Management Styles: Ryanair versus Virgin Atlantic - Case Study Example

Managing Business Organizations: Management Styles: Ryanair v Virgin Atlantic Introduction Management or leadership styles at Ryanair and Virgin Atlantic are rooted in the European tradition of managing business with coolheaded obscurity though both being in the passenger air transport business, have adopted a more aggressive policy of reorientation towards market-led growth. Current management styles of the two companies go along with this latter theoretical conceptual paradigm (Mullins, 2007). While Ryanair is a low-cost no-frills airline that caters to the low budget passenger, Virgin Atalantic operates in the long haul market with all its resources being concentrated on major transatlantic routes and others from Heathrow Airport and Gatwick Airport in London. While the two carriers have very little else in common except the European roots, they play a pivotal role in the European air passenger transport sector. Management structures and styles too differ with Ryanair concentrating greatly on the domestic inter-European market segments and Virgin Atalantic on diverse destinations such as North America, the Caribbean, Africa, the Middle East, Asia and Australia among others. Management structures at Ryanair essentially facilitate a more concentrated businesslike approach in which there is very little freedom for the subordinate staff to make decisions or act independently. On the other hand at Virgin Atlantic such structures essentially support an easy-going friendly atmosphere. Such divergences in management styles serve as the catalysts of great change. Richard Branson, the founder of Virgin Atalantic, has been more amenable to change than O’Leary the Chief executive Officer (CEO) of Ryanair. However it’s difficult to draw broader conclusions on these preliminary suggestions without an in-depth analysis of the respective management styles of both. Analysis It’s necessary at the outset to focus attention on the impact of structural constraints on management styles at these two airlines due to the fact that management structures are primarily determined by the nature and the size of the business organization. Virgin Atlantic is a Full Service Carrier (FSC) and its management structure is much more complex and thus requires a more detailed analysis in order to understand the implications of the management style. Both Virgin Atlantic and Ryanair have had a checkered history of operations in intra-continental and inter-continental markets in the world. Now they are faced with an intensely competitive environment both strategically and operationally. This environment has been evolving through a number of other variables – the ever increasing density of the airline industry in Europe and North America, pressures of global regulatory regimes, rising costs, choosy customers, falling demand and above all, a global recession as of late. The current market-centric performance of the two airlines is determined by their internal and external environments. For instance the internal environment consists of the airline’s strength/weakness and opportunity/threat framework, organizational culture, management/leadership style, management and organizational structures, quality, value chain and HR management, communication, operations, finances, marketing, operations and so on. On the other hand the external environment consists of political, economic, social, technological, regulatory/legal and general environmental factors along with external supply chain management, strategic competitive environment and so on. Management styles of these two airlines thus require strategic context based analysis to identify and address many other implications arising from the kind of environment in which each operates. Though there are some commonly shared characteristics by both the airlines, there are some remarkable differences too. Branson has been noticed for his easy going manner and down-to-earth approach in managing the staff while his counterpart O’Leary at Ryanair has been noted for his stiffer and matter-of-fact behavior towards his staff. Thus it’s not difficult to notice the theoretical and conceptual frameworks that are obviously applicable to each management style. For instance Virgin Atlantic’s Branson has a management style that is more in line with democratic leadership style while O’Leary’s style is more in line with the autocratic leadership style (Bennett, 2006). According to democratic leadership style the manager wouldn’t hesitate to delegate power, authority and even responsibility to his subordinate staff. Since Virgin Atlantic places emphasis on brand equity creation for the customer, there is much to be seen and heard between the staff and the customer. In other words the staff at Virgin Atlantic has to perform a number of tasks to satisfy the customer. Therefore a more democratic management style based on motivation can be seen at Virgin Atlantic. On the other hand Ryan air’s approach to staff management is much less democratic and more autocratic. In fact senior managers require the subordinate staff to act in accordance with their contractual obligations to the supplier company, Crewlink. Branson adopts a far more strategically imperative approach in his easy-going manner of management. The overall conglomerate type organizational structure of Virgin Atlantic owes its origin to the multiple businesses that Virgin operates in Europe and elsewhere as fully owned and associate subsidiaries. This typical conglomerate style management approach is in complete contrast to the Ryan air’s style. In fact the recruitment process at Virgin Atlantic is based on impressing the need for positive customer relations on the staff. Thus any potential recruit gets the first taste of what the job would be like at the initial interview itself. This is further augmented by the repeat message delivered at every subsequent stage, i.e. the customer comes first. Ryanair depends less on customer relations because it depends exclusively on the price factor. Thus its strategic management style requires much less customer orientation in planning. There is also the internal environmental factor and the organizational culture which play a very significant role in deciding the kind of management style. Organizational culture succinctly defined as a system of beliefs, values, norms and concepts commonly shared by the members of an organization, is typically the basis of many monument styles. Virgin Atlantic has a very positive organizational culture based on an equally positive system of customer-centric values (Mullins, 2008). Brand equity or brand value creation for the customer requires a more dynamic management style that would enhance its equity value in the eyes of the customer. This is how Virgin Atlantic has acquired its current reputation for being one of the most customer friendly organizations in Europe. Ryanair has been under pressure to change its management structure to suit the current trends in low-cost no-frills competitive environment though an alternative perception of the cost-competition as against brand loyalty exists to support its current policy. Its management style has forced it to abandon some of the more culture-centric management practices that are essentially focused on diversity programs and recruitment processes (Doganis, 2005). That’s where Virgin Atlantic has been successful. For instance its recruitment process is centered on fostering a dynamic value enhancing relationship with customers so that new recruits realize the organization’s philosophy of creating brand loyalty at the very beginning. Ryan air’s approach based on recruiting employees through a third agency has little success in inculcating organization’s own values in them. Management style is equally important when it comes to employee motivation. Human Resource Management (HRM) practices adopted at Virgin Atlantic are in conformance with the organization’s requirements. This is in fact the case with big organizations like Virgin Atlantic because they need to have a well motivated staff to perform on the lines of international norms in creating brand related values to the customer. The customer’s positive perception of brand equity is perhaps the best barometer of organizational success in a highly competitive airline industry in Europe. With a very high concentration ratio the European airline industry has been marked by a higher degree of on-and-off seasonal competition. Against this backdrop airlines’ HRM practices have acquired a still greater importance. Next employee relations in general and motivation in particular at both the airlines have to be examined with reference to their respective management styles. Virgin has adopted a very liberal employee relations policy of encouraging employees to be independent with a degree of freedom given to ensure operational independence. In fact Branson encourages greater participation in the decision making process of the company for his employees while O’Leary has little patience with divergent ideas of his employees. This contrast has been the most remarkable phenomenon between the two men. Better positive employee motivation can also be attributed to good pay. Ryanair pays much less to a new recruit while Virgin Atlantic pays well. Monetary and non-monetary benefits both lead to better performance and especially performance related pay as adopted at Virgin Atlantic would have a good impact on employee motivation. This type of strategy in managing labor relations cannot be ignored and it’s perhaps one of the most desirable policies to achieve organizational goals in the long run. In the first place higher labor turnover figures at Ryanair could be attributed to poorly managed labor relations and poor motivation policies. In contrast Virgin Atlantic has successfully been carrying out motivation programs of a very high quality and acceptance (Harris and McDonald, 2004). The degree of support among employees at Virgin Atlantic for such programs has been consistent enough for the management to initiate changes at every level of the organization. Turnaround times at Ryanair are very tight with about 20 minutes per flight while at Virgin Atlantic they are far more stretched to accommodate divergences liberally. This is another factor that has been responsible for the current difficulties with the management style of Ryanair. When pilots, on-board and ground staff are employed with a view to meeting just the prevailing demand for seats without much attention being paid to trends, some motivation related constraints begin to develop. Ryanair’s policy of recruiting through a third agency has been one of the reasons for its inability to successfully manage its employee relations. In fact the practice is intended to reduce costs so that the benefits can passed onto the customer; however it has its disadvantages too. Management style at Ryanair is based on meeting contingency demand and not intended to achieve pre-defined long term organizational goals such as profitability, market share and better share price. Thus Ryanair’s communication strategy too has some flaws. In other words horizontal and more hierarchical organizational structure doesn’t allow the management to reach out to lower level employees. Motivation apart these lower level employees need encouragement to perform better. Such encouragement should come from the management style itself. This is essential for the responsibilities to be evenly entrusted to employees and above all to bring about the desired quality management perspectives at the organizational level in the long term. On the other hand Virgin Atlantic has been successful here by adopting a management style that readily accommodates these variances. Management styles that are more democratic in nature encourage communication strategies that require frequent feedback from lower level employees to the top management. Virgin Atlantic has adopted some innovative communication strategies to achieve these goals. Its communication flow from top-to-bottom and vice versa has been successful enough to generate some positive interest among employees in the successful management of the day-to-day affairs. As against this scenario of Virgin Atlantic, Ryanair has adopted a management style and a communication strategy that leave much to be desired. In the first place its management style has failed to encourage participation in quality improvement programs simply because it emphasizes cost-cutting measures so that benefits can be passed onto the customer. That is basically lower prices. On the other hand Virgin Atlantic places emphasis on quality improvement. Its recent successes in revenue-to-miles passenger ratio and gross revenues could be attributed to these quality improvement programs. Virgin Atlantic also has been involved in merger talks, without success so far, and has introduced some innovative management techniques to bring about a turnaround in revenues and customer satisfaction that has little parallel with Ryanair. In the process the business organization might fail in its efforts to successfully implement long term strategic initiatives though. In this respect effective use of communication techniques within and without the organization is emphasized by strategic management experts in order to achieve these long term objectives. Communication within the organization is necessarily influenced by its leadership style and organizational culture and structure. A vertical top-down structure with an autocratic leadership style is less likely to facilitate efficient communication between different layers of the hierarchy while conversely a horizontal structure with a democratic leadership style would more likely facilitate good communication flow between departments. Strategic long term goals such as market share, profitability, an increase in the share price, quality improvements, customer satisfaction and brand loyalty have to be achieved by adopting such strategies as good internal and external communication practices, employee relations, good motivation strategies and HRM practices, sound financial management including positive cash flows and better overall performance metrics. Conclusion Management style is one of the most pervasive strategic techniques adopted by the business organization with a view to achieving its goals. Virgin Atlantic as against Ryanair has adopted a more customer-centric employee-friendly democratic management style. Ryanair on the other hand has chosen to adopt an autocratic and acerbic approach to managing the business to achieve it organizational goals by cutting down on costs. Thus Virgin Atlantic places emphasis on quality improvement and brand loyalty through brand value enhancement for the customer while Ryanair palaces emphasis on passing benefits of lower cost to the customer by way of lower prices. Virgin Atlantic is a conglomerate style big organization with resources concentrated in a number of diverse businesses and therefore is a FSC while Ryanair is a low cost no-frills airline that operates within the European Continent. Thus the former’s management style has been basically determined by accommodation of divergent employee views as against the latter’s failure to be open towards its employees. REFERENCES 1. Bennett, S. 2006, A Sociology of Commercial Flight Crew, Ashgate Publishing, Ltd, Hampshire. 2. Doganis, R. 2005, The Airline Business. (2nd ed), Routledge, New York. 3. Harris, P. & McDonald, F. 2004, European Business and Marketing (2nd ed), Sage Publishers, London. 4. Mullins, L. J. 2007, Management and Organisational Behaviour (8th ed), Financial Times Prentice Hall, Essex. 5. Mullins, L. J. 2008, Essentials of Organisational Behaviour (2nd ed), Financial Times/Prentice Hall, Essex. Read More