Case Study

Strike at British Airways: Unavoidable or set-up-to-fail?

17 pages
December 2008
Reference: IMD-3-1736

This case covers Bob Ayling’s efforts to cut costs at British Airways even as the airline was reporting record profits. Having secured equivalent savings elsewhere in the airline, British Airways management encountered difficulties getting its cabin crew to cut its costs by £42 million per year. The case considers the steadily deteriorating relationship between BA’s top management and its cabin crew union – and highlights the self-fulfilling and self-reinforcing nature of the dysfunctional dynamic that develops between the three key parties. We concentrate on the cognitive, motivational and behavioral mechanisms that drive the parties toward an avoidable stalemate. The airline ultimately got its way, but at the expense of a three-day strike estimated to have cost £125 million. In the process, it also inflicted huge damage on employee morale and corporate reputation. The strike proved to be a turning point in BA’s fortunes, sending the once soaring share price into a long decline – as measured against its direct competitors. Although Ayling’s radical cost-cutting strategy was in many ways farsighted, it was implemented in a way that alienated staff and angered the unions – moves that ultimately sent the company crashing out of the FTSE100.

Learning Objective

We have written this case in response to demand from instructors to provide material for teaching the set-up-to-fail syndrome in different courses and in different contexts than the typical dyadic boss-subordinate relationship. This case shows how the process plays out in an intra-organizational situation between a company and its union – though a similar dynamic could easily develop with other stakeholders such as suppliers, alliance partners, shareholders, analysts or NGOs. It is a case about individual “opponents” who demonize each other – thus triggering a gigantic self-fulfilling and self-reinforcing process. The key lesson is that leaders and their teams have to be careful about labeling processes toward other parties. When they start caricaturing another stakeholder, they risk triggering vicious spirals.

Keywords
Strike, Industrial Relations, Cost Cutting, Conflict, Attitude to Change, Label, Framing, Attribution, Justice, Reactance, Self-management, Set-up-to-fail Syndrome
Settings
Europe, United Kingdom
British Airways, Travel and Leisure, Airlines and Aviation
1997
Type
Published Sources
Copyright
© 2008
Available Languages
English
Related material
Teaching note
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