INTRODUCTION
Ryanair Ltd was founded in 1985 by the Ryan family with a share capital of £1 and a manpower of 25 staff (Nortilli and Wong, 2014, p. 74). In that same year on 8 July when its inaugural flight took off from Waterford to London Gatwick (Ryanair, 2015, p. 6). It was incorporated as a public limited company Ryanair Holdings PLC on 23 August 1996 as an ultralow fares airline business, initially serving short distances in Continental Europe (Ryanair, 2015, p. 11; Nortilli and Wong, 2014, p. 74).
The unmistakable success of Ryanair in the air travel industry must be an outcome of valuable dynamics existing within the company, which powered its capacity to perform beyond its competitors and, thus, achieve beyond them, too. This paper attempted to analytically explore these dynamics through indicators from its organizational structure, leadership style, corporate culture, and teamwork in a hope that the success of Ryanair may be better understood.
2.0 ANALYSIS
2.1 Organizational Structure
Ryanair is managed by the Board of Directors, which consists of one executive (the CEO) and 10 non-executive directors, including the Board Chairman (Ryanair, 2015, pp. 15-16). Chairman David Bonderman, which served in the same capacity since 1996, establishes and maintains the Board’s working relationship with the CEO. Within the organization itself, functional heads directly report to the CEO. This structure is often duplicated in its international bases wherein systems, processes, and resources from the Ireland headquarters are extensively transferred. In effect, Ryanair employs a centralized functional structure.
A functional structure is most productive in organizations with highly defined and standardized products or services, which require a specialized set of tasks. It is a structure designed primarily to optimize operational efficiencies within each functional groups and by extension in the entire organization. Coordination of these specializations, thus, can be performed centrally (Elsaid, Okasha, and Abdelghaly, 2013, p. 1). This is also best suited in organizations with a limited range of services, making these highly predictable, characteristics which largely describes Ryanair with its single core service: air travel service.
One advantage of this organizational structure involves its accessibility to vertical integration, enabling the company to provide services quickly and at low costs and support Ryanair’s ultralow operating cost structure and price leadership strategy. However, there is an inherent danger, which results to highly specialized skill development of employees, seriously narrowing their functional skills and knowledge (Elsaid, Okasha, and Abdelghaly, 2013, p. 2). It can also develop narrow departmental perspective and focus, which can negatively impact on interdepartmental teamwork. However, Ryanair effectively avoided it (Lucas, 2012, n. p.).
2.2 Leadership Style
Online newsmagazine City A.M. (2014, n. p.) did not mince words when it called Ryanair CEO O’Leary as possessing an “abrasive attitude” (described also as “nasty”, “cavalier”, and “jeering rudeness”) for once badmouthing airline customers, for rudeness to passengers with disabilities, etc. (Lucas, 2012, n. p.). However, even this online organization admitted O’Leary’s positive impact in promoting Ryanair to the public. Lucas (2012, n. p.) observed that his success could even be from “doing the opposite” of academics teach in school.
Observers, such as Nortilli and Wong (2014, p. 74), described the Ryanair management style as autocratic with strong control and rigid characteristics. The human resources management, for instance, use threats (e.g. dismissal) to push employees to perform. Ryanair management, in its efforts to cut on costs, strongly emphasizes ritualistic behavior, clear divisions of labor, high task specialization, status recognition, and efficient decision making mechanisms. Others (e.g. Hosseini, Shakhsia, Moezzi, and Khaksar, 2011, p. 173), however, disagreed to that assessment and insisted that the strong management style was highly regarded among employees and even motivated them to work harder and more effectively than other airport-based organizations. Moreover, share options entitlement for all employees provided more reasons for job motivation in addition to pay incentives based on hours flown (Hosseini, Shakhsia, Moezzi, and Khaksar, 2011, pp. 173-174). Nevertheless, the transformative character of O’Leary leadership, although cast in a negative manner, did provide the Ryanair role modeling (although not the academic definition of “outstanding role model”: Lucas, 2012, n. p.; cf. (Aasland, et al., 2010, p. 438), challenged followers’ high efficiency standards and expectations, questioned old assumptions, and stimulated innovative ways (Goertzen, 2013, p. 85). The ultimate test, however, is the accomplishment of the goals (Sohmen, 2013, p. 2).
2.3 Corporate Culture
Nortilli and Wong (2014, p. 74) considered the Ryanair organizational culture as weak. However, Hosseini, Shakhsia, Moezzi, and Khaksar (2011, p. 173) disagreed. As early as 2004, they reported that the staff culture of the company was strongly supported by the employees, who themselves own shares in Ryanair and knows that its profitability would be strongly associated with their future. They insisted that the low cost model used by Ryanair has resulted to increased labor productivity. Moreover, Lucas (2012, n. p.) attributed to Ryanair’s iconoclastic culture its success in beating traditional airline model, creating superior shareholder value in the process. His rhetoric highly unconventional, the CEO nevertheless is a risk-taker and a hands-on decision maker.
These conflicting perspectives on the Ryanair culture cannot provide a clear-cut and accurate understanding on the internal organizational phenomena. CEO O’Leary, however, confirmed the existence of a ‘macho’ or ‘abrupt’ culture in Ryanair, which, although apparently not affecting employee relations negatively, nevertheless spilled out to its customer service behavior, resulting to cases of customer-perceived bad customer service policies, such as penalty on fractional excesses in hand luggage size limit or charging high for switching schedule even for valid reasons (e.g. death in the family), which had already impacted on ticket sales (BBC, 2013, n. p.). However, despite reporting less than expected profits, O’Leary maintained the sales were still ahead of the previous year’s, attributing the 2014 third-quarter loss to the weakness of sterling against euro and weakening the ticket prices (BBC, 2014, n. p.). Culture shapes the way an organization and its employees define their processes and, in effect, create the organizational climate (Bitsani, 2013, p. 49). In case of Ryanair, the ultimate value of culture resides in its power to support organizational success in the market, something that Ryanair achieved.
2.4 Teamwork
Perhaps, partly as a consequence of highly specialized tasks, Ryanair employees had been reportedly as autonomous, disjointed teams, doing their respective tasks without interfering with those of others (Nortilli and Wong, 2014, p. 75). As early as 1993, it was believed that the communication barriers between departments had resulted to 90 percent of its process problems, often causing conflicts and weak efficiency. The Civil Aviation Authority, however, held that low cost carriers, by nature, are more efficient utilizers of labor compared to full-time carriers due to their drive to increase productivity and to avoid legacy costs (e.g. heavy pension liabilities) (Hosseini, Shakhsia, Moezzi, and Khaksar, 2011, p. 173).
However, beyond these debates and outsiders’ perspective on how Ryanair manages its team, the underlying principle of its human resource development is multiskilling. Lucas (2012, n. p.) observed the way Ryanair employees team worked in highly interchangeable system where each employee can readily join with other teams to support specific operational functions. In customer service, for instance, cabin crew check-in staff can easily work with ground staff while getting involved in activities that maintain flyers’ safety. This indicates a highly innovative and essentially nonhierarchical attitude towards teamwork and ad hoc team creations.
Essentially, a team works together in pursuit of a common mission (or objective), at times even at the cost of sacrificing personal agendas (Sohmen, 2013, p. 4). The best teams are those who are innovative problem solvers, adept opportunity anticipators, and even incorrigible optimists. The success of Ryanair could not have happened with a dysfunctional team. Despite the seemingly aggressive work environment within, the Ryan teams achieve even more than full-service airlines had. These results cannot dispute an evident superiority of Ryanair teams in action. In ways unpredictable by outsiders, the O’Leary leadership just fit perfectly to them.
3.0 CONCLUSIONS AND RECOMMENDATIONS
3.1 Conclusions
Ryanair’s corporate structure has inherent dangers, which other organizations may shy away from. It is highly functional and centralized, organizational characteristics that naturally leads to superior efficiencies in the upside but to increased specializing and narrowing of employee skills and knowledge development. However, CEO O’Leary’s leadership surprised the normative thinking by creating teams of employees that are multi-skilled and highly adaptive to any, if not most, operational demands in providing the best service it can provide under the practical limits of an ultralow cost and pricing business strategy. In a sense, the abrasive form of transformational leadership that O’Leary exercised appeared to be just in the right dose to push, if not motivate, the employees to perform better, more efficiently, and less costly.
Moreover, there is an undeniable symbiosis between leadership and teamwork (Ullah and Park, 2013, p. 4206). From this viewpoint, the success of a leader is highly dependent upon the ability of the team to perform successfully in line with the leader’s objectives. Conversely, the failure of a leader will negatively redound against the future of the team even if the team members are individually competent. In a sense, the fate of the Ryanair employees is closely bound to the effectiveness of O’Leary’s leadership. And it is clear that the employees knew that by heart and came to respect and even support their CEO’s objectively unsavory brand of leadership.
Furthermore, while the O’Leary formula may not be the pleasant mix that theoreticians and academics may find necessary, years of growing Ryanair business provides an evidentiary testimony that the formula worked. Thus, it seems unwise to fix a machine that did not break.
3.2 Recommendations
Despite the fact that the O’Leary leadership and Ryanair did not break, there are nevertheless observable signs of clinkering and problematic performance in relation to its air travel customers. These problems may not necessitate a total overhaul of the Ryanair machinery. They, nevertheless, demands that certain measures of preventive maintenance must be implemented to avoid a break down while the Ryanair machinery has not yet. In line with these considerations, the following recommendations are deemed necessary:
(1) Fine tune customer services to prevent any permanent shift of flyer preferences: Although the no frills management style had delivered the market to Ryanair, continued adverse customer services can become an unwelcome catalyst that can switch customer preference from the low cost offer of Ryanair to a slightly pricey alternative with superb customer experience. In an improving economy, consumers may afford slightly more expensive tickets in exchange in at least getting away from unacceptable Ryanair brand of customer service. Responding quickly to market signals can make Ryanair avoid costly consequences of losing air travelers’ good will.
(2) Fine tune employees’ social and emotional flexibility in handling customers: Even if the Ryanair employees had been accustomed and fully adapted to the abrasive cultural environment inside the company, they should be trained to be more behaviorally nimble in dealing with the customers. That means training them to be adept behavioral switchers when customer contexts demand it in order to provide a level of experience that may not be superb and world class in quality, but adequately positive to discourage customers from switching airline preference.
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