Reality of Corporate Practices in British Airways

Contents

Introduction 2

Summary 2

Supporting workforce 3

Conclusion 6

Appendix 1 8

Corporate Social Responsibility Report 8

Appendix 2 9

Carroll's pyramid of CSR 9

Appendix 3 10

Utilitarian Theory 10

Appendix 4 11

Deontological Theory 11

References 12

Introduction

As a concept of business being "a force for the good of society", this has become an object of close attention, in the business sector. Whilst the generally accepted view is, that enterprises operate legally and ethically, and therefore do not need to pursue large social goals, this theory is continually disputed throughout the world. Businesses are more concerned about the environment and sustainability, and of possible adverse effects on consumers and society. This has drawn attention to the role of business in society and the crucial issues changing relationships between Business, Government, and Civil Society (Sastry, 2011).

This essay contains and examination of Corporate Social Responsibility Report (see appendix 1) as enterprises are concerned about their social responsibility, and also care more about how the public interprets them.

Therefore, the business ethics for British Airways (BA) will be reviewed and ethnical theories will be applied in order to understand if the business is making positive contributing to the society.

Summary

British Airways is one of the oldest and the most reputed airlines in the world. British airways can trace its origins back to the civil aviation, since the world's first schedule air service on 25 August 1919. The company celebrated its 100^th​ anniversary this year (Airways, 2019). British Airways the official airline of the United Kingdom and employ approximately 45,000 people including 16,500 cabin crew and 3,900 pilots with the average of 15 years' experience. British Airways is owned by the government of the United Kingdom, whilst being run by private firms, it is also known as BA. (Airways, 2019).

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Currently, British Airways has a fleet of more than 280 aircrafts, by the year 2020 it will launch another 100 new aircrafts; A British Airways aircraft takes off from somewhere in the world every 90 seconds, and flies to 200 destinations over 80 countries across the globe (Airways, 2019). In 2018, British Airways generated about 13 billion British pounds profit (Mazareanu, 2019).

The company focuses on the strategy of becoming the world's leading premium airline (Airways, 2019). British Airways tireless attention to customer service is an essential component of the long-term vision and actions that they are taking now, aimed at making company costs base more effective in assisting the company to create a sustainable and profitable future for their business, benefiting their customers, colleagues and shareholders (Airways, 2019).

Carroll's pyramid (see Appendix 2) of Corporate Social Responsibility (1991), indicates that businesses are expected to tolerate all ethical norms of society and because they are not written in law, they are more vague than legal requirements and therefore more difficult for companies to follow (Griseri, Seppala, 2010).

Business executives think and act as Utilitarian's (see Appendix 3), because business decisions mostly based on risk management and cost-benefit analysis and they are fundamentally Utilitarian (Bowie, 2013).

In November 2007, BA opened a new Corporate Department which merged the previously existing Community Relations department and Environment Teams. Activities of the Corporate Department are controlled by the Corporate Responsibility Board which is chaired by Keith Williams who is Chief Executive of British Airways company.

Keith Williams stated that, in order to become a world responsible and leading global premium airline British Airways need to look at the way they operate as a business therefore according to Corporate Responsibility Report company focused on: tackling climate change; reducing environmental impact; conducting their business responsibly; supporting workforce; supporting local communities; fostering customers wellbeing; carbon offsetting (Airways, 2019).

Supporting workforce

In relation to Corporate Social Responsibility, Utilitarians believe that businesses have a moral duty to promote the best possible outcome, maximise happiness from the fan fair perspective. "The greatest good for the greatest number" known as one of the principles of utility (Frederiksen, 2009).

Since the mid-1980s, BA management seems to have been prepared to adopt a long-term vision based on staff development and customer quality. Programs such as People Put First focused on staff development, employee engagement and a collaborative approach to work relationships. In fact, BA has become a model of sustainable working methods corporate (Upchurch, 2019). British Airways via deontological theory (see appendix 4) seems to be given equal respect to all workforce by providing staff development programmes. 1

Nevertheless, in 1982 Colin Marshal said: we must "design' our people and their service attitude just as we design an aircraft seat, an in-ight entertainment programme or an airport lounge to meet the needs and preferences of our customers." (Grugulis, Wilkinson, 2002, p5). There is a clear link to the Utilitarian principles that persuades to a moral justification for prevalence of maximizing profits and economic value. This is fully dependable on Carroll's (1991) pyramid of CSR conferring to which, the primary goal is to make a profit. Consequently, according to British Airways Annual Report and Accounts (2009), the main goal for the company is to make sure their workforce develops high performance customer focused culture, in order to be the leading global premium airline (Airways, 2019). Consequently, to create a high-performance workforce, British Airways require the right leaders, with the right support, and are confident the company have this. British Airways managers then can involve their workforce in achieving world-class levels of productivity (Annual Reports and Accounts, 2009).

Thus, we can see a utilitarian theory implemented here.

Contrary to this, Deontological ethics stated that people should be treated with dignity and respect (Griseri, Seppala, 2010). In 2009 British Airways moved towards Agile management style and improved governance and accountability in the business. From the Deontological perspective, According to Corporate Sustainability Report (2011), British Airways invested into employee relations and launched an open communication with trade unions to establish closer working relationships, thus continuing to work with trade unions to modernise and adapt collective bargaining (Airways, 2019). This theory could work, and in accordance with the deontological ethic, but evidence from the past shows a different angle of British Airways business ethics.

We have an indication from the previous years that, British Airways breach the deontological ethic, based on conditional duties that involves different types of agreements, the principal one of which is the duty to keep one's promises​ (​ Internet Encyclopaedia of Philosophy). By the late 1990s, many of the British Airways structural factors that underpinned the company's success were at risk because, newly launched low-cost carriers such as EasyJet and Ryanair were undermining British Airways prices (Grugulis and Wilkinson, 2002).

In early 1997, BA attempted to change the payment structure for flight attendants, the policy of reducing labour costs was extended to British Airways "core" employees and it was suggested that existing staff would be "redeemed" by receiving higher basic salaries (Grugulis and Wilkinson, 2002). British Airways suggested that during the 3-year period not a single crew member would earn less under the new system, and it was clear to staff members that this was the explicit goal of saving money. This was very good company attempt to comply with the Deontological principles, to treat people with dignity and respect. However, 5,000 voluntary redundancies were planned with staff to be replaced by newly hired employees on lower pay​ (​ Grugulis and Wilkinson, 2002).

When these negotiations were unsuccessful, people went on strike. Deontological supporters will claim that, employees sometimes reflect that their values, beliefs and rights were not valued regarding the company ethics therefore, Kant (see appendix 3), therefore, ethical theories bounced them to a narrative, for making their point (Bowie, 2013).

According to Kant philosophy, humans deserve respect and in the basis for many enlightened methods of human resources management, the emphasis on the value of independence is the basis for people's governance.

However, crew members were advised not to go on strike, and BA managers were instructed to inform dissatisfied employees that anyone taking industrial action would be dismissed without trial and then sued for damages (Grugulis and Wilkinson, 2002). Any member o staff who has simply stayed away would face disciplinary measures, be deprived of promotion and lose both pension rights and staff discounts (Grugulis and Wilkinson, 2002). Moreover, it was also reported that the BA was shooting pickets. The night before the first day of the demonstration, the airline's flight attendants called home and warned that "they must cooperate with their employer duty" (Grugulis and Wilkinson, 2002). Immediately questions regarding company ethics could arise and the consensus of business ethics could be questioned. Does BA have a business ethic at all? Does British Airways recognise employee dignity and respect workforces?

In regard to the above argument it is important to note that the Kant's moral philosophy on the dignity of people has been absolutely ignored and breached by British Airways. On the first arranged day of strike action, less than 300 workers stated themselves is strikes, and more than 200 called in sick. Fatefully, this "massive sick day" has worsened British Airways situation on the market (Grugulis and Wilkinson, 2002).

A second duty -based approach (Deontological theory see Appendix 3) can be applied regarding to the strike consequences. According to this approach, rights and obligations are related in such a way that the rights of one person points toward the right and obligations of another person (Internet Encyclopaedia of Philosophy).

However, the trade union was able to negotiate with British Airways and managed to save the earnings and discounts of British Airways staffs, and sanctions against the strikers were lifted. Thus, the trade union increased its membership by 50 per cent to more than 10,000 members. 2

Bob Ayling's assertion that the agreement marked a "new beginning and spirit of British Airways cooperation" (Grugulis and Wilkinson, 2002). With the new statement from Chief Executive we can see another attempt from the company perception to shift towards Deontological principles and treat people with dignity and respect their rights.

During the strike action from 2008 to 2010, BA developed a new approach to resolving industrial conflicts, which included lawsuits (Lange et al., 2015). The major disagreement happened in 2010 and lasted for 22-days costing the company more than 180 million pounds which was caused by a proposed reduction in labour costs (Batty, 2010). These cuts were focused on 'demolishing the staff priority system,' the reformation of the cabin crew and development of a new pay scheme in line with the competition (Lange et al., 2015). The outcome of this dispute was the breakdown of relationships between British airways and British Airline Pilots Association which represents the cabin crew (Lange et al., 2015). Labour MP John McDonnell stressed the disagreement was a major case of the current climate relationship where employers not only wanted to succeed, but correspondingly wanted to repay the union (Batty, 2010). From the Utilitarian beliefs we can see British Airways sacrificing something, in this case the workforce, for the overall happiness of the majority, who can be named as customers, shareholders and company profitability. Utilitarian's were to justify the action with the result; The Union and British Airways managed to get an agreement which helped the company to save £60 million annually (Lange et al., 2015).

The principle of categorical imperative, expressed by Kant stated that people must act in a way that treats civilisation, whether in their own individuals or in the individuals of other individuals, never just as a means to an end, but always simultaneously as a goal (Shakil, 2013). In other words, to fail to do this British Airways treated others in a way that denied the moral law. It can be seen that British Airways treats their workforce as a means only.

The most recent article from the Guardian newspaper said that pilots based on Heathrow and Gatwick would down tools for the first ever "pilot strike" in September (Topham, 2019).

Negotiations on an eight-month wage did not take place, even though over the past three years an offer was made, they have not yet reached an agreement. Article author Gwyn Topham mentioned that British Airways pilots who earn six figure salaries would still want to go on strike (Topham, 2019). One of the long serving British Airways pilot outlined that all this "pilots' strike" are not about the money, but about respect, furthermore he explained that they abandoned the serious pension scheme, and salaries increases when the company was in a weak position, all on the promise that when the business is strong and will have a proper income, pilots would benefit (Topham, 2019). British Airways pilots have lost confidence in the leadership of the airline. The cost reduction mode has reduced the customer service quality and also affected themselves. The snowballing effect is a good reason for feeling unsatisfied with their job position, pilots seeking recognition rather than pay increase (Topham, 2019). We cannot fully rely on the article information because we never knew what the authors agenda behind the article was.

However, if we relate this issue to the Deontology, we can link this act to the third formulation of the categorical imperatives. Immanuel Kant, Groundwork of Metaphysic of Morals (Seven pillars institute.org, 2019) said: "Therefore, every rational being must so act as if he were through his maxim always a legislating member in the universal kingdom of ends." Kant would say that British Airways acting morally in the wrong way. Moral responsibilities or categorical imperatives are fundamental principles of Kant philosophy (Johnson, 2016). Accordingly, the concept of reason, gives decisive grounds for considering everyone as having equal value and deserving respect (Johnson, 2016). British Airways gave the promise to their staff to respect them and benefit them financially when the company would be in a better financial position. However, as evidence shows, British Airways did not comply with the moral responsibility of keeping their promise. Therefore, this is not morally permissible for British Airways to have acted in this way.

Conclusion

In concluding this essay, regarding the corporate responsibility to the reality of corporate practices within British Airways, it is obviously apparent that British Airways had a few attempts to implement Deontological theory and use it, unfortunately this did not happen.

British Airways adopted the Utilitarian business ethic and according to Carroll's Pyramid of social responsibility, the company managed to move as far as the second stage (Legal Responsibilities) even though British Airways also made a good attempt towards the third stage (Ethical Responsibilities). Unfortunately, again British Airways moved more towards the Utilitarian concept of company profit, and not the Deontological concept for the wellbeing and recognition of the people who are employed by company, hence creating low self-esteem and unhappiness amongst the employees.

It is of common knowledge that when a company looks after the well-being of their employees, including appraisals and recognition, the company in turn get the best from their workforce, creating a satisfactory environment for all employers and employees.

When a company does not address the needs of the employees as above, then the company does not receive the full potential from employees, this creates negativity and motivation from the workforce becomes extremely low creating a knock-on effect of dissatisfaction all round.

In regard to the above statement, it is imperative for British Airways to consider Kant's ethical theory in order to become an ethical corporation. If a business is seen as a cooperative enterprise that grows the values of all the parties involved in the corporation in order to improve lives, then the business is no longer limited to just monetary gain.

Business is a means for people to join a cooperative venture, to prosper and make the world a better place, by providing the goods and facilities that the nation requires.

Appendix 1

Corporate Social Responsibility Report

Corporate Social Responsibility requires an organisation to evaluate its employees, customers, suppliers, communities and the environment, as well as assessed its obligations to them. Good CSR approaches are aimed at creating a procedure that benefits society in different ways, taking into account the individual circumstances of the organization (Bliss, 2015).

An effective strategy focuses on initiatives aimed at improving relationships with local peoples or communities, personnel's, customers, and intent to create systems to promote and monitor morally and environmentally responsible activities. The goal is often sustainability, accumulation business actions with socially accountable arrangements that support local people, staff and the environment (Bliss, 2015).

Appendix 2

Carroll's pyramid of CSR

Carroll defind the four different types of responsibilities which is mutually exclusive and represent them in the form of pyramid in 1991(Griseri, Seppala, 2010). This pyramid useful to distinguish and clarify the objects and contadicitions behind the corporate behaviour (Griseri, Seppala, 2010).

Economic responsibility was the basis of the pyramid, because it is a essential condition in business. Just as the foundation of a construction must be strong to support the whole structure. Thus, supportable profitability must be strong to support other shared prospects of enterprises. The fact is that the Corporate Social Responsibility organisation is built on the basis of an economically strong corporate (Griseri, Seppala, 2010).

Legal resposibilities described as a second stage. At the same time, the business must comply with the law and comply with regulatory acts, since laws and principles are the systematisation of the straightforward rules by the company on which the corporate should operate in a civil society (Carroll, 2016).

In addition to legal responsibilities business expected to comply with the ethical responsibilities as well. Society expects business to comply and behave in an ethical manner (Carroll, 2016).

The public Philanthropy today is a part of the everyday expectations. Corporate philanthropy embraces business's voluntary or optional activities therefore the amount and nature of these actions are charitable or unrestricted (Carroll, 2016). In other words, economic and legal responsibilities that state in CSR Pyramid could be marked as "required" of business by society; the ethical could be "expected" and the philanthropic responsibility is "desired or expected "by society (Carroll, 2016).

Appendix 3

Utilitarian Theory

Philosophers and economist Jeremy Bentham and John Stuart Mill presented one of the earliest versions of Utilitarian theory in late 18st century (Encyclopaedia Britannica, 2019).

Utilitarianism is philosophical theory about how people should evaluate a wide range of things or the things we face every day, such as: laws, politics, and moral codes (Encyclopaedia Britannica, 2019). Supporters of Utilitarian Theory believe to make life better that the purpose of the morality (Encyclopaedia Britannica, 2019). It can only be achieved by increasing the number of good things such as pleasure and happiness in the world and dropping down the number of bad things such as pain and unhappiness. Therefore, different orders, moral codes or systems that consist of commands or restrictions based on customs, traditions given by leaders or supernatural beings are rejected by utilitarians (Encyclopaedia Britannica, 2019). Utilitarians strongly believe that morality must be justified and make positive contribution to the society (Encyclopaedia Britannica, 2019).

Whatever is assessed, people must choose the result that will give the best overall outcome. Utilitarianism is based on the results of the actions and thus it is a form of Consequentialism. Therefore, from the Utilitarian prospect people must choose the option that maximizes usefulness that is the action that produces the greatest amount of good (Encyclopaedia Britannica, 2019).

The theory of Utilitarianism is considered to be quite simple and easy to understand because it is involving only one appraisal principle: do what leads to better consequences (Encyclopaedia Britannica, 2019). However, in reality, Utilitarianism is complex theory, because people cannot distinguish this single principle if they do not know next: 1) what is good and what is bad;

2) whose benefit they should strive to maximize; 3) whether activities, rules, policies are right or wrong because of their real consequences or their expected consequences (Encyclopaedia Britannica, 2019).

Bentham suggested that people must calculate the values of each action that they perform, and thus justify on the specific basis whether the act is ethically correct or incorrect (Internet Encyclopaedia of Philosophy). Bentham named this aspect as Act-Utilitarianism. Furthermore, he suggested that people must take into account and calculate the pleasure and pain that lead to their actions. For Bentham these two factors are only consequences that matter in defining whether actions are moral (Internet Encyclopaedia of Philosophy).

Appendix 4

Deontological Theory

The theory of deontology is based on the fact that, regardless of the result, we have a moral obligation to act in accordance with a set of principles and rules (Griseri, Seppala, 2010).

By far the best-known example of a deontological theory of ethics is German Philosopher Immanuel Kant. In terms of ethics, Immanuel Kant's most significant work is Basics in the Metaphysics of Morality (1785). He believed that people have an obligation to do good regardless of the situation, contrasting to Utilitarian's supporters who believes that people must choose the result that will give the best overall outcome (Griseri, Seppala, 2010).

Kant's best-known expression of his ethics approach lies in what he called the categorical imperative (Griseri, Seppala, 2010).

Kant's moral theory is grounded on his view of the human being as having the exclusive capacity for sanity (Griseri, Seppala, 2010).

According to Kant, the only thing in the world that can be considered good without qualifications is the moral of value and actions, which is determined by human will.

Only acting in accordance with moral duty/law goodwill will be realized.

Kant designated three formulation of categorical imperative, they ate based on moral law which are categorical in nature (Seven pillars institute.org, 2019).

The First Formulation of the Imperative

"Act only according to that maxim whereby you can at the same time will that it should become a universal law without contradiction." – Immanuel Kant, (Seven pillars institute.org, 2019) Groundwork of Metaphysic of Morals.

The Second Formulation of the Imperative

"Act in such a way that you treat humanity, whether in your own person or in the person of any other, never merely as a means to an end but always at the same time as an end." – Immanuel Kant, (Seven pillars institute.org, 2019) Groundwork of Metaphysic of Morals.

The Third Formulation of the Imperative

"Therefore, every rational being must so act as if he were through his maxim always a legislating member in the universal kingdom of ends." – Immanuel Kant, (Seven pillars institute.org, 2019) Groundwork of Metaphysic of Morals.

Alternative Formulation of Categorical Imperative

Kant stated the categorical imperative differently and the most significant of these is formulation of humanity (Seven pillars institute.org, 2019).

Kant (Seven pillars institute.org, 2019) said: "Act in such a way that you treat humanity, whether in your own person or in the person of another, always at the same time as an end and never simply as a means."

He evaluates his personal standpoint on the same moral theory. Consequently, to fail to follow this humanity approach, would be to treat others in a way that denies the moral law (Seven pillars institute.org, 2019).

References

1. BRITISH AIRWAYS FACTSHEET (2019) Mediacentre​ ​. Available at: https://mediacentre.britishairways.com/factsheets/details/86/Factsheets-3/33# targetText=It%20has%20its%20home%20base,16%20UK%20airports%20in %20total (Accessed 23 Oct. 2019).​

2. British Airways (2019). Corporate Responsibility Report 2010/2011​ ​. Available at: https://www.britishairways.com/cms/global/pdfs/environment/ba_corporate_re sponsibility_report_2010-2011.pdf (Accessed 2 Dec. 2019).

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13.Lange, K., Geppert, M., Saka-Helmhout, A. and Becker-Ritterspach, F. E.T (2015) 'Changing Business Models and Employee Representation in the Airline Industry: A Comparison of British Airways and Deutsche Lufthansa.' British Journal of Management​, 26(3), pp.388-407. doi: 10.1111/1467-8551.12096

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17.Topham, G. (2019) 'Why are British Airways pilots going on strike for the first time.' The Guardian​ ​. 7 September, Available at: https://www.theguardian.com/business/2019/sep/06/ba-strike-4300-staff-to-ta ke-part-in-airlines-first-ever-pilot-walkout (Accessed 5 Dec. 2019).

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¹ 'Putting People First' training programme launched by Colin Marshall, the company's new chief executive, in December 1983

² Bob Ayling From 1996 to 2000, was the CEO of British Airways.