British Airways (BA) is among the largest airlines in the United Kingdom. It is based in Waterside, and it has its main headquarters at the London Heathrow Airport. It has been serving the United States for more than a decade, continually providing excellent services to its customers. There are a number of stakeholder groups who are interested in the well-being of the company. The stakeholders are the fundamental players for the success of any company. Deterring ethical relationships could cause a substantial loss in the success of any business. British Airways participated in unethical behavior that caused a considerable loss for the company.
There are several stakeholders who are concerned with the operations at British Airways. Two of these groups include: the workers at B.A and the shareholders. The workers are interested in the general performance of the company because they earn their living from the profits gained by the company. This is reason enough for them to work hard to achieve the company’s goals. The shareholders put their best foot forward to ensure the company is growing so that they can enjoy the dividends. They are the owners of the company and will do their best to make it achieve greater heights. High levels of ethical standards need to be observed by the company to ensure their stakeholders are contented and are able to give their best.
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At one point, the company suffered the consequences of disobeying their code of conduct and ethics. It ignored the talks that were demanded by the employees about the pay rise. They ignored the rights of one of their stakeholders and thus resulting to massive losses due to the 3 day worker’s strike. They had not anticipated for the strike and, therefore, experienced losses. They, however, corrected the matter at the right time before they were faced with any difficulties. This act made the company lose the confidence of most people who had trusted in the efficiency of their services (Gary, 2010).
The employees at B.A are to be treated with uttermost respect, and they are not to be ignored. They are the company’s motivators who see to it that the company has achieved the goals they had planned to get. Their rights are not to be looked down upon, the failure of the company to respect the talks between the workers and the executives saw the company face a tremendous loss up to about $25 million which could not be easily recovered. Employees play a tremendously significant role in the company. They broke their company’s ethics of not respecting the rights of the employees, thus facing the consequences of their actions.
The company had to keep communications open with the employees and settle for a pay rise that was acceptable for both parties. The company went against its code of ethics and thus resulted in loss of trust. Customers who trusted their efficiency lost all the trust. The C.E.O, Willie Walsh had to issue a direct apology to the passengers on the company’s official site and YouTube. These are some of the corrective measures B.A had to do to gain their lost glory (Gary, 2010). This is a serious management problem that will take time to be resolved. The lost customers will have to take time before they regain their trust in the airline.
The company should also respect the agreement which they make with the employees. Before one is given a job, one signs an agreement. This agreement is mutual, and each party plays a role in it. One is expected to comply with the terms and conditions of the agreement as stipulated in the paper. One agrees to be submissive to the company and comply with its rules and regulations, including the codes of conduct. B.A executives should maintain their integrity and obey the agreement. In as much as they try to reinforce the agreement to the workers, they should also play a role in following them since it is a mutual benefit.
The failure of B.A can be related to Peter Drucker’s theory “the theory of the business”. This theory suggests that most businesses fail because they assume the fundamental decisions which affect the success of business. Simple changes in the society can affect the business structure. Ignoring these changes may lead to failure in business because the changes may affect the lives of people and that of the business. The onset of the recession affected the lives of the workers at the company it was only human to activate for their rights; they decided to strike after their efforts were ignored. This is an example of how changes in the society can affect the perspective of people and their view.
B.A has successfully managed to keep their employees after the strike. The increase in pay kept them motivated and therefore, they were able to slowly regain their trust and keep their customers. This corrective measures were handy however, the executives could have negotiated with the workers union and avoid the damages that were done to the company. This could have saved the company the trauma of trying to regain its lost glory and losses.
The company has an ethical obligation to the shareholders they are the ones who own company and have invested in it. They should therefore, be well versed with any information regarding the company. Transparency about any information should be relayed in opportune time. There were allegations that the firm conspired to fix prices. This information must have surprised many investors. They were not aware of the issues that had emerged in the company. The issues were however, resolved and the problem solved (Ethics News line, 2010).
The company should involve the shareholders in all the activities in which the company is participating in. This makes them more involved with the activities of the organization, and they are able to make their contributions in case of any expansion. The company is accountable to the shareholders, and it should offer an explanation for any form of mismanagement in the company. The company owes the shareholders an explanation for the cancellation of the 3 flight to Dubai from London on the 27th of December 2010 (Ethics News line, 2010). This is an example of an ethic the company has to obey.
The shareholders should be involved in crucial decisions that are to be made in the company. Their opinion counts. Failure to do this may land the company in a series of problems since the shareholders are the owners of the company. The company needs to maintain its integrity and see to it that they are trusted and that they might have confidence in the work that they do. This is done for the safety of both the company and that of the shareholders.
British Airways made a total loss of about $531 million. This loss could have been prevented if they followed the right code of conduct and followed the company’s ethics. The many complaints that were heard from the customers could have been unheard of if the right procedures were implemented. They had to make several changes in the management so as to revive the company and find a way to compensate for the losses. This was particularly necessary in order to revive the trust of the people. However, they should not have assumed how change in the society affects the business set up.
Apart from the workers and the shareholders, British Airways has two more stakeholders who are relatively valuable to them. They include their customers and suppliers. The company has to ensure that all the stakeholders are content with all the activities that are taking place in the company. They have an obligation to ensure that their customers are contented with the services that are offered and that their needs are satisfied. The suppliers are interested in the company’s profits because they want to continue providing goods and services to them, and thus they have to maintain a healthy relationship.
The company had to improve the relations it had with the stake holders. According to the annual reports by the airline, the company has created an interactive forum with the aim of improving the communication and interaction with the employees. This is aimed at reducing the occurrence of any strikes in the near future. The employees’ salary was increased to keep them motivated. This is an application of the motivation theory which suggests that human beings work at their best when they are motivated (Corporate Responsibility, 2005).
The company has also improved its transparency and is more open to the shareholders. Investor days have been introduced to the company where investors meet regularly to discuss any upcoming issues with the analysts. This is done with the aim of improving on transparency and building investor trust. The company has also incorporated the aspect of having an active dialogue with their stakeholders in general. It also seeks for consultation from the government and other dominant sectors on how to effectively run the company (Corporate Responsibility, 2005).
The customers of B.A were also compensated for damages that were made. The company’s C.E.O personally apologized to customers and tried to explain the reason behind the cancellation of the flights. This was a monumental step for the company because it had to regain the trust of customers. Without the customers, there is no business (Lavela, 2011).
The suppliers of B.A were also affected by the issues that took place in the organization. They had less profit because the company was not purchasing their goods and services. This is dangerous to both companies. B.A ensured that it regained its stability as soon as possible so that it could continue purchasing goods and services from the company. This relationship is crucial in the business world. It assures one of constant and steady supply. Losing a trustable supplier is dangerous (Lavela, 2011).
In conclusion, it is clear that the stakeholders play a vital role in the success of any business. They determine the heights of the business and therefore, they have to be regarded with high esteem. Good ethical, practices should be employed when one is dealing with stakeholders. The stakeholders groups include: the customers, the employees, the supplier and the shareholders. Each of these groups has a role to play to aid in the success of any organization. The roles, which they play, are unique and interrelated in a special way.
British Airways had failed to adhere to some of the ethical practices that it is obliged to, and this failure led to tremendous losses for business, and all the different entities of the stakeholders suffered. This illustrates the importance of enhancing beneficial relationships with these entities. The company, however, corrected their mistakes and is now coping up with the new transformations that are being made in the company. It is necessary to maintain healthy relationships with stakeholders for the general success of the company.