First Choice Airways’ change programme: Ready for takeoff

The business

First Choice Airways (FCA), part of the First Choice Holiday group, is a UK airline with headquarters in Manchester. With a team of about 2,500 people, including 1,200 cabin crew, 390 pilots and ground staff across 12 UK and Ireland airports, the airline flies six million passengers to more than 60 destinations worldwide every year.

The challenge

In 2005, the relationship between FCA and its pilots was at an all-time low. Cost-cutting and increased security measures after 9/11 had left pilots feeling over-worked and under-appreciated, and discontent with pay and conditions was rife.

The situation came to a head at the annual salary negotiations between FCA management, the firm’s council and pilots’ union Balpa, when the pilots refused to compromise.

“It didn’t matter what offer we made, the pilots were going to reject it,” says John Murphy, director of flight operations at FCA and part of the negotiating team.

“We went through every scenario: from rolling over and giving them everything they wanted, to not giving them anything at all,” he continues. It was when the threat of strike action became apparent that FCA realised a drastic change was needed.

The solution

That breakdown in negotiations forced FCA to realise it had a “yawning gap” in communications, according to Murphy. “We were concentrating on a number, but the pilots were more interested in respect and lifestyle and feeling undervalued,” he explains.

In response, FCA introduced a wide-ranging change programme that focused on employee relations, improving communications and creating a work-life balance. It took nine months for the programme to gain acceptance, during which time FCA extensively researched what the pilots wanted.

“We brought in an independent body (People in Business) to talk with the staff,” explains Murphy. “It was probably the best thing we did.”

From that audit came a new staff remuneration package, which recognises how FCA chooses to reward pilots can play a pivotal role in the success of the organisation.

The new package is designed to encourage overall performance. Key elements include an industry-benchmarked basic salary and leave entitlement, a bonus plan of up to 2% of a pilot’s salary, and flexible working.

Also, as part of the basic pay package, pilots get £1,000-worth of vouchers to go towards booking holidays with FCA. And with each year of long service, they can get an extra £100 of holiday concessions.

Of most importance to the pilots, however, was securing a better work-life balance. “In the aviation industry, delays and disruption are symptomatic,” explains Murphy. “Previously, if a pilot wanted to organise a social event we couldn’t always guarantee that they could attend it – but now we do.”

That guarantee comes in the form of a ‘lifestyle agreement’, which incorporates a block window exemption to protect holiday entitlement, regulate working hours, and restrict the amount of overtime employees can do.

Introducing new and effective employee communications channels was a huge part of the change agenda. “We are trying to give as much good news as often as we can,” says Murphy.

Regular communications now include a weekly update from the head of pilot management, and a monthly online newsletter detailing forward-looking company initiatives.

A formal feedback mechanism has also been introduced. The annual ‘pilot’s voice’ survey gathers information on the working environment, pilots’ relationships with the management team, and whether overall objectives have been met.

FCA has also improved day-to-day communication with its pilots through an overhaul of the pilot management structure. “Previously, the management team was made up of pilots, who had to juggle that responsibility with flying,” says Murphy.

Instead, FCA introduced a mix of pilots and non-pilot managers based in the crew rooms, creating a more accessible and intimate relationship with staff. “[The managers] deal with problems that might sound minor to us at head office, but which are very important to our pilots,” says Murphy.

That in turn has allowed the relationship with Balpa to evolve to one that’s more tactical and strategic. “We are talking about promoting the industry together,” Murphy explains. Its first project is to look at environmental issues, and the effects of fuel tax.

The outcome

The nine-month planning process came to a head in May 2005, with a marathon 14-hour negotiation. There, the parties involved secured a three-year pay deal and put in place a change agenda action plan.

Within six months, a number of goals had already been achieved: a permanent part-year scheme was agreed, which encourages pilots to work more during the busy summer period pilots accepted the lifestyle agreement the annual bonus scheme became formal and a new pilot management team was put in place.

There has also been a significant shift in attitude within the company. Murphy uses as an example the payback FCA is seeing from the lifestyle agreement: “As long as [the pilots] have the option to work within the lifestyle agreement, they are now more happy to work outside of it,” he explains.

That improved flexibility was witnessed during a period of heightened security at UK airports last July, FCA pilots willingly took on longer hours to help clear the backlog of flights.

Meanwhile, FCA has become a sought-after employer. It lifted a hiring freeze in September, and after just two weeks of advertising on its own website, it received 700 applications for just 20 pilot jobs. And it won the award for HR collaboration at the 2006 Personnel Today Awards.

But this flexibility has come at a price: FCA incurred “significant costs” on the rise in basic pay rates, as well as employing 20 extra pilots to enable the lifestyle agreement. But the improved relations indicate that it has certainly been worth the investment.

If I could do it again…

“I only wish we’d done the negotiations earlier,” says John Murphy, director of flight operations and pilots at First Choice Airways. “We should have talked with the pilots more directly, and more often,” he adds.

Murphy also feels that he underestimated the task ahead in terms of resources and maintaining passion for change. “You can have the best ideas and you might start to put mechanisms in place, but it is slow to show results. Trying to sustain enthusiasm and willingness to follow you is hard,” he explains.

Employee perspective

When she was head of HR at First Choice Airways, Karen Ann Allchurch was responsible for the development and implementation of every aspect of the airline’s HR strategy – from training and development to employee relations and trade union liaison.

Allchurch played a strategic role in the change agenda, liaising with employees and management, and pushing through some difficult decisions when called for.

The most challenging aspect of the project for Allchurch was its scale. “We wanted to be contemporary, radical and bold,” Allchurch says. “And when you commit to doing something like that you have to deliver on it.”

Tenacity was vital. “You are going to have good and bad days,” she says. “Cultural change does not provide instant feedback. No-one is going to rush into your office saying: ‘You’re doing a really good job today’.”

Allchurch sees her role now as one of sustainability. “We need to make sure we can keep being creative, continue improving communications, and keep the standards high.”

Guide to dealing with union reps in 5 steps

  1. Most union reps have legal rights to paid time off to train and carry out their duties, as well as to other support, such as basic office facilities. Make sure you know the law and the relevant Acas Codes of Practice.

  2. Building a positive relationship with your reps will pay dividends in the long-term.

  3. Who does the job of a rep while they are carrying out their duties or representing their colleagues? Work with the union to ensure the needs of the business are balanced with the need for reps to be able to do their job properly. 

  4. Reps often complain their relationship with HR is different from that with managers. Make sure managers understand your agreements and policies relating to union reps, and make sure these policies are put into practice on the ground.

  5. No-one gains if volunteering to be a union rep is seen as a shortcut to career suicide.

Source: TUC


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