EasyJet Airline Company - Essay Example

? EasyJet Airline Company Contents Introduction 3 Critical Analysis of the 3 Strengths of the 5 Weaknesses of the Code 6 Component 1: Focus on Safety 9 Component 2: Value for People 10 Component 3: Concern for the Environment 11 Conclusion 12 References 12 Introduction The timeline of EasyJet Airline reportedly started in March of 1995 as founder Sir Stelios Haji-Ioannou was noted to have offered flights at significantly low fares in Europe (EasyJet Airline, n.d.). Currently, it boasts of being “Europe's leading airline, operating on over 600 routes across 30 countries with our fleet of over 200 aircraft… (and) employ(ing) over 8,000 people including 2,000 pilots and 4,500 cabin crew” (EasyJet Airline, n.d., par. 1). In its almost 18 years of organizational existence, EasyJet was noted to have been governed by a code of conduct to guide the behavior and decision-making processes of its personnel. The paper hereby presents a critical evaluation of the code of EasyJet Airline through a description of the code and by thoroughly assessing the code’s effectiveness in demonstrating the company’s values and conformity to business ethics. Critical Analysis of the Code The organization’s code was found under the title Governance on their official website: http://corporate.EasyJet.com/about-EasyJet/governance.aspx?sc_lang=en. Their corporate values were explicitly revealed as follows: OUR VALUES Safety Our No. 1 priority – no compromises Teamwork We’ll get there faster together Pioneering Breaking the mould to find new ways and new opportunities Passionate We’re ambitious to be the best we can be Integrity We mean what we say, and do it! (EasyJet, Our values, n.d.) Upon initial glance, the governance page contains information that indicates that the organization’s board of directors commissioned setting principles and ethical policies, of which, it was explicitly emphasized that the “key to these principles is working in an open and honest manner” (EasyJet Airline, Governance, n.d., par. 2). Likewise, the code was apparently patterned from the UK Corporate Governance Code which allegedly requires the following information to be disclosed: Terms of reference for the Finance Committee  Terms of reference for the Remuneration Committee Terms of reference for the Audit Committee Terms of reference for the Nominations Committee  Terms and conditions of appointment / reappointment of the non- executive directors Matters reserved for the Board Non-Audit Services Policy (EasyJet Airline, Governance, n.d., par. 3). Finally, two (2) other documents were disclosed to be incorporated and accessible: (1) Corporate Governance Pages of the Annual Report; and (2) division of responsibilities of the Chairman and CEO (EasyJet Airline, Governance, n.d., par. 4). The Corporate Governance Pages of the 2012 Annual Report are found on pages 44 to 48 and contain the following major portions, to wit: principles statement, statement of compliance, leadership, directors’ conflicts of interest, board engagement with investors, board committees, relations with investors, internal control, risk management and internal audit (EasyJet, Corporate governance, 2012). The Ethics Resource Center has recommended a code outline that should apparently contain the following format: I.    MEMORABLE TITLE  II.   LEADERSHIP LETTER  III.  TABLE OF CONTENTS  IV.  INTRODUCTION-PROLOGUE  V.   CORE VALUES OF ORGANIZATION  VI.  CODE PROVISIONS-SUBSTANTIVE MATTERS  VII.  INFORMATION AND RESOURCES (Ethics Resource Center, 2009, p. 1). From the course modules, it was explicitly defined that the contents of ethical codes are as follows: “standard of conduct, obeying the law, employees,consumers, shareholders, business partners, community involvement, public activities, environment, innovation, competition, business integrity, and compliance/monitoring” (University of Salford Manchester, What is the content of ethical codes?, 2012, p. 6; Crane and Matten, 2007). Since EasyJet’s governance principles and guidelines are integrated within the organization’s Annual Report, it could be deemed oblivious of following the suggested format or even incorporating all the contents noted that generally appears in ethical codes. Their corporate governance code focused primarily on responsibilities and role of the board in governing the operations of EasyJet Airline. As such, no extensive or comprehensive guidelines were provided for other stakeholders such as the employees, customers, business partners, and even the community members and government agencies that administer their operations. The following strengths and weaknesses of EasyJet’s codes are hereby presented: Strengths of the Code Easily accessible and available for all users; Written in English as the universally known language Formally structured and professionally written as it is incorporated in the organization’s Annual Report. Weaknesses of the Code Focuses more on responsibilities and roles of the board of directors; Based predominantly on the noted June 2010 UK Corporate Governance Code; Lacks guidelines and principles that govern the behavior of other stakeholders, especially: management, employees, customers, business partners, the community, and government agencies; Lacks information to gauge the effectiveness of the code, noted to be one of the 4 key areas of ethical codes (University of Salford Manchester, 4 key areas, 2012, p. 6); If other stakeholders need to access policies on safety or privacy, they would have to separately search for these concerns if not contained in a comprehensively designed and structured code of business practice As a corporate governance document, it does not provide any link to the corporation’s explicitly stated values. In the absence of guidelines that should direct the behavior of various stakeholders, it is still commendable the EasyJet has explicitly integrated thrusts for corporate social responsibility (CSR) on their official website: http://corporate.EasyJet.com/sustainability/corporate-soc-responsibility.aspx?sc_lang=en. According to Erwin (2011), “corporate codes of conduct are a practical corporate social responsibility (CSR) instrument commonly used to govern employee behavior and establish a socially responsible organizational culture” (p. 535). With EasyJet’s explicit affirmation on CSR, management has manifested commitment to the following specific areas: safety, connecting with their people, and the environment (EasyJet, n.d.), among others. However, the absence of clear guidelines, princiles, and policies governing ethical behavior of all employees make it difficult to ascertain the extent and effectiveness of abiding by the organization’s commitment to CSR. As emphasized by Erwin (2011), the effectiveness of the code could be measured in terms of conformity to the following: “‘Public Availability’, ‘Tone from the Top’, ‘Readability and Tone’, ‘Non-Retaliation and Reporting’, ‘Commitment and Values’, ‘Risk Topics’, ‘Comprehension Aids’ and ‘Presentation and Style’” (p. 538). As far as EasyJet’s corporate governance is concerned, the pertinent ingredients that were contained include tone from the top (based on the extensive and comprehensive information regarding the board’s corporate governance policies and procedures) as well as risk management. When searching for privacy policies, which are integrated in other organizations’ codes of business conduct; for EasyJet, privacy policies were not included within the corporate governance document but could be accessed using this link: http://www.EasyJet.com/en/book/privacypolicy. Accordingly, the information that could be found from this link includes the following: use of customer information, security for personal information protection, disclosure to third parties, and securing customer content (EasyJet Airline, Privacy policy, n.d.). These are actually easy to access and readily available using the search engine. Likewise, it was disclosed that if further clarifications are required, it is the customer services department that must be contacted. However, no effective link was included herewith and it is, therefore, presumed that another search would have to be conducted to make the necessary clarifications on issues pertaining to privacy. Overall, it is deduced EasyJet Airline has more improvements to be made in terms of designing a more effective and comprehensive code of business practice. The organization’s ranking, which gauges their performance from the perspectives of the customers, was revealed as 3-star based on product and service quality standards (SkyTrax, 2012). A more detailed examination of their rationale for generating a 3-star rank could be viewed as follows: BOOKING WEBSITE : CUSTOMER SUPPORT   -   EasyJet Website : Language options Website : Service Information Website : Ease of Use Website : Product information Website : Fares & Taxes info Fares : Clarity of add-on charges Credit Card payment fees Checked baggage charges Online Check-In facility Online Manage Booking facility Departure / Check-in information Ease contacting Customer support Cost contacting Customer support Quality of customer support help Handling cancellations Handling refunds Excess Baggage charges     Source: SkyTrax, 2012 From the ratings, the ability of employees to cater to the customers’ needs through access to information, use of website, language options, quality of customer support help, product information, all needs to be improved. A way to make the necessary strategic improvements is to provide a detailed code of business practice through focusing on the areas that need much improvement and address customers’ complaints more effectively, as required. Component 1: Focus on Safety One of the key components noted in the organization’s CSR is the commitment to safety and to ensure no compromises when addressing this issue. As an airline company, it is understood and expected that all personnel must focus on providing safety fto consumers as they travel and use the organization’s services. As emphasized, “the safety of our customers and staff is EasyJet’s number one priority; it remains a core part of our DNA. From all across the business, the boardroom to the flight deck and the check-in desk to the maintenance bay, safety informs everything we do and is the starting point for every decision, at all times” (EasyJet Airline, Safety first and foremost, 2011, par. 1). As such, this component is clearly and directly linked to the corporate’s value, as above mentioned. One hereby deduced that by presenting information about safety under CSR, the organization was merely announcing commitment to this key component but failed to provide explicit guidelines on how exactly they would enjoin all personnel at various organizational levels to adhere to this value. It was revealed that “at EasyJet we take the welfare of our passengers extremely seriously whatever their needs and disabilities. In 2010/2011 we carried over 350,000 passengers with reduced mobility from across Europe and have worked closely with European disability groups across various countries to improve our service offering for this group of travellers, but without compromising our safety” (EasyJet Airline, Safety first and foremost, 2011, par. 12) – which is a very general statement and pledge. A more detailed policy for customers, business partners, and those assisting in delivering the safety value would be needed to focus on Do’s and Don’ts as well as provide specific situations and scenarios that pose challenging questions which are effectively responded to. Component 2: Value for People The organization’s value for teamwork was specifically emphasized under CSR’s Connecting with Our People (EasyJet Airline, Connecting with our people, 2011). It is surprising that one of the notable ethical guidelines appeared, which discussed the importance of gifts and gratuities, to wit: In order to provide clear guidance to employees and avoid potential conflicts of interest, we have a strict policy that prevents any employee accepting gifts over a nominal value of ?35. When required, EasyJet holds a staff raffle of all the gifts that are received. Every employee across Europe is entered into the draw and allocated a unique reference number. Numbers are then drawn at random and winners have the gifts sent directly to their home (EasyJet Airline, Connecting with our people, 2011, p. 1). The following detailed information is also provided herewith: people strategy focusing on talent and engagement; as well as a method of feedback on the performance of people through ‘uSay’ (EasyJet Airline, Connecting with our people, 2011). The feedback mechanism was noted to be designed for the staff to achieve the following: “aimed at obtaining employee feedback from everyone across our European organisation as well as each of our main communities. In 2011 our overall score has improved to 40%. We will be using the results to identify improvement areas and action on suggestions” (EasyJet Airline, Connecting with our people, 2011). This is a commendable move and is one of the goals of a code of ethics and business practice. Component 3: Concern for the Environment Another major component that demonstrates the organization’s commitment to their values and to business ethics is their concern for the environment. Information and policies governing environmental concern and protection are as follows: To be efficient in the air To be efficient on the ground To lead the move to more efficient flying (EasyJet Airline, EasyJet and the environment, 2011, par. 4). Information contained herein clearly stipulates the rationale for the organization’s commitment regarding the environment as of prime concern. To ensure that this particular focus is achieved, EasyJet acknowledges that “oversight of our environment policy is carried out by a manager in our regulatory team, and the EMT receives regular updates on environmental policy as part of our reporting on regulatory issues” (EasyJet Airline, EasyJet and the environment, 2011, p. 1). Thus, one could deduce that through ensuring conformity to regulations on preserving and conserving the environment, EasyJet actually abides by ethical standards of society and of the world as a whole. The focus on conserving and protecting the environment is consistent with one of the contents enumerated by Crane and Matten (2007). Likewise, it could be linked to the corporate value of safety through ensuring that all organizational actions and endeavor adhere to environmental efficiency and sustainability, which forms part of the legacy to future generations. More commendable was the organization’s inclusion of actions that focus on the effect of their operations on the environment and finding innovative ways for improvement (EasyJet Airline, EasyJet actions, 2011) – which is again an integral component of an ethical code (Crane and Matten, 2007). Conclusion The current paper has successfully presented a critical analysis of EasyJet Airline’s code of conduct, which was laid out as a corporate governance portion in their Annual Report. Inasmuch as the code focused predominantly on the board’s responsibilities in governing the organization, it is weak in terms of integrating the crucial components and ingredients that were stipulated in standard codes of conducts of corporations. However, the organization’s explicit commitment to CSR is indicative of their ability to abide by ethical and legal standards, pursuant to the values that were explicitly defined. However, since the organization operates in different strategic locations, it would be viable to consider means of improving their code by structuring a separate code of business conduct that contains all the necessary ingredients and components that would guide various stakeholders in that they behave according to ethical, moral and legal standards. Portions such as privacy policies, gifts and gratuities, environmental concerns, and innovation, among others, could be integrated into a more cohesively and comprehensively designed code of ethics and business practice that would aim to improve the organization’s overall performance and enable them to increase their ranking in the airlines industry. References Crane, A. and Matten, D., 2007. Business ethics. s.l.:Oxford Press. easy Jet Airline, n.d.. Our journey. [Online] Available at: http://corporate.EasyJet.com/about-EasyJet/our-journey.aspx?sc_lang=en [Accessed 31 December 2012]. EasyJet Airline, 2011. Connecting with our people. [Online] Available at: http://2011annualreport.EasyJet.com/corporate-responsibility/people.aspx [Accessed 31 December 2012]. EasyJet Airline, 2011. EasyJet and the environment. [Online] Available at: http://2011annualreport.EasyJet.com/corporate-responsibility/environment.aspx [Accessed 31 December 2012]. EasyJet Airline, 2011. EasyJet’s actions. 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