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This assignment is of two parts: part A which describes the role to be considered by Human Resource Managers when there are changes in external environmental factors while at the same time analysing the HR practices that will help organisations gain sustainable competitive advantage, with examples (of an HR manager's role during external environmental changes as well as HR practices that will help organisations gain sustainable competitive advantage) from TMS, a UK financial services company; part B, using British Airways (BA) as an example, discusses critically negotiating compensation packages through collective bargaining agreements as a major cause of BA's inability to compete in many sectors of the international market.
1.2 ROLE OF THE HUMAN RESOURCE MANAGER WHEN THERE
ARE CHANGES IN THE EXTERNAL ENVIRONMENT
Organisations are systems that exist in the context of an external environment, in a dependent relationship, and that interact with it in order to survive and grow. Any factor in the environment that interferes with the organisation's ability to influence the human, financial and material resources it needs, or to produce and market its services or products becomes a force of change. (Shyni and Thattil, 2005).
The Human Resource department is responsible for the monitoring of change in and around the organisation and dealing with them effectively without much disruption.
1.2.1 FORCES OF CHANGE
Change variables are as follows - technological changes, economic changes, delayering, privatisation, downsizing, managerial change, change in employee attitude, expectations, competencies and skills required, and also change in organisational goals and values. An organisation is subject to two sets of forces: those of the internal and those of the external (PESTEL). Here we will focus on the external.
Forces of change stemming from the general external environment according to Gillespie (The Oxford University Press, 2007) are as follows:
Political Forces: this refers to government policy such as the degree of intervention in the economy. Political decisions can impact on many vital areas for business, e.g. to what extent does it believe in subsidising firms? What are its priorities in terms of business support?
Economic Forces: the uncertainty about the future trends in the economy is a major cause of change e.g. fluctuating interest rates, decline in productivity, low capital investment, recessions etc all have an impact on the organisation e.g. recession.
Socio-cultural: socio-cultural components such as customs, lifestyles, and values of the environment influence the ability of the firm to obtain resources. These factors include anything within the context of society that has the potential to affect an organisation e.g. equal opportunities at work, and attitudes to work.
Technological Forces: technological advancements, particularly in communications and computer technology, have revolutionalised the workplace and have helped to create a whole new range of products or service e.g. the impact of internet, reduction in communication costs and increased remote working.
Environmental: with major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities e.g. recycling and greenhouse gas (GHG) emissions.
Legal Forces: these are related to the legal environment in which firms operate. Legal changes can affect a firm's costs and demand e.g. age discrimination and disability discrimination legislation.
The Human Resources department of TMS regularly monitors these factors and ensures compliance by communicating changes in any one or more of the above to all members of the organisation.
1.2.2 THE SPECIFIC GENERAL ENVIRONMENT
The specific external environment encompasses those factors external to the organisation, but with which the organisation directly interacts. These comprise the markets from which it obtains its inputs of materials, labour and finance, and the markets into which the outputs of goods or services flow.
However, there are a range of factors here which the organisation can directly influence - customers and consumers, competitors - through its actions. Whilst they cannot be controlled in the same sense that, for example, the organisation can determine its own organisation and management structures, the way in which the enterprise organises its interactions with these market forces may have a profound effect upon its effectiveness and success. (ABE 2008).
The following as suggested by the Association of Business Executives (ABE) 2008, are factors to be considered when there are changes in the organisation's environment:
The customer base of an organisation lies at the heart of the market. After all, there is no point in producing goods or services that customers do not want and the way in which the organisation relates to its customers - meeting their various needs - will determine its success or failure in the market. Organisations need, therefore, to understand their customers. They need to be clear about who they are, what they need in terms of the products offered and how these products are supplied and supported.
Relationships with suppliers have received great attention in recent years. The bargaining power of suppliers can be a major force on the organization; their ability to dictate the conditions of supply - price, quality, availability, etc. - will depend upon a number of factors. Some of these are whether the supplier is in a position to charge monopoly prices; whether there are any substitutes for the product; the importance of the supplier's product to the customer; and the cost of switching to a new supplier.
Competition is one of the most significant external forces that an organisation faces.
Much research has been done on competition and the effect it has on organisations. One of the most respected writers on the subject is Michael Porter who has researched competitive forces for industries as a whole and within industries. He suggests that there are five basic competitive forces which influence competition within any industry -the threat of new entrants to the industry, the bargaining strength of customers, the bargaining strength of suppliers, the availability of substitute products, and rivalry amongst current competitors.
At TMS, analyses of the three factors mentioned above were carried out regularly and the responsibility of monitoring competitors however lies with the employees.
1.2.3 TYPES OF CHANGE
According to Kumari V.K. Shyni () the possible types of change are:
Happened change: these are unpredictable and normally take place due to external factors. This type of change occurs when an organisation reaches a plateau in its life-cycle and falls prey to unwieldy demands from the environment.
Reactive change: are changes that are in response to an event or a series of events. Technological changes, for example, force organisations to invest in modern technologies.
Anticipatory changes: changes carried out in expectation of an event or a series of events. Organisations reorient themselves to future demands.
Planned changes: also known as developmental changes and are undertaken to improve upon the current ways of operating. Initiated to make the organisation more responsive to internal and external demands.
Operational change: necessitated due to external competition, customer's changing requirements and demands.
Directional change: caused by severe competition, shifts in government policy and control.
Fundamental change: occur as a result of drastic changes in the business environment, failure of corporate leadership, low turnover, etc.
Total change: here, the organisation is constrained to develop a new vision, and a strong between its strategy, employees, and business performance. The organisation has to achieve a turnaround or perish.
Strategic change: this is change addressed to the organisation as a whole or to most of the organisation's components, e.g. a change in the organisation's management style.
1.3 HUMAN RESOURCE MANAGER'S ROLE(S)
Susan M. Heathfield (2010) in her article (What Does a Human Resources Manager, Generalist, or Director Do? - About.com) opined that "the role of the HR professional is changing. In the past, HR managers were often viewed as the systematizing, policing arm of executive management. Their role was more closely aligned with personnel and administration functions that were viewed by the organization as paperwork."
"The role of the HR manager must parallel the needs of his or her changing organization. Successful organizations are becoming more adaptable, resilient, quick to change direction, and customer-centred. Within this environment, the HR professional, who is considered necessary by line managers, is a strategic partner, an employee sponsor or advocate and a change mentor. At the same time, especially the HR Generalist, still has responsibility for employee benefits administration, often payroll, and employee paperwork."
However, the role a Human Resource Manager need to take into consideration when there are changes in external environmental factors is that of a Change Mentor or Change Agent. Michael Armstrong (2007) suggested that HR managers, in their proactive role, "are well placed to observe and analyse what is happening in the organisation, and as it affects the employment of people, and to intervene accordingly. Following this analysis, they produce diagnoses which identify opportunities and threats and the cause of problems. They innovation(s) in the light of diagnoses, which may be concerned with organisational processes such as interactions between departments and people, teamwork, structural change and the impact of technology and methods of working, or Human Resource processes such as resourcing, employer development or reward."
The danger, according to Marchington (1995a), is that HR people may go in for "impression management" - aiming to make an impact on senior managers and colleagues publicizing high profile innovations. Human Resource Managers aim to draw attention to themselves simply by promoting the latest flavir of the month, irrespective of its relevance or practicality, are falling into the trap that Drucker (1995), anticipating Marchington by 40 years, described as follows: 'the constant worry of all Human Resource administrators is their inability to prove that they are making a contribution to the enterprise. Their pre-occupation is with the search for a "gimmick" which will impress their management colleagues.
1.3.1 Dealing with change (Change Strategies)
The pressures for change could be so strong that continued resistance threatens the existence of the organisation itself. It is common for organisations to react to pressures emanating from the environment. They can be in control of these pressures by 'scanning' their environment in order to try to anticipate and predict change. (ABE 2008).
1.3.2 Overcoming resistance to change
The best way to get the change accepted is to identify those things/persons which are resisting and look for ways of satisfying their needs, etc.
Using TMS Financial Services (UK) Ltd as an example, the management of the company decided to effect a new system of operations by changing the layout of the Transaction Processing Systems (called the "new system"). The employees found it a bit difficult to navigate, resulting to errors and slow transaction processing times. This development led to resistance and insistence on reverting back to the "old page" which was not accepted by the management. The Human Resource Manager intervened and implemented "Kotter and Schlesinger's model of change" as outlined below:
Strategy for change
Force and support
Directive or consultative
Consultative, collaborative, or delegative
Combination of directive and supportive
In a bid to break the resistance to change and effect the implementation of change, the Human Resource manager held a training session with the employees where he communicated the benefits of implementing the change, encouraged participation by involving staff and provided support as the change process went into full operation.
At a point, there was a bit of rivalry between the Human Resource manager and the Operations manager, however, the Human Resource manager was only playing his role as a change mentor by interpreting the strategy formulated by the Directors.
The HR Manager performs his role by proactively contributing to the change management, team development and technology introduction. Sometimes the HR advocate rule may create conflict with operating managers, to identify and implement needed programs in the organisation. Operational activities are tactical in nature.
The HR function requires matching the HR activities with the strategies of the organisation. However, HR does not often help formulate strategies for the organisation as a whole; instead it merely carries them out through HR activities. (Mathis and Jackson, 2008).
Many executives and managers increasingly see the need for the HR managers to become greater strategic contributors to the business success of the organisation.
HUMAN RESOURCE PRACTICES THAT WILL HELP ORGANISATIONS
SUSTAIN COMPETITVE ADVANTAGE.
Beardwell and Claydon (2007) in their book, Human Resource Management - A contemporary approach stated that, "competitive advantage models tend to apply porter's (1985) ideas on strategic choice.
Any business with a competitive advantage is able to attract more customers than its competitors by having some special factor that no one else possesses. The key to capturing competitive advantage is knowing what your customers want and finding a way to give it to them. Very few sources of competitive advantage last very long however, so businesses are engaged in a never ending search to find new angles to beat their competitors. It's all about finding some way of differentiating products and services from other offerings. The whole purpose of business strategy is to find new sources of competitive advantage (McCrimmon 2008).
McCrimmon went further to state the following popular sources of Competitive Advantage:
Cost - This is a major source of competitive advantage. Competitors can only reduce costs so far before becoming unprofitable. Competitors will continually reduce prices over time as they find cheaper, more efficient ways of making their product. The implication for managers is that the longer they hope to offer a particular product the more they need to find cheaper ways of producing it.
Quality - Everyone wants a product that works and lasts a reasonable length of time. Any company with a better quality product that is not too much more expensive than its rivals will win out.
Service - Customer service is a popular form of competitive advantage in markets where all the players offer similar services or products and they cannot be differentiated in any other way.
Brand - Many people are willing to pay a little extra for a name brand, especially in the fashion industry, but it applies to cars, soft drinks and many other products. Building a brand is expensive and time consuming but often the only way some businesses can differentiate themselves.
Innovation - As with all forms of differentiation, innovation needs to be ongoing for any company to keep beating its competitors, but it can yield great dividends for any business that is good at it. Innovation is harder than other forms of competitive advantage because most businesses have a short-term, risk-averse focus that is driven by the demand for quarterly profits. Having a product that people want, and which no other company can match, is a great source of competitive advantage. Companies protect this form of competitive advantage through patents, or by continuous innovation.
Convenience - Many consumers are willing to pay a little extra for convenience. This can mean having a good location, as in the case of retail outlets in a mall, or shopping via the internet. The latter is obviously easy to copy but a great location for a retail outlet is not so easy to replicate. Convenience also includes one-stop-shopping and products that are simply easier to use than other offerings.
Attractive packaging can also be a factor in some industries, for example.
Speed can also be a source of competitive advantage. Opportunists who are quicker than others to spot a new market and enter it fast gain a momentary advantage.
There are other forms of competitive advantage. This list covers the most popular forms but is not exhaustive.
''Some people downplay innovation, arguing that it is not sustainable so why bother. This is naÃ¯ve because it fails to face the reality that no advantage lasts very long anyway. Apple's recent succession of innovations - iTunes, iPod and now iPhone proves that innovation can pay great dividends and that a string of innovations is not only better but the only way to gain sustainable competitive advantage.'' - McCrimmon (2007).
1.0.1 The concept of 'Best Practice'
The concept of 'best practice' is based on the assumption that the organisation's HR
strategies should 'fit' against an ideal set of HR practices that all organisations could
adopt and from which they would benefit. A 'best practice' model provides benchmarks against which organisations can assess themselves and set improvement targets. (ABE 2008).
'Best practice' in the sense that the organisation could well match itself against as
many as possible of the elements of HR strategy found in high-performing
organisations - as summarised, for example, by Pfeffer (Competitive Advantage
Through People, 1994):
Ëš Employment security
Ëš Selective hiring
Ëš Self-managed teams
Ëš High compensation contingent on performance
Ëš Reduction of status differentials
Ëš A willingness to share information
As Armstrong and Baron (Strategic HRM: The Key to Improved Business Performance,
CIPD, 2002, p. 70) comment: "In accordance with contingency theory, it is difficult to
accept that there is any such thing as universal best practice. What works well in one
organisation will not necessarily work well in another because it may not fit its
strategy, culture, management style, technology or working practices."
1.0.2. The concept of 'Best fit'
According to the 'best fit' approach, the HR strategy should be aligned to the business
strategy ('vertical fit'), and the different elements of the organisation's people strategies
should be aligned to each other ('horizontal fit'). (ABE 2008).
If a 'best fit' can be achieved, then the whole is greater than the sum of the parts, i.e.
there is positive synergy to be gained from the interaction between the corporate
strategy and its HR counterpart. Even if the alignment is less than perfect, the effort to produce a positive alignment will be worthwhile - it is better than ignoring the issue altogether, and then having the tolerate the resultant anarchy. (ABE 2008).
ABE (2008) explained the difficulties in implementing a 'best fit' approach. Even if 'best fit' is accepted as a model for HR strategy, it is not easy to achieve because of:
The diversity of strategic processes, levels and styles, which often create ambiguity and confusion within the organisation - and especially so if the organisation is multinational and/or diversified;
The complexity of the strategy formulation process;
The evolutionary nature of the business strategy - which can mean that the
business strategy and the HR strategy are never in perfect alignment together;
The absence of articulated business strategies - because in many companies the
strategy is not clarified at all (it can be merely intuitive and opportunistic), or, if
clarified, does not convey any precise meaning;
The qualitative nature of many HR issues; and differing definitions of what constitutes HR strategy and what constitutes corporate strategy.
Firms should develop an HR system that achieves both horizontal and vertical fit within the firm and foster sustainable competitive advantage from the firm's human resource capital pool.
HUMAN RESOURCE PRACTICES AND SUSTAINABLE COMPETITIVE ADVANTAGE
1.1.0 The Resource-based theory
A fundamental assumption of the resource-based theory is that organisations can be successful if they gain and maintain competitive advantage (Porter 1985). Competitive advantage is gained by implementing a value-creating strategy that competitors cannot easily copy and sustain (Barney 1991) and for which there are no ready substitutes. Human Resource Management greatly influences an organization's human and organisational resources and so can be used to gain competitive advantage (Schuller and MacMillan 1984).
Presumably, the extent to which Human Resource Management can be used to gain competitive advantage, and the means of doing so, are partly determined by the environments in which the organisations operate (Wright et al., 1994).
For example, in some industries, technology can substitute for human resources, whereas in others the human element is fundamental to the business. (Schuller and Jackson, 2007).
From a resource-based view, it is proposed that HR practices cannot by themselves be a source of sustained competitive advantage, as it is virtually impossible for HR practices to be rare, inimitable, and non-substitutable. For example, training programmes, performance evaluation systems, and compensation systems are readily available to be purchased on what Dierickx & Cool (1989) propose are strategic factor markets. Therefore, the source of sustained competitive advantage lies in the human resources themselves, not the practices used to attract, utilise, and retain them (Boxall, 1996; Wright et al., 1994). However, this is not to ignore the importance of HR practices in developing human resources as a source of sustained competitive advantage. Organisations are encouraged to adopt an approach that promotes a system of HR practices that are customised to suit a particular firm's competitive strategies, and internal practices, policies, and resources - it provides both vertical and horizontal fit.
In support of Wright et al. (1994) and Boxall (1996), it is proposed that although HR practices are not themselves sources of sustained competitive advantage, their role in developing sustained competitive advantage from human resources are still fundamental. The notion of best practices is perhaps more of a set of guiding principles, or a systemic architecture (Becker & Gerhart, 1996), while the specific policies and practices that underlie a guiding principle may be more situational-based (Stroh & Caligiuri, 1998). Becker & Gerhart (1996) suggest that a best HR system architecture may exist, but for superior performance, the bundles or configurations of practices and policies implemented in a firm must be aligned both vertically and horizontally within the firm. That is, they must be aligned with each other as well as the firm's competitive strategies and other functional policies and practices. This approach to utilising HR practices is more congruent with the resource-based view of competitive advantage as the practices are used systemically to develop and control the human resource pool, and moderate the relationship between this pool and sustained competitive advantage by effecting HR behaviour. This is depicted in Figure 1 as proposed by Wright et al. (1994).
Figure 1 A Model of Human Resources as a Source of Sustained Competitive
Advantage (Wright et al., 1994)
From the above, firstly, managers can develop the human capital pool by utilising
HR practices such as the development of selection, appraisal, training, and compensation systems to attract, identify, and retain high quality employees (Wright et al., 1994). Secondly,
HR programmes such as extensive recruitment systems and attractive compensation packages can be used to attract and retain employees with the highest ability, quality and best organisational-fit (Wright et al., 1994). Thirdly, training programmes aimed at increasing and developing individual's skills and competencies provide continuing skill development of a firm's human capital pool (Wright et al., 1994).
From Wright et al.'s (1994) model, the next aim of HR practices is to influence individual behaviour that is supportive of the firm's competitive strategy. Schuler (1992) proposes that this can be achieved by developing reward systems, communication systems, training programmes, and socialisation systems which encourage employees to act in the interest of the firm. This is imperative, as the potential of human resource capital is realised only to the extent that the individual employees choose to allow the firm to benefit from the capital through their behaviour (Wright et al., 1994).
This resource-based view provides support for the case of the human resources approach as this moderating role may explain the wide variance of high and low success and performance achieved by firms who adopt common HR practices such as selection, training, and knowledge-based pay. Firms can imitate practices that appear to make other firms successful, but it is only through the use of these human resource practices in a unique context that human resources can be developed as a source of sustained competitive advantage (Wright et al., 1994).
Wright et al. (1994) suggest that the source of differential success of the same HR practices between firms results from differing human capital pools existent within the various firms.
Some role behaviours require superior human capital, and if the required HR system does not support this, then the required behaviours will not be elicited and no sustainable competitive advantage cultivated. This is again illustrative of the proposition that the relationship between HR practices and competitive advantage is contingent upon the human capital pool, not the practices themselves.
Thus, from a resource-based perspective, firms desiring competitive advantage cannot expect to purchase or imitate sustained competitive advantages through the acquisition of a set of best practices. A firm must create a system of HR practices that are customised to suit their competitive strategies, internal practices, policies, and resources - provide both vertical and horizontal fit. Advantages may be found in the rare, imperfectly imitable, and non-substitutable resources already controlled by the firm (Dierickx & Cool, 1989). Wright et al. (1994) conclude that the role of the HR manager then, is to recognise, develop and exploit the resources within the firm through the application of HR systems that develop the human capital pool and elicit employee behaviour supportive of a firm's competitive strategy.
Wright et al. (1994:318) concluded that Human Resources Management practices themselves cannot be a source of competitive advantage, but they may play an essential role in 'developing the sustained competitive advantage through the adoption of the Human Capital pool, and through moderating the relationship between this pool, and sustainable competitive advantage through this pool.' Barney and Wright (1998) broadened this 'narrow' view, discussing in more detail how systems of Human Resource Practices and the administrative HRM function itself could become sources of sustainable competitive advantage. (ABE 2008).
These authors examined whether the HRM systems and the HRM functions met the criteria set forth by Barney (1998) and suggested that systems of HRM practices that creates synergistic effect are indeed a source of sustainable competitive advantage.
These integrated HRM systems are rare, valuable, and contrary to physical and organisational capital, 'difficult, if not impossible for competitors to identify and copy' due to the interrelatedness of the individual HRM practices in the interdependent HRM system (Barney and Wright 1998: 40). Hence, it is the internal fit between the HRM practices that may provide a significant source of sustainable competitive advantage. (ABE 2008).
TMS (UK) Ltd is a Human Resource practices at TMS are different compared to one of its major competitor, ICL Ltd just as the organisational culture of both organisations differ. Although there are some similarities, there are often delays in getting feedback of queries from the management of ICL Ltd; TMS hold periodic training sessions with the staff to ensure compliance of organisational procedures as opposed to ICL Ltd; TMS strictly recruits staff focusing on logic and analytical qualities while ICL Ltd centers much more on personality; employment security is far above the ground at TMS compared with ICL Ltd and this is evident by having self-managed teams and giving these teams autonomy in decision making as well as encouraging them on better performance by setting realistic targets and awarding compensation packages for best performance. ICL Ltd nevertheless, is still a major competitor albeit not adopting common HR practices such as selection, training, and knowledge-based pay.
The link between HR practices and firm performance has been established and from a resource-based view, it has been demonstrated that human resources can potentially be a source, or contributor, of a firm's sustainable competitive advantage. On the theoretical factors of rareness, inimitability, and non-substitutability, the universalistic ideal of HR best practices cannot provide a sustainable competitive advantage. From this framework, it has been demonstrated that the configurational perspective provides a more theoretically valid and tenable approach than the universalistic perspective for using HR practices to develop the human resource capital pool into a source of sustainable competitive advantage.
COULD COMPENSATION PACKAGES NEGOTIATED THROUGH
COLLECTIVE BARGAINING AGREEMENTS BECOME A MAJOR CAUSE
FOR A FIRM'S INABILITY TO COMPETE IN MANY SECTORS OF THE
2.0.1 What is collective bargaining?
Collective bargaining is a process whereby trade unions, representing workers, and employers through their representatives, treat and negotiate with a view to the conclusion of a collective agreement or renewal thereof or the resolution of disputes.
A collective agreement is usually an agreement in writing between an employer and a union, on behalf of workers employed by the employer. It contains provisions reflecting terms and conditions of employment of the workers, and conferring to them their rights, privileges and responsibilities. While collective bargaining involves negotiation, it is not the same thing. Collective bargaining is essentially a relationship; negotiation is a process that takes place within this relationship. (Rollinson and Dundon, 2007).
When trade unions negotiate a collective agreement with employers, the process and the outcome are somewhat different. The process of collective bargaining is in reality a series of negotiations, diplomatic and political manoeuvres, with the influence of economics.
There has been a decline in collectively negotiated relationships between organisations and trade unions in Britain, therefore, attention was directed to some of the recent developments in employee reward and pay determination. Systems of corporate governance in the United Kingdom are connected to unionism, especially in the light of changing attitudes and styles of management which emphasises preference for individualism and HRM rather than the joint regulation of employment conditions. (Rollinson and Dundon, 2007).
British Airways was judged to be the fourth-strongest consumer brand in the U.K. in the 2010 Superbrands survey of 2,100 adults, behind Microsoft Corp., Rolex Group and Google Inc. and ahead of Mercedes-Benz and Coca-Cola Co. in the top 10. (Steven Rothwell).
The airline company has recently been riddled with series of strike actions by staff, coupled with the volcanic ash cloud that crippled flight operations, resulting in loss of revenue and customer confidence. The strike is centered in Unite's cabin crew branch - the British Airline Stewards and Stewardesses Association (BASSA).
Overview of the crisis
The crisis started last year November when BA reduced the number of cabin crew on long-haul flights and brought in a two-year pay freeze from 2010.
The airline has also proposed new contracts for fresh recruits and newly-promoted staff. These include a single on-board management grade, no seniority, promotion on merit, and pay set at the market rate plus 10%. BA says the cuts are necessary to save money as the company was making huge losses. The airline company decided to strip travel perks of striking staff, including the right to buy heavily-discounted tickets causing heavy disruptions at major airports in the UK, leaving customers stranded.
For shareholders, the biggest risk for BA right now isn't financial bankruptcy but a collapse in the authority of management if it were to cave in. The executives, non-executives and owners together were in battle with cabin crew and the union. It has to do with the imminence of the merger with the big Spanish airline, Iberia. Talks are proceeding briskly to combine BA and Iberia but arguably it would be pointless crunching the airlines together - or so BA's management and owners would believe - if they couldn't do the traditional merger thing of eliminating duplicated overheads and improving productivity.
Now, given the highly regulated nature of the airline industry, it may be years before BA and Iberia can properly integrate their networks and secure these savings.
As for the alternative of caving in to the union in the current dispute, that would conceivably make it impossible for BA to secure the merger efficiency gains for a generation.
BA's brand is of significant commercial value. Erosion of the brand, through either a single
event, or series of events, could adversely impact BA's leadership position with customers and ultimately affect the organisation's future revenue and profitability. BA's brand reputation has been dented by recent happenings due to a breakdown in employee relations, disrupting operations and adversely affecting business performance.
The markets in which the organisation operates are highly competitive. BA faces direct competition from other airlines on similar routes, as well as from indirect flights, charter services and from other modes of transport. Some competitors have cost structures that are lower than BA's or have other competitive advantages such as being supported by government intervention.
Nicosia, a BA customer on Tue, March 23rd 2010 at 03:33, commented on the BBC website as thus: ''what amazes me, nobody sides up with the everyday worker any more. Bankers get bailed out but still go on to make billions of profit and pay millions in bonuses. Company directors again get millions, even for failure of MP's, Politicians, and ministers are raking it in. The average person whether he or she works in a hotel or as security, the airlines are always the ones who have to make the sacrifices - work more for less pay. People forget its the average everyday person that has made these companies through their hard work and loyalty and what do they get in return, nothing. The new boss in BA for example, earns £4 million a year and bonuses and he will be gone in a few years time. The average flight attendant earns say, £25,000 a year and away from their family etc. The job is not glamorous and they are the ones that are expected to take pay cuts. Good luck to the ones on strike at BA and good luck to any one else that goes on strike when it is justified. If people want to fly with the low cost airlines good luck to them. I know I wouldn't; BA wouldn't just save money by flying into cheaper airports, and all their millionaire CEOâ€¦think....''
Also, Sarah, a ''frequent flier'' was unhappy with way
Negotiations between both Union leaders and BA bosses failed after an initial offer made by BAA was rejected. The threat of strikes by thousands of airport workers which could have caused travel chaos for holidaymakers has been averted as a new pay deal has been reached which will be recommended for acceptance. The threatened strike action would have involved more than 6,000 security staff, engineers and fire fighters at the six airports. The talks followed a vote by Unite members in favour of industrial action in protest at a 1% pay offer. (Ian Collier, Sky News Online, 10:48pm UK, Monday August 16, 2010).