Virgin Australia Airlines: A Case Study in Management and Leadership

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management and leadership
Virgin Australia Airlines
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Table of Contents
Introduction.................................................................................................................................................2
About the company.....................................................................................................................................2
Leadership...............................................................................................................................................3
Management:...........................................................................................................................................3
Differences between the roles of managers and leaders...........................................................................6
The theories of Classical Management Theories.........................................................................................6
The Scientific Management Theory-.......................................................................................................7
Behavioral Management Theory............................................................................................................10
Conclusion.................................................................................................................................................13
References.................................................................................................................................................14
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Introduction
The managers and leaders both are important for an organization however, they have different
functions which they perform at any organization. In this report a comparison has been brought
about between the management and leadership and how it can be used in an organization
effectively. The organization where the differences have been entailed is the Virgin Australia
Airlines. This is an airline services providing company in Australia and it is the largest airline in
terms of fleet of airplanes in Australia. The company started giving its services from 31st August
2000 and was formerly known as the Virgin Blue with only two aircrafts and were operating on a
single route. It has its head office in the Virgin village in the Bowen Hills in Brisbane. The
cofounder of this company was Richard Branson who was a British Businessman and was the
founder of Virgin Group and the other founder was Brett Godfrey who was also the CEO of the
company.
About the company
Virgin Australia has a strong position in the airline market of Australia with its strong brand
image and innovate ideas. It has the largest fleet of aircrafts in Australia which are consisted of
primarily of Boeings aircrafts and Airbuses. There are also low average fleet which assists the
company in keeping maintenance cost low for the aircrafts. It offers cheap flights to many major
destinations across the world and in Australia. It is known for its top-notch quality of services,
records of record flying, strong brand image, punctuality and innovativeness. These are key
success factors for this company. They had started off as low-cost carrier and have not improved
their services to become one of the new-world carriers in the world. After this as a part of
renewal strategy they have changed the name of the company from Virgin Blue to Virgin
Australia.
The organization structure of the company consists of two broad division and these are
commercial and operations. The operational division is consisted of airplane, engineering and
airports while the commercial division consists of the revenue management, advertising, sales,
branding and customer management. They have renew their structure and have shifted from the
traditional hierarchical structure. This has enabled more decentralization and easy flow of
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information. This has made the employees develop more confidence in the management of the
company and thereby reduced the friction in the different levels of the organization hierarchy and
the existing gaps between the different levels.
Leadership
A lot of definitions for leadership are present for leadership. Peter Drucker concluded that leader
is only defined as any individual who has gained followers for himself. Followers could be
gained by influencing people but it should not ignore the integrity for the sake of attaining this. It
is believed by several theorists that leadership is not different from the process of societal
influences which occur among all the members in a group (Hollander, E.P. and Offermann, L.R.,
1990). Also others have a belief that anyone who is doing leadership is practicing it so that he or
she leads effectively. So many researchers are still concerned with the archetypal question that
whether leaders are born or they are made. The question that whether it is some sort of aura an
art which can be taught is also of concern for researches. Various answers have been given for
these questions. Whilst, it is completely acceptable that leading is not an easy task, the person
who is a leader must possess necessary attributes like trust, creative ability, vision, selflessness,
commitment risk taking, toughness, visibility and communication skills. The dexterity which
enables someone to inspire and lead a mass of people in a direction is called leadership.
Leadership is a mutual purpose which employs a leader to influence an individual or mass of
people in order to achieve an objective enthusiastically and willingly (Yukl, G. and Van Fleet,
D.D., 1992).
Management:
Management is the procedure employed in order to accomplish the goals and objectives of an
organisation. Management can also be known as a set of processes used for achieving a goal. It is
a regimen of managing a number of things simultaneously in the manner which suits best. It is a
skill or art of completing a task in a team of many or some people. Management is applied in
almost every field be it sports, education, offices, hospitality or whatsoever. There are five major
functions of management which are:
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1. Planning: Planning is done in order to determine direction of an organisation and is
oriented to future. It helps in making intelligent decisions in a systematic way for the
future of the company.
2. Organizing: Organizing needs an authoritative formal structure and a direction and also
the working of this authority which defines, arranges and coordinates the subdivisions of
work in such a manner that every part relates to another one in a coherent and united way
in order to achieve the prescribed goals and objectives.
3. Staffing: The function of staffing is to hire and make a team of people or a staff for the
venture at managerial and non-managerial levels both.
4. Directing: The function of directing involves motivation, leadership, communication and
supervision in order to enable the employees to perform their jobs and tasks in the best
manner possible so that they may achieve the desired objectives or goals.
5. Controlling: The controlling function includes such activities which are employed to
make sure that the events stay dedicated and determined and do not drift away from the
pre-planned objectives.
Leader: A person to whom the job of management is assigned is known as a manager. And it is
predominantly believed that managers through planning, staffing, organising, budgeting,
problem eradicating and controlling attain the desired goals and objectives. Whereas a leader sets
up a direction, situates people, inspire and motivate them (Bryman, A., 1996). Some researchers
believe that a leader possess soul, the creativity and devotion. Whereas a manager processes
mind, logic and perseverance. A leader is believed to be flexible, inspiring, independent,
innovative and courageous whereas a manager is the one who is analytical, consulting,
stabilizing, authoritative and deliberate (Yukl, G.A. and Yukl, G., 2002). The significant
variations between a manager and a leader concerns the workplace and are deduced as:
Process Management Leadership
Establishment of
Vision
 Planning and budgeting  Sets up direction and
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 Constructs steps of and sets up
timelines
 Shows impersonal attitude regarding
vision and the goals
constructs the vision
 Formulates strategic plans
for achieving the vision.
 Shows a very passionate
attitude for the vision and the
objectives of the company.
Human resource
Development
 Organizing and staffing
 creates the organizational structure
 Delegation of responsibility
 Delegation of authority
 Executes the visions
 Builds policies and procedures to
execute vision
 Shows low emotion
 Limits the choices of employees
 Aligns organization
 Talks about the vision,
direction and mission
 Impacts creation of teams,
coalitions and partnerships
which understand and
acknowledge the vision
 Shows driven and high
emotions
 Increases the choices
Vision Execution  Controlling
 Identification of problems
 generating solutions for the
problems
 Monitoring the outcomes
 Provides motivation and
encouragement.
 Boosts up the workers to
overcome barriers
 Fulfills the basic needs of
humans
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 Takes an approach which is less risk
for solving problems
 takes an approach for
solving problem even if it is
of high risk
Vision Outcome  vision is on the order and the
predictability  Gives expected
outcomes steadily to the different
stakeholders through leadership.
 fosters changes which are
productive and dramatic, like
new approaches or products
Differences between the roles of managers and leaders
 A manager is an administrator; the leader is an innovator.
 The manager is believed as a facsimile; the leader is the original one.
 The manager works by maintaining; the leader works by developing
 The manager emphasizes on the structures and systems; the leader emphasizes on the
concerned personnel.
 The manager depends on control; the leader is trust-oriented.
 The manager possess a perspective of short-range; the leader possess a perspective of
long-range.
 The manager questions when and how; the leader interrogates why and what.
 The manager’s eye is consistently on the base line; the leader keeps an eye is on the
horizon.
 The manager works by imitating; the leader works by originating.
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 The manager acknowledges and takes up the status quo; the leader makes challenges with
it.
 The manager is the archetypal good serviceman; the leader is her or his own person.
 The manager executes things right; the leader executes the things which are right
The theories of Classical Management Theories
The revolution in the industries stimulated the development of management ideas for increasing
the productivity of the workers in the industries (Koontz, H. ed., 1964). The earliest theories
were called as the classical theories of management and were mostly based on the scientific
principles and methods. Few of the classical theories are mentioned below which can be used by
the Virgin Australia for enhancing the productivity of tits employees and for efficient
management of work flows.
The Scientific Management Theory-
Many different writers and research scholars have created many theories of management for
boosting the performance of their organization and this has made the jungle of management
theories (Koontz, H., 1980). The father of scientific management was F. W. Taylor who gave the
scientific theory for management. In this section their work is presented for linking it to the
current management practices in Virgin Australia Airlines
1. F. W. Taylor:- this theory was published in the year 1911 in the famous work titled
“Principles of Scientific Management” (Koontz, H., 2010). He had advocated that the
managers must collect the traditional knowledge which are possessed by the workers and
then it is classified and reduced to for laws, formulae and rules. According to him the
managers must take over certain tasks like the scheduling and planning of the work which
were earlier done by the workers as this will enable them to cope with it well as they will
have an increased understanding of the work and thereby they can plan for it. the
fundamental principles that was followed by Taylor was the underlying the scientific
approach to management which is given as follows:
a. Replacement of the thumb with the science or the organized knowledge.
b. Obtaining the harmony instead of the discord in the actions of the group.
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c. Attaining a co-operation of workers instead of the chaotic individuals.
d. Working for maximized output, instead of the output which is restricted.
e. Development of all the workers to the maximum extent was made possible for
their own with the development in the training and this was also in the interest of
the company.
According to him, if the management and labors are combined together to achieve an increased
productivity, the profits will be enhanced to a level that is sufficient for the labors and
management (Adeoti, O., George, O. and Adegboye, M., 2013). He had used the time-motion
studies for dividing each job into several tasks found in the line of production and then designed
them to be faster and best methods for performing each of the components present in the
production line. Then he had established as to how much the workers should be able to work
with the machines, materials and the equipment. He also encouraged the industrialist and the
employers to give higher rates of pay to the workers who were more productive in comparison to
the workers with the lower productive workers. This judgement was to be established using the
scientific rate and this would be advantageous to both the employees and the company. Thus this
wage rate came to be known as the “Differential Rate System” and this name was given by
Taylor.
2. The Administrative Theory
This theory was given by Henri Fayol (1841 to 1925), who was a French Engineer. Apparently
he was developing it at the same time when taylor was developing his scientific management
theory in USA. Fayol was more concerned with the implementation and authority present within
an organization. According to his there has to be a consistent set of principles, which has to be
implemented by all the organizations for running properly (Adegboye, M., 2013). According to
him there should be sound policies of management which were falling into five identifiable
functions. And these functions were the planning, organizing, commanding, coordinating and
controlling. From this insight he has developed the famous 14 principles to management which
were found by him as common to all organizations and these are as follows
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3. The Bureaucratic Theory:- this theory was given by Max Weber, who was a German
Sociologist. He had developed a theory of bureaucratic management which was
concentrated on the need of a strictly defined hierarchy of the organization, and was
governed by clearly defined rules and regulations and there was also clear lines of
authority. Weber had considered that the ideal organization were like bureaucracy where
the activities and the objectives were crafted on the basis of rationally and logic and
where the division of labor were spelt out explicitly. He was also of the opinion that the
evaluation of performance and competence has to be based on the merit. And he has
derived a conclusion that the bureaucratic leadership was an indispensable practice for
the organization where mass administration is needed and it is true even in current society
(Kitana, A., 2016). Weber had recognized that the functional aspects of any bureaucratic
system however he had failed to uncover the benefits and the importance of informal
organization. The bureaucratic organizations are a necessity in the modem business
practices as a prerequisite for maximizing efficiency. And it has a lot common features
with the Taylor’s scientific management. This also laid strict emphasis on the concrete
application of the principles which were derived from scientific studies to work. There
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has been a strong criticism of these theories as they were inflexible, were more
authoritative and were lacking in human values and emotions (Adetule, P.J., 2011). There
was a need to formulate new procedures and rules which was necessary to remove the
bureaucracy in the organizations. Instead of finding solutions to the problem of this
theory people started making new rules and procedures which took away their valuable
time and this led to the dysfunctions in the bureaucratic organizations like displacement
of the goals and the objectives, rigidity, self-perpetuating, impersonality, limitations of
the categorization, anxiety, cost of controls and empire building. There was a resultant
timidity, technicism and conservatism because of strict adherence to rules and
regulations. There was a prevalence of people avoiding their responsibility on the basis of
legal terms for accomplishing the goals of the organizations. This further sabotaged the
bureaucratic organizations as the initiatives were restricted by the regulations and the
rules. The organization which adopt the bureaucratic organizations structure are not able
to generate creative and innovative ideas and this can result in the organization becoming
obsolete and may hinder tint he competition with the other companies in the industry.
Behavioral Management Theory
The classical theories of management principles were not found to be useful for the various
situations in the organization related to labors as these theories had ignored the human element in
management. And therefore, the behavioral school developed as a natural response to the paucity
of behavioral aspect in the management theories (Mahmood, Z., Basharat, M. and Bashir, Z.,
2012).
Such theories were also called as the human relations theory of management as it addressed the
human dimension at the organization. These theorists have considered that the better
understanding of the human behavior at the organization will help in increasing the
organizational performance and these behaviors were the conflict, group dynamics, expectations,
improved productivity and motivation. These theorist have visualized the employees as
individuals and did not consider them to be equivalent to the machines. They treated the
employee as assets and as resources for the company (DuBrin, A.J., 2011). These theories can be
used by the Virgin Australia Airlines managers for adding the social skills in their management
practices. Few of the behavioral management theories are given below.
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Hawthorne studies were a part of the contributions made by the Elton Mayo. This study was
conducted in the city of Chicago at the Western Electric Company and in this the effect of
lighting was studied on the productivity of the workers.
The father of industrial psychology is considered to be Hugo Munsterbeg (1863-1916). He had
attempted to formulate the practical application in the psychology for the industries (Ivancevich,
J.M., Matteson, M.T. and Konopaske, R., 1990). He considered that the psychologists could
provide their help to the industries in the following prime areas which are given below:
a. For finding out ways for the identification of the person who is a best fit for the job.
b. For identification of certain psychological situations in the organization for gaining optimum
efficiency.
c. For discovering out the ways for influencing the behavior of the individuals to be in
congruence with the objectives of the management.
In another work Mary Parker Follett had given a perspective of social work and political science
to the management theories. According to her work there is an importance to the functioning of
the whole group and not just the individuals working within an organization. The principle of
‘power over’ should be replaced with ‘power with’ in the management employee relationships.
Integration should be used for the conflict resolution that is finding a solution for a conflicting
issue which could satisfy both the involved parties (Kotterman, J., 2006). There has to be
attainment of an integrative unity in which the organization can operate as the functional entity
having different interconnected part that work together efficiently for achieving the
organizational objectives and goals.
Motivation theories were also developed to increase the social skills of the managers and also to
increase the productivity of the employees. The important theory of motivation was given by
Abraham Maslow. He had developed motivation theory of needs which was based on the
following assumptions related to the nature of humans (Healy, K., 2016). These are-
a. there are human needs which remain unsatisfied.
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