward functions, to make sure that they support and strengthen change. WestJet has a highly vibrant culture with high employee involvement and a true sense of belonging. The staff at all levels in the organization is encouraged to participate in the decision making. The decision to expand is another step towards growth which needs to be communicated effectively to the staff. If a divide exists between the change initiative and corporate culture, culture can moderate the effectiveness of the initiative. If there is a potential for conflict then it should be evaluated in the change plan development phase. Once changes have been incorporated, they need to be rooted in the processes and followed diligently. WestJet has a workforce trained to work with the fleet of bigger planes. It has substantial maintenance support from the provider as well. Adding another fleet of smaller planes will build up the anxiety level in the staff about various performance issues. The commitment to provide support and training to deal with emergent issues should be honored.
7.2. Change Leader
A change leader has a critical role in creating the corporate vision. The leader inspires the staff to embrace the vision, sets the organizational structure and there are reward mechanisms inplace for people who consistently focus on the vision. This can be done by and individual and also by a team of people who have the right commitment, competence and motivation to follow the change through (Katzenbach and Smith 1993). Senior management must give time and concentrate on the change process - Going on a well-earned holiday while, the new planes are being bought, introduced and prepared for flights doesn't give the right message to staff (Young January 2010).
7.3. Communicate the change
The best strategy is to communicate, involve people, and be honest. Communication with the staff is of critical importance right from the beginning of a change effort. The objectives of communication need to be to improve the perception and commitment to change, to reduce resistance and to inform staff for both the benefits and perils of the proposed change. WestJet management needs to have frequent sessions with the staff members to create a buy-in for decision to go for the second fleet. The staff should be informed about the likely impact it will have on the business and their personal growth and goals. There needs to be a very strong message going out about maintaining the customer focus and delivery standards (Kotter 1995).
WestJet Airlines has achieved remarkable success. In 13 years of operations, it has managed to surpass Canada's national airline. The founder's attribute all their success to the company's culture; it's 7000 employees and around 12 million guests. WestJet management has always invested in maintaining their standards and needs to determine the growth path without compromising on the core values and the unique culture of the organization. Its goal is to be in the top 5 airlines of the world by 2016 (Seijts and Mark 2009). To maintain the exponential growth rate, they have decided to invest in smaller planes. The challenge is to materialize the growth plan and yet maintain the same or even better service standards for customers and keep the prevalent culture intact. Based on an analysis of various change models and approaches available, the paper has listed down the most effective way of implementing the change and sustaining it in the longer run.
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