Style Change in the Management The of Gate Gourmet - Case Study Example

Style Change in the Management: The Case Study of Gate Gourmet 0 Introduction: The problems faced by Gate Gourmet, the official caterers for British Airways with respect to its industrial relations had a telling effect on the financial standing and reputation of the British Airways. This was mainly due to the changes the company Gate Gourmet (GG) adopted the old style of working practices. The various issues that had to be tackled by GG related to people and processes within the organisation, the structure of the organization itself , information and communication networks and the actual scheduling of work. The study of the problems and the ways in which the issues were tackled by GG had given rise to serious thoughts over new conceptualization of management techniques. The case study of the Gate Gourmet affair had become the subject matter of study for several management experts and consultant groups to have a re-look into the different traditional processes of the whole management philosophy and arrive at new angles and ideas about the management of the corporate bodies. The changes in the style of management adopted by the company had evolved a detailed study of the management in all its perspectives and this paper attempts to bring about the important aspects of the study of the art and science of management with its old and new approaches after the Gate Gourmet affair. 2.0 Management - An Overview: The act, manner or practice of managing comprises of the areas of policy and administration. The term management also encompasses the people that provide the direction and supervision necessary to control and monitor the implementation of the organizational objectives. Irrespective of the size of the organization the management becomes an important aspect of pursuing the business policies. According to Henri Fayol (1966) management consists of the functions of: Planning - the continuous process of developing the broader objectives of the business and also determining the ways in which they could be accomplished Organising - the function of establishing the internal divisions of the organization. It also deals with the coordination and control of work flows and flow of information within the organisation Leading - also known as staffing comprises of hiring, recruiting, training, evaluating and compensating the various levels of organization for the smooth flow of activities Coordinating - and directing the various people connected with the organization through motivation, communication, leadership and channelising the efforts of all people to accomplish the organizational objectives Controlling - "is a four-step process of establishing performance standards based on the firm's objectives, measuring and reporting actual performance, comparing the two, and taking corrective or preventive action as necessary." (Bernard L. Erven 1994) 2.1 Development of New Management Thinking: While the traditional school of management philosophy identified the different functions that contribute to an effective management, there are some new thoughts have been evoked in the field of managements studies. According to Davenport and Prusak (2003) implementing the right idea at the right time can be the difference between success and failure for even established companies. After spending considerable time in research in the area of idea generation, the authors opine that companies that could implement new management ideas are bound to be more efficient in their operations, remain effective in their outlook towards business issues and they also adopt innovative techniques in their performance in different functional areas. This way these companies are able to outperform their competitors. Strategy is often considered a major part of the total management activity. Strategic thinking and Strategic Management are the most important activities undertaken by any business organization. Evans et al (2003) describe the term strategy to consist the following elements as put forth by Mintzberg: Plan: implies some activity which is intentionally put into operation, the progress of which is monitored from the very beginning till the predetermined completion of it Ploy: encompassing the short term detailed action plans of the original activity planned. It consists of very limited objectives that are subjected to momentary changes even at short notices Pattern of Behaviour: Quite different from plans and ploys the pattern of behaviour strategy is an action undertaken just by a consistent behaviour of the people involved in the activity Position in respect to others: The position strategy defines the standing of the organization with respect to its competitors or its customers. The position strategy may also be considered as the objectives of the organization that it wishes to achieve in terms of its performance. Perspective: implies how the organization views its position vis--vis with that of the stakeholders of the organization as also the responsibilities it has to carry out to the different stakeholders. 2.2 Management Theory and Practice: The modern day management theory and practice has been filled with a number of new management tools and techniques that are supposed to make the functions of management a lot easier than as it was before. However with the increase in the management solutions, the problems and issues that are being faced by the managers seem to be getting more and more complicated with the result that the solutions themselves pose an additional problem to the managers. Egan. C (1995) finds the new strategic tools like business process engineering, benchmarking, Total Quality Management as constituting the age old techniques dealing with age old problems and such business solutions become part of the larger management problem. Managerial Roles and Relationships with Stakeholders: Based on the theory of strategic management approaches the role of the managers can be identified in relation to the commonality of the functions performed by them. (Henry Mintzberg (1973), has identified three groups of managerial roles namely: Interpersonal - ensuring that the necessary information for decision making is provided at all levels Informational - linking all the managerial works and Decisional - using the available information to make significant management decisions These three groups comprise of ten different roles; three (figurehead, leader and liaison) in interpersonal group, three (monitor, disseminator and spokesperson) in informational and four (entrepreneur, disturbance handler, resource allocator and negotiator) in the decisional group. At the interpersonal group functions like representing the organization legally and socially to the outside world, representing the work group to the higher management and vice-versa, and interaction with people inside and outside the organization are performed essentially to maintain the flow of work and collection of necessary information for decision making. In the Informational level, receiving and collecting information from all sources, transmitting the information to the required levels and dissemination of the organizations information to the environment are taking place. Initiation of necessary changes, dealing with the threats to the organization, deciding on the direction of the organizational efforts and negotiating on behalf of the organization are performed by the people occupying the decisional roles. The managerial relationships with stakeholders in the present day business management assume a larger amount of importance. Especially with the corporate social responsibilities placed on the organizations, the managerial relationship is based on moral commitments to the stakeholders instead of just using them for the organizational objective of profit maximization. According to Berman et al. (1999) the decisions that are being taken by the company affect the stakeholders outcomes. Hence it becomes imperative that the firm shapes its strategy around its moral obligations to its stakeholders and the managerial relationships to the stakeholders are thus based on a normative, moral commitment approach. It is also argued that firms which create and sustain stakeholder relationships based on mutual trust and cooperation are bound to have a definite competitive edge over the other firms that do not consider this managerial relationship to stakeholders aspect. 3.0 Management Styles and Type of Managers: The mangers have to perform different roles in an organization. The way in which the managers handle different situations within the organization depends on the individual style of management. A management style may be defined as the method and functionality of the leadership deployed by a person to handle the situations. Review of Basic Styles of Management: Traditionally the management styles have been identified in relation to the personal qualities exhibited by the managers in accomplishing their missions. Accordingly the traditional types management can be classified in the following ways: Autocratic Management - purely interested in the bottom-line regardless of how the subordinates achieve that Democratic Management - who considers participation by the subordinates as the key requirement for success Facilitative Management - considers the self-growth and self-responsibility of the subordinates are equally important as the productivity Objective-Seeking Management - who views the personal values as secondary and the contribution of the subordinates are often measurable through various measures Crisis Management - this kind of managers while allowing the employees free to operate, spends most of the their time in fire-fighting. Irrespective of the style being followed the common aim of all the managers is to achieve the organizational goals more effectively and efficiently. 3.1 Modern Styles of Management: With the development of the business world with the corresponding technological advancement, there had been considerable changes in the styles of management being adopted. The values on management philosophy have changed in tune with the times to incorporate: A feeling of self-responsibility and self reliability Enhanced sensitivity to the feelings of others Development of an attitude to take into account both the needs of the organization as well as the personal needs of the employees Following a humanistic style of management to effectively utilize the capabilities and resources of the individuals Identifying the responsibility as an inter-personal process which looks beyond the individual contribution to productivity or other work-related issues. Source: Texas Tech University Course Such changed values have given rise to the following new styles of Management: Principled or Diplomatic Style of Management and Humanistic Style of Management 3.2 Principled or Diplomatic Style of Management: This kind of business management has been necessitated out of the changed business environments which calls for quickness as well as effectiveness in communication and the accessibility through cross border barriers. Since the modern day businesses deal with a variety of technological, economic, environmental, socio-cultural and regulatory issues it becomes important that an effective management encompasses the expertise in all these areas. The exposure to all these business environments requires the manager to be forceful and tactful in achieving the organizational objectives. At the same time such a kind of management tend to completely ignore the cultural and individual differences in order to push the management's towards achievement. Since this kind of management possesses these extra-ordinary characteristics it can be termed as 'Value-based Management' The diplomatic style of management incorporates the essence of Western Culture in doing business. The characteristic features like roughness, speed, doing things expeditiously and at the same time profitably are inbuilt in this type of management. While concentrating on the accomplishment of the objectives, the values of high integrity, trust and honesty are also considered part of this style of management. 3.3 Characteristics of Principled Management: The foremost characteristics of the principled style of management are the application of the ethical values to the business. The pure ethical values of Honesty and fairness in transactions, respect for the feelings of others, kindness towards employees and others who come in contact with managers for business purposes and trying always to do good to others are often inculcated in the principled management. Although there is more consideration towards the ethical values, the style of management does not make any compromise on the basic understanding and approach towards business conflicts and issues. The managers who practice principled styles of management becomes tougher when it comes to the situation of resolving business problems or making tough decisions while negotiating complex business deals or in employee negotiations. Thus, this style of management is characterized by a perfect combination of mutually principled approach and effective business diplomacy. (Kobus Visser) 3.4 Humanistic Style of Management and Business Ethics: While humanistic style of management adopts most of the principles of the diplomatic management style, it adds more of humanistic approach in the discharge of the functions of management. More ethical standards in doing the business combined with the principled management characterize the humanistic style of management. Business Ethics implies the fair treatment to others in the same way one wants himself to be treated by others in similar situations. Ethics has a vital role to play in the business, the main objective of ethics in business is to classify the business decisions into moral or otherwise in a given business environment. This is being done on the basis of comparison of the decisions made within a business organization to sound moral principles that are prevalent in the society. Moreover ethics also critically analyses the process of value formation within an organization to ascertain whether such process adopts ethical standards. It is quite often possible that some actions which are otherwise legal may be deemed to be unethical in the view of certain people. Similarly some illegal actions may become ethical in the view of some other people. Kantian Framework describes the essential elements of business ethics. According to this framework, business ethics consists of Fidelity, Reparation, Gratitude, Justice, Beneficence, Self-improvement and Non malfeasance. 4.0 Globalisation: In common parlance globalization is defined as "the historical transformation constituted by the sum of particular forms and instances of . . . . [m]aking or being made global (i) by the active dissemination of practices, values, technology and other human products throughout the globe (ii) when global practices and so on exercise an increasing influence over people's lives (iii) when the globe serves as a focus for, or a premise in shaping, human activities" (M. Albrow,1996 ). Often there tends to be a mix up in the usage of the word 'globalisation'. While the broader sense of the term signifies the connectivity of the economic and cultural life beyond cross border barriers the term is being used intermittently to describe the political-economical ideology of creating a free market for goods and services. It is also true that gobalisation is not an altogether new phenomenon; it is existing for quite a long -time. But with the technological advancement the speed of communication has also followed the spirit. The effect of such speed in communication and the associated changes in the volume of networks created, markets developed and the resultant enhanced volume of trade all have ended up in projecting 'globalisation' as an ultra new and peculiar force in work. 4.1 Features of Globalisation: Globalisation thus is a force for the economic interconnection between the countries which are situated geographically apart. Giddens (1990: 64) has described globalization as 'the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa' Globalization is quite different from internationalization and universailsation. Being different from these, globalisation also contributes more to mankind than these concepts. Globalisation has stronger and wider dimensional capabilities in the areas of economics, politics, social and cultural spheres. 4.2 Reasons for Globalisation: The increased effect of globalization has been made felt throughout the world by the advances in communication and information technologies. There are numerous examples of different media like internet, communication satellites, global television broadcasts etc have made the small and every corner of the world easily accessible. Massive improvements in the transport sector have also contributed a major share in the gloablisation process. Faster moving vessels carry containerized products from one country to another not only at a low cost but also at surprisingly faster way. Moreover persona travels are more than facilitated by the fastest air planes. The major impetus for increased globalization activity is the reduced transaction costs. With the advent of internet and email, the reduced transactions costs of E commerce has provided the important fillip for the growth in globalisation process. The possibilities of off shore subcontracting and establishment of BPOs in economically viable and cheaper countries are some of the other reasons for the growth of globalization. 4.3 Globalisation and De-localisation: One of the effects of globalization is the due-localisation of economic and social interchanges. Activities and relationships have been uprooted from local origins and cultures. The man to man interaction among the people has decreased to such an extent that the people have to live on systems and happenings that exist quite away from them. The classic example is the call centre operations in Banking and retailing. In globalization it so happens that although, most of the employments are local, the impact of things happening miles away is dominant. "What happens in local neighbourhoods is increasingly influenced by the activities of people and systems operating many miles away." Smith, Mark & Smith Michele Enna doyle (2002) 4.4 Benefits of Globalisation: While globalization undertakes to describe the ongoing global trend for the flow of trade and commerce through different nations without restrictions, it has also helped the integration of various economies; strong and weak together in the process. The chief advantages of globalization are: Greater economic freedom for the countries Increased global competition for products and services Enhancement in the productivity Raised standard of living of the people in developing economies Increased access to foreign capital Availability of ultra modern technological skills for the developing nations Leads to higher labour and environmental standards 4.5 Anti- Globalisation: It is possible to find the anti-globalisation movement has taken its origin from ideologies like anarchism and nationalism. While the activists of these ideologies point out the demerits of globalisation, they try to combat the globalization of corporate economic activity in particular that may result in the free trade between nations. Absence of coherence, consistency and realism has deterred the advancement of the anti-globalisation movements. The main contention of these groups is that globalization acts merely for the benefits of transnational and multination organizations by providing them with all the required avenues of free movements across borders. According to the anti-gloabalisation activists these multinationals move from country to country after creating permanent damage to the natural capital and bio-diversity of a nation. 5.0 Process of Communicating: The purpose of managerial communication as distinct from normal conversation is to accomplish the objectives of motivating and persuading the subordinates to perform. Effective communication is imperative to make the people understand the organizational objectives clearly and enable them to achieve the objectives within the defined boundaries. Usually the communication within the organization takes the channels of: Upward - from employees to supervisors Lateral - to adjacent departments and managers and supervisors of the same level Downward - from supervisors to employees The communication process involves six basic elements namely; sender, message, channel, receiver, noise and feedback. By a careful understanding and evaluation of these elements of communication process the supervisors would be able to improve their communication skills and contribute more to the organizational success. 5.1 Methods of Effective Communication: In order that the communication remains effective the following inputs to the communication management are essential: Building a communication plan at the earliest opportunity Linking all messages to the organizational strategies and directions so that the employees understand the need underlying the change There should be honesty and openness in communicating. Openness does not in any way mean the availability of all information at all levels There should be effective two way communication so that all concerned understand the issues in the same perspective Greater emphasis need to be attached to proactive rather than reactive communications Sometimes it may be helpful to send the same communication through different channels Symbols created at the right places may communicate better by actions instead of words Proper identification of the needs and linking the messages to the needs will make the communication more purposeful 5.2 Communication Process: The communication process involves sender, message, and recipient. The messages may be visual, oral or written. In an organization where there are only smaller number of people exist the communication will be mostly informal and in large organizations there will always be formal communications. Thus, communication may be formal or informal otherwise known as grapevine consisting of rumours, gossips and other informal ways of communicating within the organization. 5.3 Types of Communication: The different types of communication are: Diagonal without an obvious line of authority Vertical where the communications flow from the top management down the line for implementation of decisions Verbal includes telephonic conversations, meetings, debates, interviews, presentations etc Non verbal like eye to eye contact, body language sign language etc Visual in which communication is displayed by any media Written where the communication takes the form of emails, letters, inter-office memos etc 5.4 Communication Management for Transformation processes: The above outlined communication system functions in the normal management environment. However with the change in the business scenario there occur many circumstances under which the communication needs to be managed in a totally different management perspective than the traditional way. Urusula Stroh and Miia Jaatinen (2001) describe the ways how the communication needs to be managed during changed situations. They opine that "if the organisation could utilise communication management more effectively and in a twoway, participative way, they would build more positive relationships with the publics involved and reorganise themselves out of disorder." Communications are a crucial change management tool. It helps to realign the organizational culture and enhances the commitment of the people concerned towards the change. 5.5 Openness in Communication: In a changing business environment it is quite unlikely that all the decisions of the management with respect to changes will be liked by all the constituents. Hence there should be effective communication of the reasons for the change and such communication should be able to make people understand why the company decided as it did. Not communicating the reasons sends a message of disrespect and arrogance which is undesirable. Usually people dislike changes and the dislike gets more aggravated when the reasons are not explained properly. Hence openness in communication is absolutely essential for the company to claim the loyalty, commitment, trust and enthusiasm from its employees and others. 5.6 Other aspects of Communication: According to the Web site from Performance Institute there are several other aspects of communication that need to be taken into account for improving the effectiveness of communication: Development of messages with underlying values like hopes, aspirations, emotions and assumptions made by the targeted audience on any particular issue Effective planning of the internal communications as communicating openly with the employees is as important as communicating with other stakeholders Targeting the right audience using cost effective medium of communication Ensuring the integration of the perspectives of both internal and external stakeholders in the organizational goals and strategies Developing a system of measuring the performance of internal and external strategic communication initiatives. 6.0 Culture of Organisation: Article on Organisational culture defines the culture of an organization as an amalgamation of the values and beliefs of the people in an organsiation. The organsiational goals are often based on the organizational culture which is exhibited by the top management's policy decisions in an organization. Although there are no formal rules about the organisational culture made known to the employees, by virtue of their movements within the organization they clearly understand what is expected from them. A positive organisational culture is helpful in enhancing the motivation of the staff. If the culture or climate of the organization is not conducive to the employees they get de-motivated and do not contribute much towards the accomplishment of the organizational goals. 6.1 Factors that contribute to the organizational culture: The following are some of the factors that contribute towards the culture of an organization: Structure of the organization and the reporting relationships The policies of the company with respect to its various internal and external stakeholders The company policies and practices towards its personnel The work flows and the resultant work loads The job designs The style of management including the supervisory styles 6.2 Factors that affect the organizational culture on a personal level: The following factors affect the individualistic perspectives of an organizational culture: The levels of trust that the organization and the individual place mutually on each other The nature and extent of the risk taking by the individual The work related stress on the individual The fears and anxieties surrounding the individual's future prospects with the organization The level of social interaction of the individual The existence of factions and politics within the organization that affect the individual's view point on the culture of the organization 7.0 Case Study - Industrial Dispute of Gate Gourmet Gate Gourmet (GG) initially was a division of the BA and later on for administrative convenience it was formed as a separate entity. But all employees of GG still felt that they are BA staff. The industrial dispute at British Airways (BA) was provoked by the company's attempt to introduce a new system for recording and managing the working time of the employees. In August 2005, the baggage handlers stopped their work to protest against the dismissal of 670 employees by Gate Gourmet, the official caterer of BA. Even though the employees of BA, who stopped their work in support of the GG employees, resumed their work after a small interruption, the stoppage has caused an estimated loss of 30 million and cancellation of more than 700 flights disrupting the journey of 100,000 passengers. "It raises some important questions concerning such matters as global competitive pressures in the airline industry, and their influence on the way in which employment relations is managed" (Williams and Adam-smith) The main issues connected with the management that were responsible for the industrial dispute in GG are: With the change in the management there were pressure on the staff to serve more number of flights than before without any revision of pay and allowances which was expected by the workers. There was no participative management in GG. Although frequent staff meetings were held, the top management didn't take the suggestions offered by the staff for implementation. There were too many levels of management which hindered the process of communication very much. With the result that the grievances at the lowers level were never brought to the attention of the top management which were suppressed for a long time and broke later into a long drawn industrial dispute. Sudden and unannounced actions like dismissal of the people without notice irked the employees and put them off the balance and the whole dispute was approached both by the management and the employees emotionally rather than rationally which only lead to further aggravation of the situation. The feeling of the employees of GG that they still belong to BA is another important reason for the dispute. Both the organizations had different businesses and different cultures which the employees failed to understand and appreciate. Perhaps they expected the same kind of treatments with respect to pay, allowances and working time as were given to the employees by BA from GG, the company that was already struggling financially. The management of GG failed to estimate the unified strength of the employees before initiating the dismissal action. Their thinking that they could get easily tackle the employees by force proved wrong. The management clearly lacked the ability to control the employees. The labour issues were handled without any vision which is expected of any efficient management. Another area where the management lacked was the scheduling of the work of the employees. With a proper analysis and understanding of the workload there was a possibility that the some of the works would have been subcontracted without putting additional burden on the employees of the company. In fact when some steps were taken in this direction, the purpose of such was not clearly explained to the employees which also triggered the anger of the employees on the suspicion that the management is planning to reduce the workforce. Thus the case of Gate Gourmet is a classic example of the slackness on the part of the management in various facets of management, like planning, scheduling, communication, organization culture, style of management and employee relationship. The industrial dispute at GG has exposed the management of GG as one that sets an example of 'How a management should not approach the issues concerned with the employees'. References: 1. Article on Organisational culture from the Information technology and management [On line] Available from: http://opax.swin.edu.au/388226/howto/it2/manage1.htm Accessed on 10th April 2007 2. Berman, Wicks, Kotha, Jones (1999) What is Intrinsic Stakeholder Commitment Definition Academy of Management Journal Vol. 42 Issue 5 3. Bernard L. Erven 1994 The Five Functions of Management Management Excel Ohio State University Extension [On line] Available from http://www2.ag.ohio-state.edu/mgtexcel/Function.html Accessed on 10th April 2007 4. Davenport T.H, Prusak L & Willson H.J. (2003) What is the big Idea Creating & Capitalising on the best management thinking, Boston: Harvard Business School Press 5. Egan C, (1995) Creating Organizational advantage, Oxford: Butterworth-Heinemann 6. Evans N, Campbell D & Stonehouse G (2003) Strategic Management for Travel and Tourism, China: Butterworth-Heinemann 7. Giddens, A. (1990) The Consequences of Modernity. Stanford: Stanford University Press. 8. Henri Fayol (1966) administration industrielle et gnrale - prvoyance organisation - commandement, coordination - contrle, Paris: Dunod, 1966 9. Henry Mintzberg,(1973) The Nature of Managerial Work, Harper & Row 10. Kobus Visser Ethics and Leadership Faculty of Economic and Management Sciences University of Western Cape [On line] Available from http://www.uwc.ac.za/EMS/man/MAN805/Ethics3.ppt Accessed on 18th April 2007 11. M. Albrow,1996 The Global Age, 1996, p. 88 12. Performance Institute Strategic Communications [On line] Available from http://www.performanceweb.org/Consulting/communication.html Accessed on 18th April 2007 13. Smith, M. K. and Smith, M. (2002) 'Globalization' the encyclopedia of informal education, [On line] Available from www.infed.org/biblio/globalization.htm. Accessed on 18th April 2007 14. Texas Tech University Course Administration and Management [On line] Available from: http://www.hs.ttu.edu/rhim5200/htm_files/0002.htm Accessed on 18th April 2007 15. Urusula Stroh and Miia Jaatinen (2001) New approaches to communication management for transformation and change in organizations Journal of Communication Management Vol.6 Issue 2 pp148-165 16. William and Adam-Smith Contemporary Employment Relations Chapter 9 pp1Oxford Higher Education [On line] Available from http://72.14.235.104/searchq=cache:tvKQ7UIL9NgJ:www.oup.com/uk/orc/bin/9780199272433/01student/01webcases/ch09_case02.pdf+case+study+gate+gourmet&hl=en&ct=clnk&cd=2&gl=in&client=firefox-a Accessed on 26th April 2007 Read More