Virgin's Organizational Culture Model of the Organization Case Study
- Length: 8 pages
- Sources: 10
- Subject: Business - Management
- Type: Case Study
- Paper: #50159039
Excerpt from Case Study :
Virgin's Organizational Culture
Model of the organization
Organizational culture is built around three aspects: (1) complexity, (2) formalization, and (3) centralization.
Complexity: Complexity depends on the hierarchical structure of the organization, the larger it is generally the more complex it is. Complexity, then, is reduced to three tiers: vertical, horizontal, and geographical.
Vertical: The larger the depth of layer the more 'vertical' the organization is. A complex and broad organization, therefore, would generally have more layers than one less complex (Bartol, Twein, Matthews, & Martin, 2007). Branson was an exception to this. Though leader of exceedingly broad and complex operations, he managed to reduce the structure of verticality by splitting Virgin Groups up into multiple small companies. Branson believed that employees preferred to work under small companies than under large impersonal corporations. By the late 1980s, for instance, he had fragmented his collection of companies into more than 100 loosely connected enterprises, each of which was run by a small, streamlined staff. "Virgin had minimal management layers, no bureaucracy, a small board of directors, and no massive global headquarters" (IBS, p.4).
Horizontal complexity describes the pattern of task-distribution. A company may either distribute its tasks generously to a handpicked select force, or the tasks are fissured into non-complex smaller portions and these, then, distributed amongst a non-skilled workforce. Virgin, and, in fact, all of Branson's companies had implicit trust in their employees. He picked employees who resembled the brand of the company, the company, in turn, was highly motivated, and were given enormous power and responsibility; a quality that Branson believed would help the company excel since it empowered it to develop its own decisions and run its own affairs.
Geographical complexity, the last tier of the organization, is the term accorded to an organization whose personnel and task distribution are distributed through various geographical localities. Branson's companies fragmented into numerous small operations (since, as Branson explained, "In a small company, you can create a different type of energy, People feel cared for" (IBS, p.5). Virgin Groups were nationally and internationally geographically disseminated.
2. Formalization: Formalization describes the attitude of the organization, namely whether the organization is rigidly structured, directing itself according to an inflexible and monitored superstructure of conventions and rules, or whether its atmosphere is more flexible and relaxed, allowing minimal enforcement of rules and structure and encouraging, on the contrary, innovation and rule bending (Ott & Shafritz, 2008).
The Virgin Group Companies excellently illustrate the latter. Branson, himself rebel per excellence (he had, for instance, shocked the marketing world by creating his trademark name 'Virgin', i.e. lack of knowledge about the business, and with no preconceived ideas inventing his own route to success) empowered the group to run their own affairs with one Virgin company helping another. Rather than a rigidly defined set of rules, the individuals of each company were given power and responsibility, and this, Branson believed, encouraged the employees as well as the heads of each specific company to excel in a manner in which they would have otherwise not done had they been accountable to one CEO. More so, each company was encouraged to develop its own distinct identity, and Branson encouraged employees to maintain their innovativeness and individuality. Innovation and individuality was one of the characteristics that Virgin sought in its employees, and the work place environment represented this relaxed code with its "casual dress code, open plan offices, music, flexible timekeeping, commitment to training and development, and in its celebratory culture" (IBS, p.4). In a radical departure from the British corporate norms of the 1970s and 1980s, Branson replaced the traditional suit and tie for sweater and slacks and, instead of working in the traditional corporate office, operated from the bow of his barge.
3. Centralization: Centralization describes the extent to which power is disseminated throughout the organization; whether authority is vested in upper management echelons, or whether it is equally distributed through each layer of the organization. Generally, the larger the organization and the more rigidly structured its formalization, the more centralization will skew towards an upper management hierarchy. Some organizations, being heavily dependent on technology, will equally vest their authority in specialized technologies and in experts that control and monitor these technologies, (Ott & Shafritz, 2008).
Virgin's autonomy is decentralized. It is equally distributed throughout its various companies. In fact, Branson's choice for running his business from his barge was so that it gave his subordinates, spread out in more than 25 buildings, greater autonomy. Managers were encouraged to take control and move in their own direction projects that Branson had conceived and started. They were given minimal interference and encouraged to innovate and take risks.
Organizations can also be distinguished between two types, mechanistic and organissmic (Burns & Stalker, 1950). A mechanistic organization is a rigid and highly controlled structure that features little participation in decision-making by lower-level employees. It is characterized by a highly authoritative, structured, and formal system that involves close supervision to the rules. If large, there will, likely, be a hierarchy of various types of managers operating at various levels and featuring various responsibilities (Bartol, Twein, Matthews, & Martin, 2007). Innovation and encouragement of creativity would be at a minimal if at all. Generally, large corporations and governmental organizations possess these characteristics.
The organic, or organissmic, organization, on the other hand, is flexible, and encourages change and change is encouraged. It also has least hierarchy and specialization of functions whilst valuing external knowledge. There are no job descriptions, and the environment is described as a hub with an easy-going relaxed atmosphere. Managers need to lead by charisma and example, and the multi-talented employees usually juggle a diversity of tasks (Burns & Stalker, 1961). Since the organization highly depends on its employees for maximum performance, organizational needs center around the employees. Decisions are group-formulated, and teamwork (rather than hierarchical control) is a given.
The Virgin Groups, definitely, belong to the latter category. The Virgin group motto paraphrases it precisely: "our people come first." Unlike typical corporate businesses, particularly in Britain, "Virgin actively encouraged personal expression -- in speech, creative thinking, and even dress, in instances where uniforms were not required." (IBS, p.8). Virgin's focus was on making communication within the company relevant, experiential, and fun. Its internal communications community kept all employees informed in an engaging and enjoyable way. Staff freely communicated with mangers -- and were encouraged to do so - and as Group Brand Manager for Virgin pointed out: " Virgin is one company that has always recognized the importance of its people... we have always believed that to create a powerful external brand you need to create a culture that supports it." (IBS, 9).
Model of Recruitment
Human Resource at Virgin selected employees that would extend and expend its model. In fact, Virgin invited people to apply even when no vacancies were available, so bent was Virgin on obtaining employees that would personify its culture.
Principles of the Virgin group regarding recruitment expressed the following:
We know what kind of people we want and we work hard to recruit the best
We train them properly. We allow them freedom t be themselves
We trust them to make the right decision, and the odd mistake is tolerated
We believe in karma -- we're loyal to them and they're loyal to us (www.virgin.com)
Virgin HR Management sought individuals who indicated passion for new ideas; who thought 'out of the box'; who were creative; who 'had a nose' for business and were able to detect new business opportunities; who were customer-centered; and who were not intense but rather into 'fun' in a balanced manner (IBS, p.8). HR, as did its leader, Branson, also valued time management (Ibid, p.7). Branson believed that brand culture was created and developed by the kind of people he hired, and it was these people who made the organization. Group Brand Manager for Virgin explained:
We've always been clued up about getting the right people on board…. We ask a lot of questions that aren't traditional, to get a feel for what the person is like. We select on attitude and personality and a feel for where someone's a bit different from the crowd, [can] cope with pressure and [has] a good sense of humor. That's what makes our brand come alive" (IBS, p.3).
Training at Virgin
If this essay could use any model to describe training at Virgin it would be Appreciative Inquiry (AI). AI is the belief that humans grow through inquiring into and asking questions about their organizational environment. AI espouses the idea of members of the organization reflecting on, formulating, and articulating their dreams and then building an organization around this 'positive core'.
According to the AI philosophy, humans grow in the direction of that which they constantly ask questions about, and they can realize this 'positive core' by an environment of comradeship where people see the best in one another and share their dreams in affirming ways. AI is a theory of human relatedness,…