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    Case Study

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

    By Jean-François Manzoni and Jean-Louis Barsoux
    17 pages
    December 2008
    Order this case study
    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
    Management, Strike, Industrial Relations, Cost Cutting, Conflict, Attitude to Change, Label, Framing, Attribution, Justice, Reactance, Self-management, Set-up-to-fail Syndrome, General Management, Strategy
    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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    Copyright ©2024
    Copyright owner IMD Copyright
    Organization Daikin Industries
    Industry Consumer Goods, Home Appliances
    Available Languages English
    Contact

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    Global Business Strategy
    By Kazuo Ichijo and Yunfei Feng
    Case reference: IMD-7-2618, © 2024
    Read more
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    By Joep de Caluwé
    in I by IMD
    Summary
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    Read more
    Contact

    Research Information & Knowledge Hub for additional information on IMD publications

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    By Jean-Claude Gallet
    in I by IMD
    Summary
    How quick thinking, strategic choices, and trust in the team kept one of the world’s most iconic landmarks from destruction – lessons every leader can apply in times of crisis.
    Read more
    Contact

    Research Information & Knowledge Hub for additional information on IMD publications

    Related topics
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