British Airways, its business strategy, HR strategy and practices, analyses the extent to which the company’s current HR policies and practices support its business strategy

 British Airways, its business strategy, HR strategy and practices, analyses the extent to which the company’s current HR policies and practices support its business strategy

Human resources are a critical asset in any given organization that contributes to the achievement of greater productivity, success, and competitive advantage of a business. Most importantly, human resources play a vital role in enabling and helping a company achieve its business strategy through strategic human resource management, which involves aligning of the right human resource personnel in the correct job positions to achieve the strategic goals of the firm as outlined (Wilkinson et al., 2019). Owing to their vital significance, managing human resources becomes important for any given enterprise. Here, managing human resources is perceived as the process of planning, developing, and utilizing labor forces in the workplace so as to achieve better outcome/output towards the achievement of set performance goals (Redman and Wilkinson, 2006). In this respect, the human resource department is tasked with the responsibility of designing and executing the HR strategy, which comprises a range of HR practices whose primary aim is to achieve a balance between efficiency, equity, and voice. This means that the management of human resources and the execution of HR practices is directly linked to the existing business strategy of firms (Boxall and Purcell, 2015). This is evidenced in the airline industry, where key industry players align their HR practices with their existing business strategies.

This essay focuses on British Airways, its business strategy, HR strategy and practices, analyses the extent to which the company’s current HR policies and practices support its business strategy and makes recommendations on the changes the company can make on its current HR strategy.

Business strategy of British Airways (BA)

British Airways is the UK’s largest internationally scheduled airline. The company flies more than 300 destinations carrying about 300 million passengers. In addition, the company also engages in the operations of international and domestic carriage of freight and mail. Over the years, BA has maintained consistency in its performance. Notably, its revenue has risen from GBP 8 billion in 2008/2009 (British Airways, 2009) to GBP 13.3 billion in 2018 (British Airways plc, 2018). Such an exemplary performance is attributable to the business strategy the company has in place.

To understand the business strategy of BA, Porter’s generic strategies model is used. As explained by Eldring (2008), Porter’s generic strategy model comprises of three major strategic options that organisations can choose so as to achieve their performance goals and obtain a competitive edge over their close rivals. The three strategies include differentiation, leadership, and focus, which is divided into two areas – differentiation focus and cost focus (see figure 1).

 

Figure: Porters generic strategies

Source: by Eldring (2008)

Cost leadership strategy is where a company offers products and services at a cheaper cost than most of its rivals in the industry so as to remain ahead of the competition. Differentiation strategy is where a firm seeks to create and maintain a market advantage over its competitors through creating its products and/or services in a manner that they are uniquely different and non-imitable. At last, the focus strategy involves offering products or services that specifically serves the needs of a niche market or emphasise on cost-minimisation in a focused niche market (Porter, 2008).

The business strategy of British Airways is identified as service differentiation. With a geographic presence in over 400 destinations worldwide, British Airways has increased its service diversification and differentiation in both passengers and cargo business segments. The airline focuses on providing the highest standards of services whilst exclusively focusing on service personalization (Katie, 2013). Service differentiation is also achieved by providing a variety of choices. For example, in the World Traveller cabin, travelers have a wide variety of tastes to choose from, which includes Great British Breakfast, Taste of Britain, Gourmet Dining, Taste of the Far East, Vegetarian Kitchen, and Healthy Choice (Hayre, 2015).

British Airways’ service differentiation strategy also depends on market diversification. For instance, in 2022, the company is anticipated to fly a dozen new routes such as Palermo in Sicily, Mahon in Menorca, and Biarritz in France. Moreover, the company said it would be adding more services in flights plying Berlin in Germany, Stockholm in Sweden, Olbia in Gibraltar and Sardinia, and Split in Croatia (Hayre, 2015).

Critical analysis and evaluation of British Airways HR strategy

Human Resource Management models

Before critically analyzing the HR strategy of British Airways, the human resource management (HRM) models are first introduced. Existing literature presents several HRM models. However, three main models are widely discussed in the literature and widely applied in many contemporary organisations because they clearly explicate how a business strategy (hence competitive advantage) can be achieved through strategic human resource management.

The three models or approaches include the universalist approach, the contingency or fit approach, and the resource-based approach (Dessler, 2004). The universalistic approach, which is described by P as one size fits all, holds that there are predetermined and predefined HRM practices that can help any given organization to achieve a competitive advantage. This approach is derived from the best practices philosophy. However, critics of this approach argue that organisations differ on many dimensions, including scope, scale, time of existence, resources, and strategic focus and as such, not all HR practices are effective or work well in all enterprises (Analoui, 2002). The contingency or fit approach is based on both external and internal fit and, in particular, focuses on key HR practices such as recruitment and selection, reward and appraisal, learning, and development. The approach holds that the choice of these HR practices is hinged on the strategic focus and direction of a business, as well as the internal resource needs and the external factors impacting the enterprise. Although this approach has been favored by many both in literature and in practice, it has been criticized on the grounds of focusing only on the one-way relationship between HR policy and/or practices and organizational strategy (Torrington et a., 2008). Lastly, the resource-based perspective is founded on the aspects of firm resources. The approach holds that to gain a competitive advantage, a firm’s resources must meet the VRIN criteria, which is to mean, the resources should be rare, inimitable, valuable, and non-substitutable. Thus, HR practices chosen by a firm should seek to make human resources meet the VRIN conditions for the attainment of the business strategy and attaining a competitive edge (Barney, 1991).

British Airways HR strategy

The HR strategy of British Airways is hinged on the resource-based approach. The company endeavors to achieve a leadership position and competitive advantage in the industry by developing its human resources. Here, the goal of BA is to ensure that its human resources are developed in such a way that they are owned exclusively by the company and supply unique skills, expertise, and competencies. In this respect, as a sustainability policy, the airline has endeavored to maintain its competitiveness and leadership position in the aviation industry by relying on its human resources (British Airways, 2009). Notably, the company introduced a High-Performance Leadership (HPL), a business model that helps create a linkage between the company’s business strategy and its HR policy and practices. This system puts several key HR practices at the core of BA’s HR strategy, with the ultimate objective being to influence the commitment and motivation of all employees (Hayre, 2015).

At the center of the HPL model are employee recruitment and selection. The company embraces diversity in its recruitment and selection process, and as such, it recruits people from all races to constitute its workforce. Also, diversity entails respect to different cultural ideas, giving disabled employees the necessary support and the opportunity to contribute to the decision-making process and company success (Bertillo and Salando, 2013). All these aspects are clearly outlined in the company’s diversity policy. At the same time, in order to improve and change the way the company identifies, sources, and recruits competent individuals from the labor market, the airline now procures its recruitment and selection function to a set of human resource professionals, who the company regards as its human resource management partners. Besides recruiting competent employees, these business partners are also tasked with the responsibility of handling BA’s employee issues. The airline regularly informs these business partners about its priorities when it comes to human resource needs and management as well as encouraging them to be innovative and seek ideas from other sources so as to boost the effectiveness of its human resource management (Price, 2007).

The HPL model also proposes competitive rewards and compensation for employees based on performance merit. The company’s reward packages comprise of salary, pension, employee discounts like flight discounts, sick pay, and insurance. The company has in place a remuneration system with profit-sharing as well as encourages share ownership. This has proven to be effective in enabling employees to feel more involved and associated with the company’s results and success. In addition to the salary and wages, the rewards offered by British Airways also include a tax-friendly pension plan that was implemented in 2008 (Banfield and Kay, 2012). The company also has an employees’ reward plan that allows employees to share in the company’s profit success. The overall goal of the company is to offer total reward packages to encourage exceptional customer service throughout its business operations. In an effort to support this goal, the company continuously innovates better tactics to communicate with its existing and potential employees about the flexibility in its reward practices and the possibility of employees to select rewards that suite them most (Needle, 2010).

Employee training and development is another key HR practice at British Airways. The training of its employees, especially those at the management level, is key to the company’s growth. In line with this, the company’s Leadership and Talent strategy is a critical aspect of its training and development practice (Hayre, 2015). The leadership training is widely rolled out in all company branches to ensure emphasis is put on the importance of leaders and managers to listen and act appropriately on the feedback from both employees and customers. The company invests hugely in employee training and development, especially for its cabin crew to boost their skills, expertise, and competence in customer service provision (British Airways, 2010).

To augment the effectiveness of its HR practices, British Airways endeavors to maintain an open and direct link between its management and employees via reliable and efficient communication tools like emails, brochures, memos, face-to-face interactions and other publications where employees are regularly informed and updated on developments in HR practices and policies as well as the company’s priority needs (Hayre, 2015).

The extent to which the current HR strategy and practices in British Airways support its business strategy

As evidenced by the previous section, the HR practices and policies in British Airways have been influential in supporting its business strategy. Notably, the company’s HR strategy is considered a competent one, which encompasses rationalized training and development, recruitment, and the selection and reward processes. The strength of the recruitment and selection process lies in its ability to ensure only competent and highly skilled individuals are selected to join the company’s workforce to contribute to the distinctive British Airways high-quality customer service that is unmatched in the UK and global airline industry. Besides, excellent training and development programs create a better competitive advantage of the employees in terms of skill diversity, skill variety, skill relevance, knowledge base and competence, factors that support the achievement and provision of high quality, and unequalled services to customers. Further, the competitive reward and benefits packages help create an inspiring, motivating, and rewarding workplace where gifted individuals can work to the best of their ability to meet the needs and expectations of customers in terms of delivery of differentiated services.

However, despite the effectiveness of its HR strategy and practices, there are also some deficiencies, which hinder or reduce the positive implication of the HR strategy on the company’s business strategy. In executing its HR strategy, BA employs the line manager ownership type of model whereby the human resources are required to be close to the management as much as possible (Hayre, 2015). This implies that line managers are the ones responsible for overseeing the execution of HR practices and solving any issues affecting employees. Although this model enhances the contact between management and the staff, it has been a stumbling block in the company’s HR strategy. The system has led to a lot of complaints and dissatisfaction among employees, especially cabin crew staff, who sometimes feel they are being short-changed by the airline. The extended effects of this have been poor service provision by the dissatisfied employees. As a result, this has damaged the airlines’ service provision reputation, employees – customer relations, and the overall company image as a world-class airline that offers unequalled services (Needle, 2010).

Also, to address the business challenges facing it, British Airline implemented cost-cutting measures so as to curb the rising cost of doing business. Such measures included laying off several employees, a significant reduction of employees’ benefits, and recruitment of younger workforce who can work for longer hours. Many employees who were laid off considered it unfair dismissal, while increasing working hours was interpreted by employees as exploitation. For these reasons, the company, on many occasions, failed to live up to its standards, offering differentiated services because of the dissatisfied employees and new workforce whose work performance is below standard (Reilly and Williams, 2016).

Recommendations

Following the revelation of several human resource management challenges existing in British Airways, which hinders the effectiveness of its HR strategy to support the achievement of its business strategy, various suggestions are recommended on how the company can make changes to its current HR strategy.

Firstly, British airways should endeavor to use an employee relations approach whenever it has disputes with its employees. An employee relations approach, as explained by Torrington et al. (2008), can help the company exploit the opportunity available proactively by involving the employees in understanding the workplace challenges facing the company whilst at the same time endeavoring to understand the frustrations and tribulations of employees. By doing this, the company can establish a more sustainable work system and a human resource management system where both the company and employees understand and work together mutually to meet the needs of each party.

Secondly, in times of hard financial times like recession, British Airways should seek to create a more flexible work plan for its employees that would help reduce its cost expenditure on labor instead of cutting salary directly and removing cabin crew travel allowances. Appropriate measures can involve asking employees in a friendly and accommodating manner to take unpaid leave, work part-time, or work temporarily for no pay. Such measures would help create a fulfilling work environment whereby employees are satisfied in the company’s management approach in times of adversity and, as such, would influence the employees’ commitment to supporting the company’s strategic objective of delivering differentiated services to remain a world-class airline.

At last, the cost of training and development programs at British Airways has proven a great cost to the company (British Airways, 2009). Although excellent training brings a competitive edge for the company in terms of enhanced employee competence to deliver quality and differentiated services to customers, the training has a huge cost implication on the company. More so, it becomes more costly when trained, and longer-serving employees are laid off and replaced with younger individuals who can work longer hours because not only does this lead to loss of valuable resources, but it also affects the company’s competence and ability to provide differentiated services. Thus, the company needs to find ways of subsidizing the cost of employee training and development. This can include letting employees cover a certain percentage of their training costs to lessen the burden. Alternatively, British Airways can focus on the diversification of its pool of candidates during the recruitment and selection process to obtain cheaper labor but with equally strong performance and competency-based standards of qualifications that can help the company maintain consistency in delivering high quality and differentiated services.

Conclusion

This excerpt has analysed the business strategy of British Airways, the HR strategy and practices the company adopts, and how the HR strategy and practices enable the achievement of the company’s business strategy. From the analysis, it has been established that business strategy provides the general strategic direction to a firm, explicating the long-term performance objectives of a company and how it wants to stand out from the competition. Porter’s generic strategies provide three key strategy options for businesses. They include differentiation, low cost, and focus strategy. Of these, British Airways adopts the differentiation strategy as its business strategy, where it aims to provide differentiated services that are unequalled in the industry.

Further, the analysis has shown that human resource management is concerned with how employees’ needs, concerns, and welfare are managed and aligned with a company’s operations to meet its business strategy. Analysing the case of British Airways reveals that the company’s HR strategy comprises key HR practices, including training and development, recruitment and selection, and rewards and compensation. The approaches taken by the company in implementing these strategies have been instrumental in supporting the achievement of its business strategy. For instance, the recruitment and selection process helps ensure only competent and highly skilled individuals are selected to join the company’s workforce to contribute to the distinctive British Airways high-quality customer service that is unmatched in the UK and global airline industry. Excellent training and development programs enhance employees’ skill diversity, skill variety, skill relevance, knowledge base, and competence, and this supports the achievement and provision of high quality and unequalled services to customers. The competitive reward and benefits packages help create an inspiring, motivating, and rewarding work environment where talented individuals can work effectively to deliver differentiated services. However, the company experiences challenges in the execution of its HR strategy. This essay makes suggestions on the viable changes the company can make to its HR strategy and practices to ensure it supports the achievement of its business strategy more effectively.