Gate Gourmet Management - Term Paper Example

Running head: GATE GOURMET Gate Gourmet: Managing Intercultural Workforce In August-September 2005 British Airlines employees walked-out to join the strike of the Gate Gourmet workers. The actions of Gate Gourmet management prior to and in the conflict situation are assessed with regard to organizational behaviour theories of communication, decision-making, organizational culture and intra-organisational politics. Recommendations concerning improvements in transparency and quality of communication, participatory approach and creativity stimulation in decision-making process and elimination of disruptive politics are formulated. Gate Gourmet: Managing Intercultural Workforce Introduction Gate Gourmet Company is neither a hi-tech giant, nor a diversified multinational corporation out of the Fortune 500 list. It is an in-flight meals provider for the airline industry companies that operates in 29 countries and employs 22,000 people, making 534,000 meals per day (Profile: Gate Gourmet, 2005, n/p). However, in August- September 2005 Gate Gourmet managed to get into the headings of almost every major business newspaper or magazine. The company has become a widely-cited example of airline industry outsourcing after some of the British Airlines employees joined the Gate Gourmet's workers for strike. In this paper I will assess the actions of Gate Gourmet management prior to and during the time of the strike and negotiations with regard to aspects of communication, decision-making, organizational culture and inter-organisational politics. Communication Aspects Effective communication is of high importance to every organisation in every industry. Nevertheless, for the going through the hard times of restructuring and strategy rethinking airline industry companies it is a factor of extreme importance. Sometimes it can bring the parties to unity and shared sacrifice as in unprecedented case of American Airlines, in which the unionized employees voted in support of a very painful wage concession plan and agreed "to work up to 20 percent more days for up to 40 percent less pay in an effort to ward off bankruptcy" (Wagner & Hollenbeck, 2005, p. 215), sometimes it can hinder or stop the changes. The issue of effective communication should have been assigned a high priority by Gate Gourmet prior to and during the strike time. According to the theory of equity which provides a simple framework for understanding how people decide whether they are being treated fairly in their relationships the distributive, procedural, and interactive dimensions of justice are distinguished between Perceptions of people that constitute base for the judgments about equity differ significantly, especially in the multicultural workforce environment like one at Gate Gourmet. If Gate Gourmet's management had properly addressed the notions of the distributive, procedural, and interactive justice, it would have lessen or prevent the escalation conflict that developed. Workers of Gate Gourmet, and British Airways employees that later joined them, went on strike not only because they perceived the job cuts to be unjust outcomes (distributive justice was not in place), but also because the procedures used and communication were not regarded as adequate for the situation. The latter aspect is addressed in the organizational behaviour theory as procedural and interactional justice. It focuses not on the final outcomes, but rather on the means deployed to get them. If the methods and procedures used to arrive at and implement decisions that affect the employee negatively are seen as fair, the reaction is likely to be much more positive than otherwise (Wagner & Hollenbeck, 2005, p. 235). To minimise the accumulating tension and anger among the employees and referent groups the Gate Gourmet management should have focused on procedures used. Emphasis on their consistency across time and other people, bias suppression, accuracy, correctability, ethicality and representativeness would be extremely important. Moreover, the perceptions of the procedural justice by all the parties involved would have increased by implementing the effective and transparent decision-making process and allowing the workers to participate in it. However, it should be noted that the lack of attention to the procedural and interactive justice perceptions was not the biggest problem of Gate Gourmet management. The absence of transparency and badly coordinated communication can be named the gravest problems in the situation faced. The negotiations were held separately with British Airways and the T&G union representatives and the circulation of information between the participants was quite poor. The mass media often cited contradictory information and facts received from different insider sources: It emerged over the weekend that Gate Gourmet had given BA a deadline of 5.00 pm today to agree a new supply contract on improved terms or see the UK business put into administration. However, sources indicated Gate Gourmet's discussions with BA have made sufficient progress for the deadline to be extended even if talks with the unions remained stalled. "An extension would be the better option than throwing it into administration," sources said. (Davey, 2005, n/p) The fact that the consequences of the company restructuring were not foreseen by the managers of Gate Gourmet is also explained by their underestimation of the interdependence of the industry employees. The relationships of Gate Gourmet's workers, British Airways employees, trade unions' administration and both companies' managers are of a complex nature. The workers and managers of the companies are involved in the relations that can be characterized as reciprocal or comprehensive interdependence, contrary to simpler pooled or sequential relationships structures. Moreover, the working links are not the only important in the situation described; many of the participants are involved into the relations of family or personal nature. As the spokesman of the Transport and General Workers' union Mr. Woodley pointed out "there were many links between Gate Gourmet and BA workers at Heathrow as many of the caterer's own staff were previously employed when BA ran its own catering operation" or share the same neighbourhood, or even household (Don't Victimise Strikers, 2005, n/p). In such an extremely interdependent environment ruination of established relations can lead to critical and unexpected consequences, as happened after the announcement of the job cuts and strike at Gate Gourmet: The loss of individuals . . . becomes more important as the intensity of the interdependence increases. One person's departure requires that few relationships be rebuilt under conditions of pooled or sequential interdependence. In situations characterized by reciprocal or comprehensive interdependence, however, many more relationships must be redeveloped if a new individual is introduced into the system. In some cases of extreme interdependence, the loss of even a single person can make everyone else perform below par. (Wagner & Hollenbeck, 2005, p. 219) Decision making Based on the information about Gate Gourmet's operational activities, strategy development and overall industry situation we can conclude that the organizational design of the company earlier addressed the external and internal environmental quite sufficiently. The basic coordination mechanisms, including that of mutual adjustment, direct supervision, and standardisation, were in place. The structure of the company and the decision-making process corresponded well to the needs of the company and its partners. However, at the start of millennium the situation changed. Although the company effectively functioned before 2001, the increasing pressure from the major airline industry players, who made up the biggest portion of the Gate Gourmet's clientele, together with other changes in the factors of the external environment made the company's organizational design obsolete. Following the in-flight catering market shrinkage in size by about 30% in the past four years, declines in revenues, and zero profits the Gate Gourmet's top management made a strategic decision of reorganisation and cost-cutting program implementation (Profile: Gate Gourmet, 2005, n/p). It should have been realized, though, that the old model of the decision-making which worked effectively in more stable business environment and for the purpose of the effective day-to-day management was not successful any more. The decision-making process in this case should have been built on the base of open negotiations and employees' more active participation. The creativity in decision-making in a situation prior to strike should have also been encouraged. The Gate Gourmet should not necessary follow the steps and fate of other airline catering companies. Nevertheless, this way of development is justified by pointing out that "LSG Sky Chefs has cut 12,000 jobs over the past four years, reducing its workforce from 41,000 to fewer than 30,000. The firm, owned by German carrier, Lufthansa, said it needed to revamp its operations at all levels in the fact of mounting losses. It hopes to break even, excluding restructuring cost, in 2005" (Profile: Gate Gourmet, 2005, n/p). Being the leader of the in-flight catering industry, Gate Gourmet may as well set an example of fostering participatory approach and creativity in decision-making among its employees. The multiculturalism of the company's workforce can stimulate it greatly. As Wagner & Hollenbeck (2005) emphasize: Because much creativity comes out of collaborative efforts carried out by different individuals, organizations should promote internal diversity and work environments that enhance the opportunity to exchange ideas. If all members of a group share the same interests, experiences, strengths and weaknesses, they will be less likely to generate new ideas than if they have divergent backgrounds and capabilities. (p.96) Organizational culture Gate Gourmet through the years of its existence has developed its own organizational culture which constitutes: pattern of basic assumptions - invented, discovered, or developed [by a firm's members] to cope with problems of external adaptation and internal integration - that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems. (Wagner & Hollenbeck, 2005, p. 436) The workers of the British Airlines have their own organisational culture as well. The support of the strike shown by BA employees can be explained by the similarities in organizational cultures of both companies, or by the fact that many BA workers were previously working in the catering business or Gate Gourmet and were part of its culture themselves. Organisational culture not only gives the members of a group or a company a sense of organisational identity; it also should facilitate collective commitment: "the common purpose that grows out of a shared culture tends to elicit feelings of attachment among all those who accept the culture as their own" (Wagner & Hollenbeck, 2005, p. 436) In Gate Gourmet case the workers had "shared pattern of basic assumptions", their common organizational culture that promoted organizational stability. It unified them in protest efforts. However, in this situation Gate Gourmet's organizational culture did not stimulate collective commitment of the employees to the goals of the whole organisation, contrasting to the case of the American Airlines workers' actions referred to in the very beginning of the paper. Creation of a strong organisational culture with its symbols, language and heroes, that will promote sustainability and forward-orientation of the company as a whole would be very desirable, but the process of development of organisational culture is lengthy and can be hardly influenced by a direct external influence. Therefore, it is very difficult to formulate particular recommendations concerning this aspect of organizational behaviour. Power and politics Power, politics and conflict in the organisations can have different effects - all of them can increase productivity and efficiency - or reduce them substantially. Political processes can even determine the existence and strategic direction of entire organizations: Restructuring, often stimulated as much by internal power struggles as by external market conditions, is prompting executives to search out new strategic directions for their firms. In the process, political considerations are altering the careers of thousands of employees - both managers and nonmanagers. At the same time that these events are creating opportunities for some, they are costing many others their jobs. (Wagner & Hollenbeck, 2005, p. 344) The conflict of the interests in Gate Gourmet in combination with intra-organisational politics, formal and informal power of different groups involved resulted in significant losses for the organisation. Not only did Gate Gourmet lose working time, revenues and profits and caused negative PR, the strike also resulted in the cancellation of 700 flights, causing disruption to the journeys of 100,000 travellers and costing BA more than 30m (Gate Gourmet Probes, 2005, n/p). The reduction in intra-organisational disruptive politics would have been a good step towards enhancement of open communication between the unions, companies' management, workers and mass-media. Conclusion The conflict situation that resulted in strike and consequent losses has demonstrated the inadequacy of certain aspects of Gate Gourmet's organisational structure to the current realities. Improvements in transparency and quality of communication, encouragement of the participatory approach and creativity stimulation in decision-making process; elimination of disruptive politics would have been desirable prior and at the time of the strike. References BBC News. (2005, August 23). Gate Gourmet probes union claims. Retrieved during the period of 16th August to 5th September 2005 from www.bbc.com. BBC News. (2005, August 23). Profile: Gate Gourmet. Retrieved during the period of 16th August to 5th September 2005 from www.bbc.com. BBC News. (2005, August 24). Don't Victimise Strikers, BA Told.Retrieved during the period of 16th August to 5th September 2005 from www.bbc.com. BBC News. (2005, August 24). Gate Gourmet may reinstate 400. Retrieved during the period of 16th August to 5th September 2005 from www.bbc.com. Davey, J. (2005, August 23). BA broadly agrees new deal with Gate Gourmet but dispute remains sticking point. Retrieved during the period of 16th August to 5th September 2005 from www.forbes.com. Wagner, J., & Hollenbeck, J. (2005). Organizational Behavior: Securing Competitive Advantage. Taunton: South-Western Publishing. Read More