Transformational Change Management A Review of Air New Zealand

Transformational Change Management: A Review of Air New Zealand

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Table of Contents

TOC o “1-3” h z u Introduction PAGEREF _Toc88127512 h 3Task 1: Key Drivers Necessitating Change PAGEREF _Toc88127513 h 3Covid-19 Pandemic PAGEREF _Toc88127514 h 3Competition and Decreased Market Share PAGEREF _Toc88127515 h 4Task 2: Activities and Responsibilities of Participants within a Change Program PAGEREF _Toc88127516 h 4Key Stakeholders PAGEREF _Toc88127517 h 4Activities and Responsibilities of the Key Stakeholders PAGEREF _Toc88127518 h 5How the Stakeholders Bring About Successful Change PAGEREF _Toc88127519 h 6Task 3: Appropriate Leadership Style to Deal with Change and Suitable Change Management Strategy PAGEREF _Toc88127520 h 6Proposed Leadership Style PAGEREF _Toc88127521 h 6Change Management Approach (Kotter’s 8-Step Model) PAGEREF _Toc88127522 h 7Task4: Recommendation for Change Management Strategies PAGEREF _Toc88127523 h 9Conclusion PAGEREF _Toc88127524 h 9References PAGEREF _Toc88127525 h 11

IntroductionAir New Zealand, Air NZ, operates under the New Zealand government as the official flag carrier airline of the nation. At present, Air NZ operates about 20 domestic passenger flights and 31 scheduled international flights to more than 20 destinations all over the world. It primarily operates within the Pacific Rim. Air NZ has been in operation since April 1940, making it one of the longest serving airlines in the world (Air New Zealand, 2021). The company attributes its long service and success to helping New Zealanders thrive both at home and during international travel. The company embodies the Maori culture and aims to show resilience, strength and tenacity, with a hint of renewed spirit and hope for a bright future. Some of the ongoing drivers for change at Air NZ include choice and flexibility during travel and the COVID-19 pandemic also demands newer flexible options for travelers in response to emerging issues (Air New Zealand, 2021).

In this report, the main purpose is to examine transformations and change currently underway in Air NZ. The increased flexibility and choice are set to change the way the organization operates, both for its international as well as domestic flights. Specifically, an analysis regarding these changes will be made to show how Air NZ should deal with business transformation and change management practices. Through a transformational change management plan, the report will make recommendations to ensure that Air NZ remains successful.

Task 1: Key Drivers Necessitating ChangeIn the life cycle of organizations, change is inevitable. A shift in the market environment has led to a disruption in the normal running of an organization therefore top managers need to prepare a response plan to adapt. Some of the key factors driving change for Air NZ include; Covid-19 pandemic and decreasing market share. These changes are still ongoing, and more will be required in order to enable Air NZ to retain its position in the air travel market. The said changes are largely a reaction to the pandemic and other issues relating to market changes. In the future, more changes will be needed as an adaptation of the organization to a world that will be open despite the changes caused by COVID and a reduced market share.

Covid-19 PandemicThe impacts of the global Covid-19 pandemic weighed heavily on the airline industry more than any other. According to Mazareanu (2021), the airline industry took a major hit amidst the pandemic seen in losses of over 270 billion USD; furthermore, the drastic financial decline is reflected in the decrease from 581 billion USD prior to the pandemic, to 189 billion USD revenues recorded in 2020’s end year. Reduced demand coupled up with government restrictions on travel led to major losses in both airlines and airports. Air NZ is among the affected airlines within the industry hence needed to undergo changes to with stand Covid-19 financial implications. According to Airnewzealand.co.nz (2020), Air NZ has reported over 75 percent loss in terms of customer revenues over the restrictions placed on air travel amidst the pandemic. In response, the airline’s strategic management team worked on securing more liquidity, structurally minimizing its costs while moderating expenditure, and preparing plans to position the company to emerge profitable once customer demand increases after the restrictions.

Competition and Decreased Market ShareThe airline industry is characterized by stiff competition. According to Owler.com (2021), the main rivals in Air NZ’s competitive environment include companies such as Jetstar, Virgin Australia, Fiji Airways, Singapore Airlines, and Qantas. With many active competitors who operate more destination points, Air NZ market share is greatly threatened. Air NZ’s management team must therefore develop strategic solutions aimed at mitigating the threat posed by increasing competition. In retaliation to the competitive pressure, Air NZ CEO, Greg Foran, made arrangements to strengthen its domestic front by initiating changes in the domestic scheduling; the plan comprised of steps aimed at reducing the scheduling complexity with an objective to cut down costs – more than that, Foran assured the new system would enable the company to offer more choice as well as flexibility, which is achieved through enhanced connectivity, consistency, and frequency across the local networks.

Task 2: Activities and Responsibilities of Participants within a Change ProgramKey StakeholdersThe key participants and stakeholders for Air NZ include: the board of directors, the management, the employees, Air NZ customers, the government, the public, investors, suppliers, and partners. These stakeholders and participants are all important players in implementing the changes required at Air NZ. Despite the importance of every participant, the main stakeholders are the management, the employees, the customers, investors, and the government. The main stakeholders that are of relevance to change management However, employees among other stakeholders may not respond well to change therefore steps to manage the transition of change in an organization must be first addressed before change is implemented to ensure success of the whole process.

Activities and Responsibilities of the Key StakeholdersFrom the description of stakeholders above, it is clear that it involves all entities with vested interests in another entity’s outcome. These entities are focused on ensuring that the organization is able to attain positive outcomes in order for them to benefit in their different ways. Stakeholders, such as the board of governors and the executive management, have a legally binding decision-making power and have power to control the direction of the organization. similarly, the management has budgetary and scheduling power that enables them to drive the company forward. Air NZ’s stakeholders are diverse. It includes the above listed and other groups of people or companies that share interest on the progress and developments in Air NZ. For some groups main activities and responsibilities include ensuring the smooth running of an organization. Cardwell, Williams, and Pyle (2017) see this as a role specifically designed for internal stakeholders including the employees, the management, and the owners.

Internal stakeholders are directly involved in the financial, managerial, and operational processes of Air NZ. They determine how well or poorly the organization performs through their operational financial, and decision-making activities (Brunton, Eweje, & Taskin, 2017). Their responsibilities include helping Air NZ meet its strategic goals and objectives. This is attained through contributing their perspective and experience to projects and providing necessary resources and expertise to run the organization. they also have the responsibility to educate developers, finance projects, create scheduling parameters as well as setting milestone dates.

External stakeholders include suppliers, the government, society, union, regulatory agencies, customers, shareholders and creditors. It may also include business partners who interact with Air NZ on a need-to-need basis (Cardwell, Williams, and Pyle, 2017). The main activities include investing and sometimes disinvesting in the organization. they are not involved in bringing change directly but some of them have significant influence. For example, Air NZ treats customers as high interest and high power stakeholders who need to be managed closely. Others with the same ranking in stakeholder analysis include the government and supply chain partners. Community members, unions, and shareholders need to be monitored and kept informed. The responsibilities of these external stakeholders are diverse. Suppliers are required to ensure timely payments, communicate, and ensure success of operational processes. The local community keeps the organization accountable.

How the Stakeholders Bring About Successful Change

Stakeholders have an impact on the decision-making process of an organization (Brunton, Eweje, & Taskin, 2017). At Air NZ, stakeholders influence change by driving the direction of the company towards shifts in the market. For example, consumer demands and government regulations following the COVID-19 pandemic has forced Air NZ to make drastic changes to its business model, a process that is still ongoing. Other key stakeholders such as the employees and the management of the organization ensure that the company’s work environment is still dynamic and responsive to changes in the market. Managers ensure that the employees remain committed to driving the company forward through continuous change. They bring about successful change through relationship building on various fronts, including with consumers, the community, the government, regulatory agencies, suppliers, and other important groups. Regarding the change required to operate domestically within New Zealand, the stakeholders will have a key role in ensuring a positive change and quick change as the organization changes its business model. Some of the leadership issues that can be expected include communication breakdown, change resistance, confusion regarding a new reporting structure, reduce motivation, and maintaining focus.

Task 3: Appropriate Leadership Style to Deal with Change and Suitable Change Management StrategyProposed Leadership StyleTo improve the company’s momentum, the Air NZ’s CEO, Foran, will rely on an autocratic leadership style. An autocratic leadership style initiates change faster decisions come from the top of the hierarchy, hence Foran can engage in critical decisions like heavy investing in a new modern aircraft that has better capacity and increased fuel saving (Cherry, 2020). However, when dealing with Unions, the most suitable leadership style would be democratic; because it is participative in nature, company managers can involve unions as equals to resolve on the conflict of interests.

Change Management Approach (Kotter’s 8-Step Model)Given the threats and weaknesses within Airline NZ’s organizational environment, implementation of strategic changes is crucial to the survival of the company. The company needs to employ a workable transitional change management plan to ensure reduced friction to change across all levels of the organization structure. The most suitable tool for change in Air NZ’s case is through Kotter’s 8-step model. Based on an analysis of over 100 companies, John Kotter established an 8-step approach to change management that advice changes managers to; increase urgency, establish guiding teams, create a vision, communicate the strategy, empower employees to action, develop short-term wins, consolidate achievements, and strengthening change through cultural integration (Carman et al., 2019). Air NZ can apply Kotter’s model to manage and enhance smooth transition to change.

Increase Urgency

According to Carman et al., (2019), increasing urgency can be achieved through different ways such as; identifying the imminent threats and consequences that might be there in future; evaluating the available opportunities and the best ways to tap into them; offering a transparent discussion to engage other people into thinking, and initiation of partnership with industry players and key stakeholders as well as engagement of employees and customers to discuss change. Air NZ needs to conduct a comprehensive SWOT analysis which can be then used to present the exact state of its performance so that all involved stakeholders are aware of the urgency in terms of change needed to protect and improve the company’s image.

Team Building

In this step, the organizational leadership team takes the greatest role; according to Mindtools.com (2021) this step emphasizes on convincing the stakeholders that the change initiated is necessary. In Air NZ’s case, the company can for instance select effective change leaders within different departments in the organization. Once a change coalition team is established, the change manager scans slowly continue pressing for urgency while at the same time building momentum concerning the need for change through the coalition teams.

Vision

In the third phase, Kotter proposes than companies should establish a vision to guide those affected by change in terms of understanding why change is needed. Carman et al. (2019), developing a vision brings light to the values prioritized by the changes as well as a brief affected people on where the change puts the organization in future. Air NZ can therefore use their coalition team to speak the company’s vision to other members in a voice that will make more sense to them. The vision for instance could lean on expanded choice as well as flexibility of its flights.

Communication

Communicating the vision to the people within the organization forms a critical success factor in the implementation of Kotter’s model. Mindtools.com (2021) explains that communicating the message in the vision can be challenging because it faces competition from other daily messages circulating within the organization – hence must be done more often. Therefore, Air NZ can ensure communication of the vision by making change managers to lead by example, constantly bringing up the change vision during assemblies, and integrating the vision in all areas of company operations such as performance review and training.

Empowerment

In this phase, Mindtools.com (2021) explains that companies should take action in terms of eliminating barriers to change. For instance, Air NZ can establish change leaders capable of implementing change; identify those resisting change and offer them more explanation on the need for change – and removal of such employees to reduce change barriers; as well as reward employees who support and align their work with implemented changes.

Short-term Wins

Carman et al. (2019) asserts that people are motivated to achieve more through small successes. In light of this, Air NZ can design short-term goals that could run on intervals of weeks, months or years depending on the nature. Mindtools.com (2021) supports this by asserting that without achievement of company goals through small wins, critics and pessimists may derail the transition process to change. What Air NZ can do is to select least expensive targets such as customers gained through various marketing strategies and then give rewards to those who attained the target scores.

Consolidate Achievements

According to Appelbaum et al. (2012), Kotter proposed that, for most organization, transition to change fails mostly due to pre-mature declaration of success; he instead advices companies to continue building onto their successes in order to attain long-term change. After each small win, Air NZ must go back to the drawing board to improve on the areas that underperformed and reinforce strategies for those that performed well.

Reinforce Change with the Overall Organizational Culture

In the last step, Kotter proposes that companies should tie the changes necessitated into the corporate culture; given that culture defines the values and beliefs that dictate the kind of behavior that is important and acceptable in relation to the company vision. Air NZ should ensure that it constantly communicates its vision every chance it gets, and integrate the company vision in the hiring process to ensure recruits match with the corporate culture.

Task4: Recommendation for Change Management Strategies and Suitable Metrics to Measure Progress

The change agents and the consequent market interruption mentioned in the foregoing sections point to a need for organizational change. For example, Air NZ has had to deal with new regulations regarding movement of people in and out of the country. Government regulations and new protocols have necessitated a need for change. Other unprecedented outcomes have included market pressure, technological developments, and competition. Air NZ must apply change management strategies in order to ensure what Kotter (2008) terms as business continuity so as to adapt to changes relating to new government regulations, market pressure, technological developments, and competition. In order to ensure smooth transition of its change management strategies Air NZ should design strategic partnership with leaders from the four main unions that represent New Zealand workers who make up a workforce size of 8000 employees (Airnewzealand.com.au, 2020). Doing so will ensure that change occurring offers positive outcomes for workers. Another thing, the company should prioritize on cutting costs to ensure it makes use of the available scarce resources and falling demand. Cutting costs will also mean better profit margins. The organization must also have a clear communication strategy in order to ensure that change is well accepted and effective in achieving what it is intended to.

ConclusionChange management in organizations is essential for ensuring smooth transition without resistance from stakeholders affected. Kotter’s model demonstrates an 8-step approach to managing change effectively to enhance the success of an organization. More than that, to resolve leadership changes, strategic managers need to apply the right leadership styles to facilitate progress in terms of transitioning organizational changes.

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