Workplace

To create a really high-performingbusiness we need to build aninspiring and rewarding workplacewhere talented people can work tothe best of their ability to meet ourcustomers needs and our widersocial responsibility.

The way we run our business

34 / British Airways 2008/09 Annual Report and Accounts

Corporate governance

Financial statements

British Airways 2008/09 Annual Report and Accounts / 35

We are re-inventing the way we work atBritish Airways. We are creating a leanerorganisation with a distinctive, high-performing culture through our flagshipchange programme, Compete 2012.

Over the next three years this programme,described in detail on page 28, will help us to achieve our vision of becoming theworlds leading global premium airline.

It will affect the way we interact with each other, how we measure individualperformance and how we promote,develop and reward talent. Coupled withour commitment to be a responsibleairline, it will also help us achieve ourambitious environmental targets, put ourrelationship with key suppliers on a newfooting and continue our tradition ofsupporting communities in useful andimaginative ways.

Restructuring managementWhile Compete 2012 is a long-termchange programme, current marketconditions have made it imperative to move fast to create a leaner, more agile structure starting at the very top of our business.

In December 2008, a third of ourmanagers left the business under avoluntary severance scheme. At the sametime we redesigned the organisation topromote greater customer focus andbetter governance and leadership.

This restructuring effort has made us moreefficient. It has also helped us identify anddraw on new talent in the business, helpedby the fact that we are now encouragingmore people to move between functionsto gain wider experience and find newoutlets for their skills. To support greater

Overview

Our business

The way we run our businessThe workplace

CustomerSilla Maizey

EngineeringGarry Copeland

Finance and performance Keith Williams

People and organisational effectiveness

Tony McCarthy

Sales and marketingAndrew Crawley

Strategy and business unitsRobert Boyle

CommunicationsJulia Simpson

CustomerSilla Maizey

EngineeringGarry Copeland

Flight operationsStephen Riley

OperationsAndy Lord

InvestmentsRoger Maynard

Legal and governmentand industry affairsMaria Da Cunha

Safety and securityTim Steeds

Chief ExecutiveWillie Walsh

Customer andOperations Executive

ManagementBoard

Reporting to the Chief Executive


The way we run our businessThe workplace continued

mobility, we have clarified individual andcollective roles and responsibilities andnow publish accountabilities for all of ourtop managers on our intranet.

Leadership developmentWe need great leaders to help us contendwith current trading conditions and achieveour long-term vision. A leading globalpremium airline must be bold and highlyeffective in developing present andpotential leaders.

This is why we introduced our HighPerformance Leadership (HPL) systemduring the year. This is an integratedsystem, linking business strategy, objectivesetting, performance assessment,development and reward. Focused initiallyon the senior leaders, HPL has rigorousassessment mechanisms to identifytalented leaders and to provide them with the right tools and support tocontinue developing.

We have also defined, communicated andbegun to measure individual performanceagainst three capabilities we think we need in our leaders, in addition tooperational excellence:

Communicating a common vision;

Agreeing accountabilities; and

Motivating and inspiring others.

For each capability, specific behaviourshave been developed so that leadersunderstand exactly what is expected ofthem and we are supporting them with a range of development programmes,including executive coaching, networks,forums and external courses. We are also using new techniques to measureperformance. These will allow us tomonitor individual progress and track ourown overall success at managing talent.

Among the other leadership initiatives we launched were:

Behaviours for Success a leadershipdevelopment programme for the HPLcommunity, focusing on understandingand developing personal leadershipperformance;

Leadership Matters a scheme toidentify and develop leaders who havepivotal roles in the Customer andOperations areas of our business; and

A Leadership Development Portfoliothat will be introduced this year with theaim of supporting current and potentialleaders at every level of the business,including emerging leaders, those on afast track to senior positions and thosewith strategic roles at the very top of our organisation.

The management of our businessChange must start at the top and duringthe year we reorganised our topmanagement team, comprising ninedirectorate heads, led by the ChiefExecutive. It is now split into two groups the Management Board and the Customerand Operations Executive.

The Management Board, which meetsweekly, is responsible for the vision andstrategic direction of the Company.

The Customer and Operations Executiveis accountable for day-to-day customerservice, operational performance andensuring the highest standards of safety.This group also meets weekly.

Legal, director of safety and security anddirector of investments also report to theChief Executive.

Change must start at the top and during the year we reorganised our top management team, comprising ninedirectorate heads, led by the Chief Executive.




Overview

Our business

Our restructuring effort has made us more efficient. It has alsohelped us identify and draw on new talent in the business, helped by the fact that we are now encouraging more people to movebetween functions to gain wider experience and find new outletsfor their skills. To support greater mobility, we have clarifiedindividual and collective roles and responsibilities and now publishaccountabilities for all of our top managers on our intranet.



People and organisationaleffectivenessIn transforming the way we work, weremain focused on creating a diverse,challenging and rewarding workplacewhich people across the airline can feelproud to be a part of, despite ourexpectation that the number of peopleemployed will need to reduce as we seekto streamline our business.

HeadcountAs at March 31, 2009, we employed40,627 MPE.

Average attrition remains low at 7 percent, with the exception of managementgrades where a voluntary redundancyprogramme contributed to a significantincrease in attrition for this group.

RewardWe operate two principal funded definedbenefit pension schemes in the UK, theAirways Pension Scheme (APS) and theNew Airways Pension Scheme (NAPS).Both are closed to new members. FromApril 1, 2003, new employees wereentitled to join the British AirwaysRetirement Plan (BARP).

SmartPension arrangements, which allowour UK-based employees to make theirpension contributions in a more tax-efficient way, were introduced in early2008. Around 90 per cent of those eligibleare now benefiting from this arrangement.

Since 2005 our Employee Reward Plan(ERP) has allowed non-managementemployees to share in the success of thebusiness based on the achievement ofcorporate measures and targets. However,

due to our losses in the year, the schemedid not operate in 2008/09.

Instead we used local incentive plans tooffer rewards for improved performance,assessed against a range of operational,customer and financial measures. The first plan was introduced in Terminal 5 and has led to significant improvements inperformance, with targets being exceededfrequently. This approach is now beingconsidered in other areas to drivecontinuous improvement in ourperformance across the business.

Management bonus schemes, using a mixof financial and non-financial performancemetrics, are designed to improve overallperformance and to reward individualeffort. Given the deterioration in tradingconditions during the year, no bonuses will be paid.

However, we have replaced our grade-based reward scheme for managers with anew broad band system which links rewardsmore closely to individual performanceand capability. Separately, our Bravorecognition scheme allows us to recognisepeople across our business for their effortsand achievements.

DiversityWe are proud to be a business thatwelcomes and nurtures difference.Diversity and inclusion are a way of life for us.

Our diversity initiatives are all aboutdignity and respect. They are designed to promote good relationships betweencolleagues, irrespective of their background,religion or culture. As part of our annualdiversity week, a series of events was heldto raise awareness and promote a more

Total membersMarch 31, 2009 APS NAPS BARP

Active members 1,494 28,130 6,770Pensioners in payment 19,266 15,699Dependent pensioners 7,301 2,756Deferred pensioners 3,143 22,307 584

31,204 68,892 7,354

Given the deterioration intrading conditions duringthe year, no bonuses will be paid.

Airline operationsMPE reduction(average)

0.7%Employee costs(excludingrestructuring)

2,193m




Overview

Our business

We are proud to be a business that welcomes and nurtures difference.Diversity and inclusion are a way of life for us.

Our diversity initiatives are all about dignity and respect. They are designedto promote good relationships between colleagues, irrespective of theirbackground, religion or culture. As part of our annual diversity week, a seriesof events were held to raise awareness and promote a more positive andproductive work environment.



positive and productive work environment.These included an inter-faith paneldiscussion focusing on five key religions anda presentation from a member of the Boardof the British Paralympic Association.

The focus this year has been ondeveloping our Dignity at Work strategy to reduce harassment and bullying in theworkplace. We have appointed and trainedHarassment Advisors, drawn from acrossthe business, in response to colleaguesrequests for people they can approachconfidentially about any issues they mayhave. The advisors act as a listening earand provide practical advice and guidance.Our intention is to adopt a more informalapproach to resolving potential conflictsusing internal mediators.

As a responsible company, we takedisability very seriously. We welcomeapplications from people with disabilitiesas we aim to employ the most talentedpeople and we support individuals withdisabilities in reaching their full potential bymaking reasonable adjustments for themin the workplace.

We consult with our disabled employeegroup to identify disability issues and theyhelp us to ensure that we are making allour products, services and training fullyinclusive and accessible. All frontlineemployees are trained in disabilityawareness to increase their knowledgeabout disabled customers and employees.

We introduced a Building Ability strategyto identify and promote the needs ofdisabled customers and colleagues. Weconstantly look at how we can improve thejourney experience for disabled customersand for the first time we conductedspecific customer research to identifyareas for development. In July 2008, 522 members of the British ParalympicsAssociation travelled to Beijing for theParalympic Games, providing us withimportant lessons we can translate intoday-to-day practice.

Overall, our Dignity at Work strategyinvolves training, communications and

workshops across the business. Alldepartments have targets to achieve andall employees must now complete theonline Expect Respect training course,introduced during the year.

AbsenceWe saw a modest improvement inattendance throughout the year. Theheadline annual absence level hasimproved by one day per person. AtDecember 2008 it stood at 10.8 averagedays per person per annum, with someareas of the business meeting top quartileabsence levels. While there has been amodest improvement overall this year, we still compare unfavourably with similarsized businesses in the UK. To remedy thiswe are creating a new programme to helpmanagers deal with attendance issues.

Absences days per person per annum

December 2008 10.8

January 2008 11.7

2003 baseline 16.7

Employee relationsWe negotiate with a total of three tradeunions representing colleagues across thebusiness. We seek to work constructivelywith colleagues and their representativesto improve productivity and performance.

Despite the challenges we faced in theearly days of Terminal 5, we went onduring the year to achieve significantimprovements in our operationalperformance. This was partly down to theagreements we reached for new workingpractices at the terminal. A major featureof these agreements was direct colleagueengagement with the involvement of ourrecognised trade unions. Another keyaspect was the introduction of localincentive plans for many terminal-basedjobs as discussed above.

We continue to work hard to foster good relations with the representatives of our flying community. Theserelationships will remain key as we tackle the challenges ahead.

Total employees

Men 54%Women 46%

Senior managers

Men 74%Women 26%

Managers

Men 69%Women 31%

Overview

Our business




We carried out consultations with anumber of groups within the business tosee where we could improve efficiencyand this has led to some beneficialchanges in work practices and roles. Theareas affected by restructuring included:

Customer relations;

Gatwick ramp and customer services;

British Airways World Cargo;

Glasgow cabin crew base; and

Manchester engineering base.

During the year we fundamentally changedthe way we organise our human resources(HR) management. We introduced HRBusiness Partners who now focus on goodpeople management and employeerelations and are responsible for day-to-day industrial relations matters. The centralindustrial relations team was consequentlyscaled back and given a more strategicrole. To support this change we ran anumber of bespoke industrial relationstraining courses to improve understandingand practice.

Engaging our colleagues We ensure that colleagues are kept wellinformed about our Company, customersand industry by using comprehensiveinternal communications. Face-to-facecommunication is our priority and we runregular briefings across the Company sothat as many people as possible can meet,question and share ideas with senior andline managers. We run workshops tosupport managers in communicating keyannouncements and also online forumsand an online Ideas Exchange toencourage wider dialogue. Othercommunication channels include apersonalised intranet, mobile SMSmessaging, video and a range ofCompany-wide and local newsletters.

In 2008/09 we saw a sea change in theway people within our business think aboutworking here. Our Speak Up! attitudesurvey in the autumn of 2008 recordedsignificant improvements in scores forpride, service and product advocacy, and satisfaction with basic conditions.

The results reflect the positive waycolleagues feel about our move toTerminal 5 and our improved performance.Encouragingly, the number of peopleresponding to the survey rose too,

indicating that more employees regard this as an important means of expressingtheir opinions.

To make the survey more effective, we wantto ensure that changes are implemented asa result. All managers are now being given aclear responsibility to plan actions basedon survey findings in an open andtransparent way. Next year we will run thesurvey more frequently during the year, so that managers get regular feedback onchanges in colleague opinion.

2009/10 will also see the launch of anEngagement Index. Building on Speak Up!results, this will help identify howmanagers can increase levels ofengagement within their teams.

Employment tribunalsDuring 2008/09, the Group was servedwith 74 new proceedings in employmenttribunals. British Airways Plc was therespondent in all but three of theproceedings. The other three are againstBA Avionic Engineering, CityFlyer and BA Maintenance Cardiff. This remains alow figure given our relative size. Of the 74 proceedings:

We lost no tribunal claims in the year;

We did lose a preliminary hearing,currently being appealed, concerning therights of staff employed and resident inHong Kong to pursue discriminationclaims in the UK;

Six claims involved multiple claimants,including two, on how holiday pay shouldbe calculated under Civil Aviation(Working Time) Regulations, brought onbehalf of some 13,000 pilots and cabincrew members;

Claims including a discrimination elementoutnumbered those for unfair dismissalfor the second year. There were 19 unfairdismissal claims, about the same as in2007/08; and

A total of 47 claims for discrimination ordiscrimination and other matters werelodged, a 60 per cent increase on the year before. Of these, 31 are ongoing, 12 were settled and four withdrawn, won by British Airways or struck out.

We negotiate with a total of three trade unions representingcolleagues across thebusiness. We seek to work constructively with colleagues and their representatives to improve productivity and performance.

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Workplace