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5. Two confronting cultures

5.1 Organisational structure

The organisational structure of a company reflects its culture, its management style and its leader attitude in addition to the environment in which it has to operate. Without giving a full description of the two airlines structure it is worth saying that British Airways and Virgin Airlines mainly differ in two aspects: size and culture. Both companies have a structure which is mostly dictated by operational needs characteristic to every airline. British Airways has a more formalised structure with precise rules and procedures, due to its size and the global scope of its activity. A major change in the last years has been the reduction of its management layers, between the chief executive and the front line who interface with customers, from nine to five. It now has small ad hoc groups working in parallel with the formal structure, with responsibilities that cut across different functions, or in some case duplicated these functions. Virgin Atlantic is a more cost conscious, lean and mean organisation. It has a small, networked and dynamic structure. It relies more on personal initiatives, helped in this by its small scale and its leaders management style. Virgin in fact is one of the best delegated companies.

5.2 Corporate culture

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_________________________________Two confronting cultures The organisational culture consists of the deep basic assumptions, beliefs, values and norms which are shared by members of an organisation, arise from the organisations history and tradition and are modified by contemporary events. It can more simply synthesised as the assumptions about how people do things around here. The culture of an organisation is fundamental because the mission, the strategies and the way they will be accomplished will spread from this core of key assumptions, how it is managed and how effectively it is communicated and shared throughout the organisation. The culture will be affected from and will affect leadership and the style of management and will play a major role in customer satisfaction especially in the service industry where the absence of physical evidences must be replaced by a strong culture. Corporate culture can be described as a self sustaining system by McKinsey 7Ss model which includes Staff, Skills, Style, Shared Values, Systems and Structure, all mobilised by an overall Strategy. Those who would evolve a culture that can pursue an effective strategy must: hire the right Staff (service oriented), train them in the right Skills (emotional labour), manage them in the Style required (trust, empowerment), select values to Share with them (customers first), install the right Systems (performance appraisal), improve the Structure (less hierarchy, more cross-functional teams). Where all these six points on the hexagon have been dealt with they can help mobilise a coherent strategy (see Illustration 5.1). In BA and Virgin Atlantic marketing fuses with the highly visible corporate culture experienced by passengers. The culture is really what customers buy. It is a larger pattern in which the physical features, such as seating and food, are embedded. Product innovations can be rapidly imitated but the culture cannot be easily copied. It has to be built up and learned. Developing an effective service culture moves an airline ahead of its competitors with imitators are more likely to fail. One projection of an airlines culture can be observed in the behaviour of cabin staff on board of both airlines.

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_________________________________Two confronting cultures STRUCTURE

STAFF STRATEGY

SYSTEMS

SKILLS

SHARED VALUES

STYLE

Illustration 5.1 - 7Ss model

5.2.1 British Airways culture

British Airways could be easily defined as a role culture reflecting functional differentiation in its structure, but its not that easy. One organisation often harbours two or more contrasting cultures, posing more difficulties in order to remain successful. There are two cultures in British Airways, one high in the sky at 30,000 feet which is highly co-operative, service oriented focused on passengers and the other one on the ground highly competitive, politicised head-to-head with the external world, where it seems that fiercely adversarial values reigned. Middle management, which is key to the implementation of any strategy and the outcome of cultural change, is still ruled by separate functions and at the top all the weight still goes on the individualist functions of high finance and take-over. There is still some job to be done (see Illustration 5.2).

Competitive Politicised

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Functionalist

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Co-operative Service oriented

Illustration 5.2 - British Airways cultures The reason for BAs success lies in the radical change of its culture undertaken in the 80s and which is still going on, as Mr. Ayling stated recently. BA managed in the 80s to change from the airline of last resort to the worlds favourite carrier. The airline was grossly overmanned, unpunctual and strike prone, with a very special disdain for passengers. It needed a coherent philosophy on how the customer can best be served. Most of the change has been prompted by a marketing orientation. Customers have been posed at the centre of the attention and individuals have been empowered to take initiative. It learned to respond to customers requirements and co-act on individuals initiatives. Ayling is now concerned about how to remove the last vestiges of bureaucracy. A customer oriented culture is vary important for an airline. Its reputation relies mostly on verbal encounters between airline staff and passengers, most lasting less than 30 seconds. A company such as British Airways, with its 30 million passengers a year interacting an average 7.5 times per journey, could expect 225 million of such short interactions. Those dealing directly with customers must have room for discretion and personal initiative. They need to be looked after so that they can repeat this caring approach onto the customers.

Customers intuitive reaction is not to the product, but to an ambience, environment or culture within the cabin and at the check in desk. Even when staff are seen as professional and competent they are likely to be also seen as cold, and uncaring

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_________________________________Two confronting cultures bureaucratic in their response to customers. The how is often more important than the what, especially as a source of dissatisfaction. Cabin staffs content of work varies so much. They dont know what kind of emotional response will be called for (emotional labour). The best workers are in excellent physical and mental shape and must have close group bounds for sharing each others grief and pain. The culture must be one in which people pass on to others the quality of the care they receive. The supervisor gives trust, support and the advice and then leave them free to use their judgement. Much work in cabins and on counters is not personally fulfilling, they dont get customers gratitude and friendship. The praise therefore must come from colleagues and supervisors and must be an attribute of the culture. As seen in the 7Ss model evaluation and reward systems are an essential part of the culture and provide it with support and reinforcement. British Airways applies a twodimensional evaluation system for managers based on what people achieve and how they do it. The how is in fact an upward appraisal system. The appraisal system is then tied up to a cash bonus system, which directly rewards high combinations of what and how. There are some dilemmas that British Airways culture must reconcile: Lean and Mean versus Fat and Happy, individual responsibility versus group cohesion, specialists versus generalists, hard (operational) versus soft (service) part of the business. All those elements are essential to success. Passengers want both safe, comfortable, punctual aircraft and be treated as people, individuals whose cares and concerns matter. Leaders have to manage the conflict in order to get the best for their employees and their customers. Management must find a paradigm which reconciliates the top, the bottom and the middle of the organisation.

5.2.2 Management style and leadership at British Airways

The traditional style at BA had been bureaucratic, distancing, highly segmented between functions and characterised by low personal feedback, neglect of subordinates, depersonalisation and hierarchy. It has changed to a style where coaching, training and Fabio Emanuele Noia, London March 1996 35

_________________________________Two confronting cultures supporting are key to employees empowerment. Manager learn how to trust employees developing a vision and then letting employees use judgement and discretion while responsibility remains with them (see Chapter 12). Managers are shown how to build a support system, so that they can get help from one another outside the formal structure and across functions. Subordinates need to be shown how their job contribute to the larger whole. People are asked to make decisions, they are provide with a vision or framework in which they are then empowered to take action to respond to non standard situations. Mistakes are forgivable provided one tries. Lord King has had a more autocratic style to manage BA, but delegation at BA has started with Sir Colin Marshall who preferred to work one-on-one, delegating responsibility directly to key individuals. The management at all levels need to set a positive example which pervades the organisation. Mutually responsive relationships created with customers can also be reproduced in relation to other stakeholders. It is vital to give status and support to people in the middle. This enables all the elements of the circle to learn and develop.

5.2.3 Virgin Atlantics Culture

Virgin is a Virgin is a flat and partecipative organisation with an open, enterprising and flexible culture, staff are friendly, fun and courteous, the organisational climate is informal, encouraging, cheerful, morale is high and they enjoy their work. The culture at Virgin can best be described as a power culture, frequently found in small entrepreneurial organisations. The power source is namely Richard Branson with rays of power and influence spreading out from the central figure (see Illustration 5.3). The organisation depends on trust and empathy for its effectiveness as well as personal interactions for communications. There are few rules and procedures, little bureaucracy and the organisation is proud and strong. A power culture such as Virgin has the ability to move quickly, innovate and react well to threats. The culture at Virgin is certainly a major contributor to its success. Virgin culture is probably unique in the airline industry. It was built on the vision of an airline dedicated to premium customers which could do anything to satisfy them. Virgin is very much customer focused and the major difference with BA is that this Fabio Emanuele Noia, London March 1996 36

_________________________________Two confronting cultures orientation pervades the total organisation. Virgin Atlantic is also dedicated to the longterm, it has always sought growth in the long term and acted accordingly.

Richard Branson

Illustration 5.3 - Virgins power culture

Virgin corporate culture fully succeeds in conveying a sense of identity and unity of purpose to members of the organisation, facilitating the generation of commitment and mutuality, shaping behaviour by providing guidance on what is expected.

Theres no airline for which the role of

the leader in shaping the culture of an

organisation would be more true. The staff love and are proud of being part of Virgin and talking about their company. Richard Branson sets the tone for the style of the

airline, creating the assumptions of competence and furthering the trust without which an empowered organisation cannot operate, and leads by example. No rules, regulations or job descriptions have been developed. Examples have been set and story telling

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_________________________________Two confronting cultures developed. Reward systems provide bonuses related to companys result or the victory over a court settlement.

5.2.4 Management style and leadership at Virgin Atlantic

Despite the lower pay in relation to competitors people love working at Virgin Atlantic, there is some kind of mystic related to working for its leader. R. Branson, or Richard for its employees, is not the classic chief executive officer. He is Virgins biggest assets and biggest liability. Without him Virgin would not exist or would probably a completely different airline. He has been the shaper who have given a vision and then lead by example to gain the commitment of his staff. Inexperience brought chaos in the beginning, but Bransons presence on board and his willingness to make the work fun had produced an excellent service and high morale. Branson has adopted a more charismatic and laissez faire style of leadership. His ability to communicate has attracted both his people and the media attention. The result is an innovative, forward thinking, creative and quality oriented company. The management style can be defined as informal without being casual, but Virgins approach to business is totally serious. Branson has a particularly individual style of informal, risk taking, entrepreneurial management. He manages by empowerment and mega-parties for his staff. Directors and staff are equally trusted and involved in decision making, making of Virgin one of the best delegated companies (both responsibility and authority are delegated). Empowerment changes the way control is exercised. Everyone is close to the customer and loops are short with customer expectations being the principle motivation. Creative thinking is stimulated and people can emotionally rely on colleagues. Listening and walking around are positive attitudes Branson and other managers have at Virgin. Cross functional teams are widely spread and achievement is celebrated, there is a diffuse feeling of ownership of the airlines problems and achievement. Everybody works flat out to make the impossible happen. Fabio Emanuele Noia, London March 1996 38

_________________________________Two confronting cultures This has created the most amazing camaraderie. The environment is relatively small and it helps to know each other. The real secret of Virgin Atlantic is in changing the traditional hierarchy which saw shareholders as the key public of a company followed by customers and staff. Virgin puts its staff first, customer second and shareholders third (see Illustration 5.4).

British Airways before privatisation Satisfy Shareholders Customers Staff Illustration 5.4 - Hierarchy of publics

Virgin Atlantic Satisfy Staff Customers Shareholders

This has generated a 99% rate of staff retention contributing in stability and continuity. With a loyal, happy staff a company can achieve anything. The caring for the carer approach really works. If flight-attendants are enjoying the job, then customers will enjoy flying with Virgin. Putting staff first effectively puts customer first also and the shareholders benefit and they come first also.

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