Yellow Air is an airline based in the UK specializing in long-haul flights. The company was floated and privatized, but a change in the tourism industry due to COVID- 19 pandemic has resulted in financial losses. Other factors that have imposed constrain on the organization include rises in fuel prices, airport taxes, and commodity prices. Top managers have developed two strategies to cope with the challenges. These approaches include merging the firm with Air Fast and joining Proxima Alliance to increase efficiency and cut costs. The strategies have problems with salary terms and conditions and potential job cuts. This paper seeks to provide a PEST and SWOT analysis of the company. The nature of change and how employees are likely to react to the change are assessed. Additionally, recommendations are provided to the organization to assist in efficiently implementing change using the organizational change model.
Analysis of Change Context: PEST Analysis
|-The novel COVID-19 has resulted in the government’s formulating new restrictions and regulations affecting the airline industry.
-Restrictions such as lockdowns and social distancing have affected travel and tourism.
-Policies have stipulated a substantial increase in airport tax.
|-There is an economic downturn as a result of the pandemic leading to low demand for travel.
-There are high fuel prices, and airport taxes have resulted in the company’s financial burden.
|-Customer behavior has changed due to the high cost of commodities.
-Remote work due to the pandemic has reduced business travel.
-There was a change in attitude toward travel activities during the pandemic.
|-Need to invest in new technologies for logistics and travels as the industry changes.
-Implementation of new safety and health measures.
|-The firm enjoys a strong brand and company name, giving it brand power.
-The organization has experienced staff and management.
– The firm offers a variety of destinations, enhancing loyalty from customers.
|-The firm has experienced financial losses due to lower demand and increased costs.
-The organization may lack the resources needed to keep changes.
-There is more competition from low-cost airlines.
|– A merger with Air Fast will retain the brand name and increase the service portfolio.
-Joining the Proxima Alliance will leverage the firm’s resources and capabilities.
|-Fall in demand for travel and Increased competition in the industry is risky
-Changes in employment terms and conditions of employment and job cuts may result in opposition.
Nature of Change Facing the Yellow Air
In the past two years, Yellow air has faced a business challenge hence experiencing significant losses. This situation has resulted from multiple factors, such as the changes in tourism caused by the COVID-19 pandemic causing low demand, rise in fuel prices, airport taxes, and increased commodity prices for the passenger. These factors have resulted in significant financial losses for the firm (Riding the waves of change). This situation has resulted in the need for a complex and multifaceted change. The company requires major restructuring to achieve increased efficiency and cut costs. The manager agreed to the implementation of a twofold strategy to help revive the company’s competitive advantage.
Proxima Alliance and merging with Air Fast are the two strategies top managers have decided will most effectively meet their set goals and objectives. This strategy represents a major change as the business will have to shift from only a long-haul extension to short-haul services. The modifications include employment terms and conditions from applying Air Fast’s salary structure and job cuts of about 10% of the employees (Riding the waves of change). The approach can transform the firm’s operations and enhance productivity.
The company will manage to retain its brand and name but be larger and have a better service portfolio. However, these changes pose significant challenges to Yellow air. Merging the two distinct companies will change the company’s values and structures. These changes are identified as behavioral and cultural changes affecting how people behave, think, and interact within the organization (Faupel & Süß, 2019). The changes may lead to challenges in creating a cohesive culture and employee alignment in the new organization. Clear communication is essential throughout the implementation process to help address the concerns of shareholders and employees.
Possible Employee Reactions to Change and Managing Reactions
Types of Employee Reactions
As a result of the changes that need to be implemented by Yellow Air, employees may react in several ways depending on their characteristics and how the change may impact their lives. Resistance is a common reaction the organization may face (Peng et al., 2021). The employees may manifest resistance to change in several forms, such as sabotage, verbal opposition, and lack of cooperation. The theory of psychological contrast provides that the changes may be viewed as a breach of unwritten contracts between the company and the employees, which may elevate the feeling of mistrust and betrayal. Merging a company may involve new managers, team members, and new working environments that the employees may not be ready to counter (Peng et al., 2021). High-stress levels are related to learning new processed methods and skills.
Employees may experience fear for their job security as a result of the merging of the company. Yellow Air already needs to lay off 10% of its workforce; hence, some employees fear losing their jobs. Stress and anger may increase among the employees, and they may feel frustrated and tense (Faupel & Süß, 2019). The sense of job loss triggers anger among employees for fear of losing positions and status in the organization.
Acceptance to change may be experienced by employees who understand the need for change and acknowledge the benefits it will offer to the company. Some employees may feel excited and enthusiastic about the new challenges (Faupel & Süß, 2019). They may be open-minded about the new organizational structure and view it as a chance to grow and develop as they acquire new skills and oncoming promotions. The employees may manifest acceptance through their verbal and behavioral acknowledgment of the need for change (Faupel & Süß, 2019). Other employees may be actively involved in the change process by giving ideas and direct engagement in the change process
For Yellow air to manage employees’ reactions to change, top management must communicate transparently and openly with its workforce, especially on why they need the change and its impacts on employees’ roles. The company should involve its employees actively, which will help provide an opportunity for them to raise their concerns that need to be addressed and offer essential feedback. One theory the organization can use to manage its employee’s feedback is Kotters 8-step change theory to offer the guidance needed to plan and execute the change (Haas et al., 2020). Theories of the model advocate for practices such as creating a sense of urgency, vision, guiding coalition, strategy, and employee empowerment to act on the stipulated change.
The 8-step model develops a clear change management roadmap which may help the employees understand and know what to expect. The sense of urgency will motivate the employees to support the changes. Coalitions usually promote ownership and a greater sense of buy-in among the workforce (Haas et al., 2020). The theories advocate for active communication that keeps the employees informed and engaged, promoting the positive reaction. The theories also encourage creating a vision to guide and inspire the employees, minimizing resistance rates.
Recommendations Using Kotter’s -Step Change Model
The first step advocated for establishing a sense of urgency. To achieve fundamental transformation, all the involved parties need to feel a sense of urgency and believe the change will be relevant for organizational growth. A sense of urgency is promoted by making people aware of the existing challenges and opportunities and motivating all shareholders to make a difference. This step includes highlighting the negative consequences that may arise if the company does not embrace change and the positive outcomes to be achieved (Kang et al., 2022). Yellow air must communicate the current situation with the shareholders and employees and inform them of the problem extensively.
The second step Yellow Air should take is forming a powerful coalition of shareholders, employees, and key players supporting and driving change. The coalition should involve a strong team of persons with skills, reputations, qualifications, and connections because such qualities are crucial in leading the change initiatives (Kang et al., 2022). Joining Proxima Alliance and creating a merger with Air Fast requires optimal support from the various representatives in the different areas and levels of the organization.
The third recommendation involves creating a vision for change. Top managers of Yellow Air need to develop a compelling and clear mission for the organization’s future. The vision will serve as a guide for the change efforts to be implemented. This step aims to develop clear strategies for the company’s initiatives and make a plan that the team can achieve (Kang et al., 2022). The vision must align with the organization’s change initiatives and core values. In this case, Yellow Air aims to improve efficiency and cost reduction and maintain a high quality of services to its customers.
Communication of the change vision is the fourth step that needs to be considered. The goal is to communicate the strategy and vision to the shareholders and employees to promote support and acceptance. The leaders at Yellow air should communicate this vision to them in a way they can relate to and which is easy to understand. The management team is responsible for winning employees’ hearts and encouraging them to make sacrifices to achieve the end rewards that will benefit the business and themselves (Kang et al., 2022). The leaders should encourage the provision of feedback and address raised concerns.
The fifth step for Yellow air would be to empower its shareholders and employees. The company needs to provide the necessary support, training, and resources to help them embrace change and achieve the set goals. Consequently, the top management may provide training to the employees that may help them adapt to the new organization and salary structure. Organizational challenges require the establishment of measures to identify and effectively deal with them to enhance the productivity of operations (Haas et al., 2020). Additionally, the company may face obstacles during implementation, which may create resistance and disempower management.
The sixth recommendation for the company is to create short-term wins that promote a sense of achievement and accomplishment. This will help inspire the employees and maintain momentum to support change efforts. The firm needs to identify quickly achievable and manageable changes. Revealing and implementing cost optimization measures that can be a crucial step in accomplishing short-term and long successes (Haas et al., 2020). Identification of immediate success will bring fast success and portray transparency.
The company must consolidate the gains and make more changes depending on the outcomes. Leaders need to celebrate achieved successes, review progress and identify areas that need improvement (Haas et al., 2020). The organization may additionally benefit from eliminating interdependencies and unnecessary procedures that have not promoted positive change. Finally, the firm needs to develop new cultures to ensure the change is sustainable Yellow air must adjust its values, norms, reward systems, infrastructures, and procedures to ensure they align with the new strategies. Procedures that do not match the new company culture should be eliminated or improved. New working methods should be integrated into the business’s day-to-day operations, and employees must be motivated to adopt new attitudes and behaviors.
In conclusion, Yellow Air needs organizational change to counter its challenges. The PEST and SWOT analysis is essential to analyze the changing context for the company. The nature of the change it faces relates to financial losses due to changes in the tourism industry. The top management has decided to merge the company with Air Fast and join Proxima to cut costs and increase efficiency. Implementing the strategies may result in changes that may affect employees, such as job cuts and impacts on terms and conditions of salaries. The Kotter 8-Step model is essential to provide a framework that may help manage employees’ reactions and successfully implement the change. The model entails eight steps: the sense of urgency, forming a team, creating a vision and strategy, communicating the vision, and employee and shareholder empowerment.
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