The Virgin Group: Executive Summary The Virgin Group: Executive Summary
The Virgin Group is one of Britain’s largest business empires. The heterogeneous British The Virgin Group is one of Britain’s largest business empires. The heterogeneous British corporation founded by Sir Richard Branson has infiltrated into vastly diverse industries whereby corporation founded by Sir Richard Branson has infiltrated into vastly diverse industries whereby
unconventional business tactics are utilized to cross borders into new industries. Though the Virgin Group unconventional business tactics are utilized to cross borders into new industries. Though the Virgin Group has retained an undeniable mystique, little empirical research has been done to obtain a perceptive analysis has retained an undeniable mystique, little empirical research has been done to obtain a perceptive analysis on the empire. Since the approach in which an organization manages itself is imperative to its success, it is on the empire. Since the approach in which an organization manages itself is imperative to its success, it is important to look outside the box to assess the effectiveness of Virgin’s management operations. This paper important to look outside the box to assess the effectiveness of Virgin’s management operations. This paper examines the organizational culture that is synchronous with the Virgin brand, as well as the structural examines the organizational culture that is synchronous with the Virgin brand, as well as the structural characteristics that have allowed Virgin to successfully operate in many industries. The company’s characteristics that have allowed Virgin to successfully operate in many industries. The company’s fundamental values foster many of the dimensions of culture, which are highly internalized within the fundamental values foster many of the dimensions of culture, which are highly internalized within the organization. The success and coordination attributed by Virgin’s culture is greatly influenced by Richard organization. The success and coordination attributed by Virgin’s culture is greatly influenced by Richard Branson, the founder of the Virgin Group. Branson realizes the potential and importance of those who work Branson, the founder of the Virgin Group. Branson realizes the potential and importance of those who work for him. Consequently, he creates a structure, which is decentralized, through empowering his employees for him. Consequently, he creates a structure, which is decentralized, through empowering his employees and providing them with autonomy. The Virgin Group is a company with little bureaucracy, as Branson and providing them with autonomy. The Virgin Group is a company with little bureaucracy, as Branson often encourages employees to use their intuition to make decisions rather than a rational process. However, often encourages employees to use their intuition to make decisions rather than a rational process. However, the lack of formalization within the company may deem to be a weak aspect of the organizational structure, the lack of formalization within the company may deem to be a weak aspect of the organizational structure, since the lack of formal rules, regulations and procedures may create ambiguous situations for the company. since the lack of formal rules, regulations and procedures may create ambiguous situations for the company. Because of the company’s corporate culture and structure, Virgin has effectively forecasted possible
Because of the company’s corporate culture and structure, Virgin has effectively forecasted possible occurrences and has dealt with them in a timely manner.
occurrences and has dealt with them in a timely manner. The Virgin Group: Company Information
The Virgin Group: Company Information
The Virgin Group is one of Britain’s most noteworthy empires in the 21
The Virgin Group is one of Britain’s most noteworthy empires in the 21ststcentury. The company hascentury. The company has
successfully incorporated a copious number of diverse industries under the Virgin brand. This includes successfully incorporated a copious number of diverse industries under the Virgin brand. This includes travel, mobile, financial services, leisure, cosmetics, retail, and music businesses (Virgin, n.d.). Virgin has travel, mobile, financial services, leisure, cosmetics, retail, and music businesses (Virgin, n.d.). Virgin has
been able to dominate the British market and has therefore continued to rapidly expand into other regions been able to dominate the British market and has therefore continued to rapidly expand into other regions
such as the United States, Canada and Australia. The enterprise was founded by Sir Richard Branson in such as the United States, Canada and Australia. The enterprise was founded by Sir Richard Branson in 1970 as a simple mail-order record retailer and has blossomed into one of the most prosperous business 1970 as a simple mail-order record retailer and has blossomed into one of the most prosperous business empires in the business world (Virgin, n.d.).
empires in the business world (Virgin, n.d.).
To date, the Virgin Group has globalized and established over 200 small to mid-sized firms, To date, the Virgin Group has globalized and established over 200 small to mid-sized firms, employing over 25,000 people. As a result, the company has exceeded over $7 billion in revenue in 2002 employing over 25,000 people. As a result, the company has exceeded over $7 billion in revenue in 2002 (Virgin, n.d.).
(Virgin, n.d.). Each one of Virgin’s Each one of Virgin’s 200 firms operates as 200 firms operates as a single entity. Branson either holds ownership a single entity. Branson either holds ownership of of a firm as CEO, or
a firm as CEO, or has a minority or majority has a minority or majority stake. stake. The Virgin Group does not hold a hierarchal presenceThe Virgin Group does not hold a hierarchal presence within the empire, which allowed its various subsidiaries to operate in an autonomous manner (Wikipedia, within the empire, which allowed its various subsidiaries to operate in an autonomous manner (Wikipedia, 2006).
2006).
A large component of Virgin’s success has been credited to the founder, Sir Richard Branson. A large component of Virgin’s success has been credited to the founder, Sir Richard Branson. Branson’s self persona is keenly aligned with Virgin’s brand identity and has set the tone for its
Branson’s self persona is keenly aligned with Virgin’s brand identity and has set the tone for its
organizational culture (Virgin, n.d.). His beliefs and vision for Virgin has shaped the structure and culture of organizational culture (Virgin, n.d.). His beliefs and vision for Virgin has shaped the structure and culture of which its success is based upon. Branson has followed this guideline in how he treats his customers, his which its success is based upon. Branson has followed this guideline in how he treats his customers, his employees and how Virgin’s products are produced (Virgin, n.d.). The Virgin Group has had a profound employees and how Virgin’s products are produced (Virgin, n.d.). The Virgin Group has had a profound impact on business relations in Britain and now the globe. The mystique that surrounds this company is impact on business relations in Britain and now the globe. The mystique that surrounds this company is undeniable; this has allowed the empire to flourish in uncertain and ambiguous times whilst pursuing undeniable; this has allowed the empire to flourish in uncertain and ambiguous times whilst pursuing financial success.
financial success. The Virgin Group:
The Virgin Group: Corporate CultureCorporate Culture
The Virgin Group’s overall brand identity is built upon the founder Richard Branson’s philosophy which The Virgin Group’s overall brand identity is built upon the founder Richard Branson’s philosophy which states that “if you keep your staff happy then the customer will be happy, and if you keep the customer states that “if you keep your staff happy then the customer will be happy, and if you keep the customer happy then the sh
happy then the shareholdeareholders are happy” (Virrs are happy” (Virgingin, , n.n.d.d.). This under). This underlying bellying belief transcief transcends into each one of ends into each one of Virgin’s subsidiaries and into each individual organizational culture. The Virgin Group genuinely believes Virgin’s subsidiaries and into each individual organizational culture. The Virgin Group genuinely believes
in making a difference in each consumer, which can only be accomplished by delivering quality service in making a difference in each consumer, which can only be accomplished by delivering quality service accomplished by empowered and motivated employees. This ultimately enables the Virgin group to foster accomplished by empowered and motivated employees. This ultimately enables the Virgin group to foster an informal, anti-corporate work environment, which is continuously defined by the pop culture of its era an informal, anti-corporate work environment, which is continuously defined by the pop culture of its era (Virgin, n.d.; Grant, 2004). Management holds high expectations and as such they expect a high level of (Virgin, n.d.; Grant, 2004). Management holds high expectations and as such they expect a high level of commit
commitment, the acceptance of personal responsment, the acceptance of personal responsibiliibility, and long hours of work when ty, and long hours of work when needed (Gneeded (Grarant,nt, 20
200404). ). Financial rewards at Financial rewards at Virgin for Virgin for most employees are most employees are typically modest; typically modest; however, the companyhowever, the company continues to procure an abundance of non-monetary benefits, which include social activities, continues to procure an abundance of non-monetary benefits, which include social activities, company-sponsore
sponsored weekend getawayd weekend getaways, and impromptu parts, and impromptu parties (Gies (Grarant, nt, 20200404). This work clim). This work climate continualate continuallyly encourages positive employee-employer relations, as well as effectively allowing Virgin’s employees to encourages positive employee-employer relations, as well as effectively allowing Virgin’s employees to create social networks while embracing the culture. This culture retained at Virgin has demonstrated that create social networks while embracing the culture. This culture retained at Virgin has demonstrated that interpersonal relations are of key importance.
interpersonal relations are of key importance.
The development of Virgin’s organizational culture has continually allowed for the emergence The development of Virgin’s organizational culture has continually allowed for the emergence of a profoundly strong culture. This is evident in the way in which members of the Virgin group interact of a profoundly strong culture. This is evident in the way in which members of the Virgin group interact with one another, as it is apparent that all members at Virgin agree strongly about certain beliefs, values, and with one another, as it is apparent that all members at Virgin agree strongly about certain beliefs, values, and assumptions, which are reinforced within the company (Johns & Saks, 2001). The acquisition of a strong assumptions, which are reinforced within the company (Johns & Saks, 2001). The acquisition of a strong corporate culture retains several advantageous benefits, two of which are evident at the Virgin Group: corporate culture retains several advantageous benefits, two of which are evident at the Virgin Group: coordination and financial success (Johns & Saks, 2001). Within the Virgin empire, the firm has coordination and financial success (Johns & Saks, 2001). Within the Virgin empire, the firm has
consistently held open channels of communication between each individual subsidiary. The organization consistently held open channels of communication between each individual subsidiary. The organization has established an internal communications community. The function of this community is to ensure that all has established an internal communications community. The function of this community is to ensure that all Virgin employees become versed with the customary affairs of the company as a whole. Moreover, The Virgin employees become versed with the customary affairs of the company as a whole. Moreover, The Virgin Village is a Group intranet site where employees are able to access information about the company, Virgin Village is a Group intranet site where employees are able to access information about the company, job opportunities, contacts, and other prevalent information. Each Virgin company also communicates with job opportunities, contacts, and other prevalent information. Each Virgin company also communicates with
staff on a regular basis, updating them on any changes and the progress of the business. As a result, each staff on a regular basis, updating them on any changes and the progress of the business. As a result, each subsidiary can learn from one another as well and allowing for coordinated efforts (Johns & Saks, 2001). subsidiary can learn from one another as well and allowing for coordinated efforts (Johns & Saks, 2001).
Each subsidiary of the Virgin Group shares a set
Each subsidiary of the Virgin Group shares a set of values that are continually strengthened. of values that are continually strengthened. ThisThis encompasses a value for money, excellent quality products, brilliant customer service, innovation,
encompasses a value for money, excellent quality products, brilliant customer service, innovation,
competition and consistently having fun throughout the process. In such a large conglomerate empire as the competition and consistently having fun throughout the process. In such a large conglomerate empire as the Virgin Group, these broad set of fundamental beliefs continually work to strengthen the company’s brand as Virgin Group, these broad set of fundamental beliefs continually work to strengthen the company’s brand as well as its culture.
well as its culture.
Virgin has continually retained a strong underlying belief that it is their employees who: deliver Virgin has continually retained a strong underlying belief that it is their employees who: deliver brilliant customer service; give the company its personality, shape its culture, and innovate. They are viewed brilliant customer service; give the company its personality, shape its culture, and innovate. They are viewed
as Virgin’s greatest asset and as such, management believes that employees should be treated with respect. as Virgin’s greatest asset and as such, management believes that employees should be treated with respect. Management looks after their employees’ welfare and allows them the freedom to flourish and be
Management looks after their employees’ welfare and allows them the freedom to flourish and be themselves (Virgin, n.d.). Virgin actively encourages personal expression, whether it is in their speech, themselves (Virgin, n.d.). Virgin actively encourages personal expression, whether it is in their speech, creative and conceptual thinking, or dress code (Virgin, n.d.). It is these fundamental values and beliefs that creative and conceptual thinking, or dress code (Virgin, n.d.). It is these fundamental values and beliefs that have allowed Virgin to thrive in such a competitive environment, challenge new opportunities and excel in have allowed Virgin to thrive in such a competitive environment, challenge new opportunities and excel in its markets, while still continuing to operate with integrity.
its markets, while still continuing to operate with integrity.
One of the single most important influences on an organization’s culture is the founder (Author One of the single most important influences on an organization’s culture is the founder (Author Unknown, 2002). Employees are often influenced by top management and mimic their behaviours (Author Unknown, 2002). Employees are often influenced by top management and mimic their behaviours (Author Unknown, 2002). Sir Richard Branson, the head of Britain's Virgin group, has had a profound influence on Unknown, 2002). Sir Richard Branson, the head of Britain's Virgin group, has had a profound influence on the corporate culture at Virgin. For example, he has a few phrases that demonstrate his underlying
the corporate culture at Virgin. For example, he has a few phrases that demonstrate his underlying
philosophy; one is, "common sense counts for way more than pure intellect." These phrases influence the philosophy; one is, "common sense counts for way more than pure intellect." These phrases influence the
entire organization's behaviour and thus promote Virgin’s autonomous work climate. Branson has been able entire organization's behaviour and thus promote Virgin’s autonomous work climate. Branson has been able to make his own freewheeling, antiestablishment personality synonymous with the Virgin brand. Whether it to make his own freewheeling, antiestablishment personality synonymous with the Virgin brand. Whether it was a punk band, an airline, or a line of cosmetics, Branson incorporated his style of flare into Virgin’s was a punk band, an airline, or a line of cosmetics, Branson incorporated his style of flare into Virgin’s
brand and culture, which allowed the organization to operate with style and playfulness (Author Unknown, brand and culture, which allowed the organization to operate with style and playfulness (Author Unknown,
n.d.).
n.d.). According to Branson, the key to encouraging innovation within the company iAccording to Branson, the key to encouraging innovation within the company is to lis to listen to ideas andsten to ideas and to offer feedback. Interaction between employees and managers is fundamental (Author Unknown, 2005). to offer feedback. Interaction between employees and managers is fundamental (Author Unknown, 2005). According to John and Saks (Johns & Saks, 2001), the culture of an organization will emulate what top According to John and Saks (Johns & Saks, 2001), the culture of an organization will emulate what top management ‘pays attention to’.
management ‘pays attention to’. Retaining a strong figurehead as a symbol of motivation and successRetaining a strong figurehead as a symbol of motivation and success creates a climate for employees, which breeds Branson’s simple philosophical values. The organizational creates a climate for employees, which breeds Branson’s simple philosophical values. The organizational culture at Virgin thus greatly reflects the values of the founder. All employees are continually faced with culture at Virgin thus greatly reflects the values of the founder. All employees are continually faced with high levels of autonomy to stimulate innovation and idea generation; this is especially apparent in the strong high levels of autonomy to stimulate innovation and idea generation; this is especially apparent in the strong organizational culture that exists within Virgin today.
organizational culture that exists within Virgin today.
According to Sheridan (Johns & Saks, 2001), there are seven dimensions of culture, and Virgin has According to Sheridan (Johns & Saks, 2001), there are seven dimensions of culture, and Virgin has a heavy emphasis on three in particular: aggressiveness, innovation and risk-taking, and people orientation. a heavy emphasis on three in particular: aggressiveness, innovation and risk-taking, and people orientation.
Aggressiveness is a key dimension in Virgin’s culture because the company often seizes Aggressiveness is a key dimension in Virgin’s culture because the company often seizes opportunities when they arise and confront the competition, taking out large and more cumbersome opportunities when they arise and confront the competition, taking out large and more cumbersome companies.
companies.
It is evident that the Virgin Group focuses on innovation because of their eagerness to offer It is evident that the Virgin Group focuses on innovation because of their eagerness to offer consumers something “better, fresher, and more valuable” (Virgin, n.d.). Virgin prides itself in carrying its consumers something “better, fresher, and more valuable” (Virgin, n.d.). Virgin prides itself in carrying its operations unconventionally, which deviates significantly from traditional business practices. However, operations unconventionally, which deviates significantly from traditional business practices. However, Virgin sees the importance of innovation, which is facilitated by Virgin’s flat organizational structure Virgin sees the importance of innovation, which is facilitated by Virgin’s flat organizational structure (Damanpour, 1996). This innovation and risk-taking has been very valuable in leading to Virgin’s success. (Damanpour, 1996). This innovation and risk-taking has been very valuable in leading to Virgin’s success. What takes Virgin to its innovative standards is what lies behind the products: people. Virgin’s top What takes Virgin to its innovative standards is what lies behind the products: people. Virgin’s top priority and greatest asset is its workforce. Specifically, Virgin believes in providing its employees with priority and greatest asset is its workforce. Specifically, Virgin believes in providing its employees with
autonomy and empowering them to make decisions. This way, decisions can be made more quickly autonomy and empowering them to make decisions. This way, decisions can be made more quickly without going through the hierarchy.
The effectiveness of Virgin’s culture may be measured through various factors, including economic The effectiveness of Virgin’s culture may be measured through various factors, including economic and product analysis
and product analysis..In economic terms, there has been extensive media coverage on Virgin’s financialIn economic terms, there has been extensive media coverage on Virgin’s financial problems. For example, Virgin Radio sold two of its radio stations to offset its debt. However, Virgin was problems. For example, Virgin Radio sold two of its radio stations to offset its debt. However, Virgin was never into making profits, but they were into making value-added products. These innovative products are never into making profits, but they were into making value-added products. These innovative products are the main reasons for Virgin’s success and are a direct function of the brewed culture.
the main reasons for Virgin’s success and are a direct function of the brewed culture.
The risk-taking, aggressive, and team oriented culture of Virgin provides focused direction for its The risk-taking, aggressive, and team oriented culture of Virgin provides focused direction for its workforce to meet customer demands of quality products in a creative fashion. The established culture fits workforce to meet customer demands of quality products in a creative fashion. The established culture fits well with its horizontal structure and is
well with its horizontal structure and is an important factor in the essence of the Virgin an important factor in the essence of the Virgin brand. brand. However,However, Virgin must caution itself of the danger of the sub-cultures that may develop within departments. Also, a Virgin must caution itself of the danger of the sub-cultures that may develop within departments. Also, a suggestion could be made to emphasize the importance of shareholder value, but overall, the culture is suggestion could be made to emphasize the importance of shareholder value, but overall, the culture is operating very effectively.
operating very effectively. The Virgin Group:
The Virgin Group: Corporate StructureCorporate Structure
Although many perceive the Virgin Group to be a conglomerate, this may not be the case in Although many perceive the Virgin Group to be a conglomerate, this may not be the case in actuality. Each of the Virgin brand companies operate as a separate entity. Branson either holds ownership actuality. Each of the Virgin brand companies operate as a separate entity. Branson either holds ownership of a firm as CEO, or has a controlling interest in shareholders equity. After careful analysis of the
of a firm as CEO, or has a controlling interest in shareholders equity. After careful analysis of the
organizational structure of the Virgin Group’s subsidiaries, it can be concluded that product departmentation organizational structure of the Virgin Group’s subsidiaries, it can be concluded that product departmentation is exhibited. In Figure 15.1, it is illustrated that each operation of the Virgin Group can be considered as a is exhibited. In Figure 15.1, it is illustrated that each operation of the Virgin Group can be considered as a department. For example, air travel operations are formed on the basis of providing a particular product or department. For example, air travel operations are formed on the basis of providing a particular product or service. If compared with another department, such as Finance, a clear distinction is shown. Looking at the service. If compared with another department, such as Finance, a clear distinction is shown. Looking at the structure of each operation, a different type of departmentation can be seen. For example, mobile operations structure of each operation, a different type of departmentation can be seen. For example, mobile operations split into Virgin Mobile UK, USA, and Australia. This demonstrates how Virgin Mobile practices
split into Virgin Mobile UK, USA, and Australia. This demonstrates how Virgin Mobile practices geographic departmentation. The internet “dot.com” operations of Virgin Mobile, on the other hand, geographic departmentation. The internet “dot.com” operations of Virgin Mobile, on the other hand, practice product and customer departmentation. Because Virgin Group practices more than two forms of practice product and customer departmentation. Because Virgin Group practices more than two forms of
departmentation, the company as a whole is considered to be hybrid. The multi-faceted approach of the departmentation, the company as a whole is considered to be hybrid. The multi-faceted approach of the Virgin Group may introduce different situations, based on social, cultural, technological and political Virgin Group may introduce different situations, based on social, cultural, technological and political circumstances. Therefore, having a hybrid structure will allow the Virgin Group to effectively adapt to circumstances. Therefore, having a hybrid structure will allow the Virgin Group to effectively adapt to various situations.
various situations.
The company’s division of labour purports a unique aspect of structure to analyze. Essentially, one The company’s division of labour purports a unique aspect of structure to analyze. Essentially, one must examine the number of levels of authority that exist in the company, as well as the autonomy, control must examine the number of levels of authority that exist in the company, as well as the autonomy, control and communication that exists among employees.
and communication that exists among employees. This information aids iThis information aids in determining the ‘flatness’ n determining the ‘flatness’ or or ‘tallness’ of the Virgin Group’s structure, which is an index of the vertical division of labour. (Johns & Saks, ‘tallness’ of the Virgin Group’s structure, which is an index of the vertical division of labour. (Johns & Saks, 2001) Figure 15.1 shows that Virgin’s subsidiaries operate separately from one another. The interaction 2001) Figure 15.1 shows that Virgin’s subsidiaries operate separately from one another. The interaction between the companies can be considered similar to a ‘family’, as opposed to a hierarchy. Each company is between the companies can be considered similar to a ‘family’, as opposed to a hierarchy. Each company is
empowered to run their own affairs, but is expected to aid one another when needed. Through closer empowered to run their own affairs, but is expected to aid one another when needed. Through closer
examination, it is determined that Richard Branson also empowers his workers by giving them the ability to examination, it is determined that Richard Branson also empowers his workers by giving them the ability to make unsupervised decisions. This leads to workers having high autonomy. Additionally, communication is make unsupervised decisions. This leads to workers having high autonomy. Additionally, communication is effective, as interaction between employees of all ranks is transparent and descending through a long chain effective, as interaction between employees of all ranks is transparent and descending through a long chain of command is not required. This effective communication is showcased through Branson’s spontaneous of command is not required. This effective communication is showcased through Branson’s spontaneous drop-ins on employees in any level within the Virgin ranks to receive ideas and feedback. This simple act drop-ins on employees in any level within the Virgin ranks to receive ideas and feedback. This simple act reduces information filtering by effectively decreasing organizational hierarchy and increasing accessibility reduces information filtering by effectively decreasing organizational hierarchy and increasing accessibility to top management, which can possibly decrease power distance. Virgin Group demonstrates high
to top management, which can possibly decrease power distance. Virgin Group demonstrates high
autonomy and control, as well as an effective communication system for employees, which indicates that it autonomy and control, as well as an effective communication system for employees, which indicates that it is a flat organization. (Grant, 2004) Flat organizations, such as Virgin, commonly have effective
is a flat organization. (Grant, 2004) Flat organizations, such as Virgin, commonly have effective
communication channels and coordination. These attributes make decision-making in a company faster and communication channels and coordination. These attributes make decision-making in a company faster and more efficient. If the Virgin Group chooses to expand, having a flat structure would be advantageous
more efficient. If the Virgin Group chooses to expand, having a flat structure would be advantageous because the effects of failure are less significant. Additionally, having a flatter organizational structure because the effects of failure are less significant. Additionally, having a flatter organizational structure
promotes a wider span of control, which results in a greater range of responsibility given to employees. promotes a wider span of control, which results in a greater range of responsibility given to employees.
These responsibilities provide employees with the autonomy to execute unsupervised decisions, which in These responsibilities provide employees with the autonomy to execute unsupervised decisions, which in turn increase employee empowerment. Lawler expresses this premise in an article where he notes that one turn increase employee empowerment. Lawler expresses this premise in an article where he notes that one of the six factors that foster empowerment is a wide span of control. (Lawler, 1992) Having a wide span of of the six factors that foster empowerment is a wide span of control. (Lawler, 1992) Having a wide span of control, however, decreases the interaction between a manager and the employees. It may also create control, however, decreases the interaction between a manager and the employees. It may also create sub-cultural differences, which may result in conflict.
cultural differences, which may result in conflict.
Virgin Group is a company which fosters a decentralized corporate structure. Essentially, Virgin Group is a company which fosters a decentralized corporate structure. Essentially, decision-making power is dispersed down the hierarchy and across departments. The company is pursuing a more making power is dispersed down the hierarchy and across departments. The company is pursuing a more participative climate, supported by the company’s top role-model, Richard Branson, who believes that participative climate, supported by the company’s top role-model, Richard Branson, who believes that
employees are the backbone of the company (Branson, 1998). Virgin Group has developed a culture, which employees are the backbone of the company (Branson, 1998). Virgin Group has developed a culture, which aims to empower employees through allocating more autonomy, discretion and unsupervised decision aims to empower employees through allocating more autonomy, discretion and unsupervised decision making responsibility to the workers. A high-involvement design (Lawler, 1992), which reflects less making responsibility to the workers. A high-involvement design (Lawler, 1992), which reflects less
constraining situations, has been developed which supports the transmission of information, resources, and constraining situations, has been developed which supports the transmission of information, resources, and authority throughout the organization. This constructive process has been associated with the increased authority throughout the organization. This constructive process has been associated with the increased self-efficacy of Virgin Group employees and the fulfillment of the desires of individuals who have a
efficacy of Virgin Group employees and the fulfillment of the desires of individuals who have a need for need for power
power under McClelland’s Theory of Needs (Johns & Saks, 2001). Recent globalization trends haveunder McClelland’s Theory of Needs (Johns & Saks, 2001). Recent globalization trends have reinforced the effectiveness and importance of the Virgin Group’s decentralized structure. Studies have reinforced the effectiveness and importance of the Virgin Group’s decentralized structure. Studies have shown that there is a steady increase of knowledge workers - those who work primarily with information or shown that there is a steady increase of knowledge workers - those who work primarily with information or develop and use knowledge in the workplace (Thurow, 2000). This has advocated a shift away from the develop and use knowledge in the workplace (Thurow, 2000). This has advocated a shift away from the traditional hierarchical constraints toward a more egalitarian organizational outline, which provides
traditional hierarchical constraints toward a more egalitarian organizational outline, which provides knowledge workers with greater autonomy (Kleinman & Vallas, 2001). The increasing importance of knowledge workers with greater autonomy (Kleinman & Vallas, 2001). The increasing importance of empowering knowledge workers is crucial to the current success of the Virgin Group and also aids in any empowering knowledge workers is crucial to the current success of the Virgin Group and also aids in any company in the future. The premise behind this notion is supported by the fact that empowering knowledge company in the future. The premise behind this notion is supported by the fact that empowering knowledge
workers will increase their self-efficacy. However, managers must ensure that the empowerment does not workers will increase their self-efficacy. However, managers must ensure that the empowerment does not result in inter-role conflict by providing workers with clear expectations and defining ambiguous situations result in inter-role conflict by providing workers with clear expectations and defining ambiguous situations or tasks. Therefore, as the company continues to expand, the autonomy provided for knowledge workers or tasks. Therefore, as the company continues to expand, the autonomy provided for knowledge workers will give them the ability to make decisions.
will give them the ability to make decisions.
Virgin can be classified as a different breed of corporate enterprise within a web of competing Virgin can be classified as a different breed of corporate enterprise within a web of competing firms. Across the wide spectrum of services and products offered under the leadership of Richard Branson, firms. Across the wide spectrum of services and products offered under the leadership of Richard Branson, minimal organizational bureaucracy prevails. As quoted, Branson declares, “To them, the fact that Virgin minimal organizational bureaucracy prevails. As quoted, Branson declares, “To them, the fact that Virgin has minimal management layers, no bureaucracy, a tiny board and no massive global HQ is an anathema.” has minimal management layers, no bureaucracy, a tiny board and no massive global HQ is an anathema.” (Virgin, n.d.)
(Virgin, n.d.)
Virgin comprises of 200 separate companies that are individually managed and have Virgin comprises of 200 separate companies that are individually managed and have separate funding. Traditionally, decentralized firms are marked by elements of organizational bureaucracy. separate funding. Traditionally, decentralized firms are marked by elements of organizational bureaucracy. However, this is not the case when evaluating the Virgin Group. As such, the formal organizational
However, this is not the case when evaluating the Virgin Group. As such, the formal organizational
structure is decentralized, and elements of bureaucracy are traditionally prevalent in such firms. Despite this structure is decentralized, and elements of bureaucracy are traditionally prevalent in such firms. Despite this Virgin is characterized by minimal bureaucracy under Branson’s leadership.
Virgin is characterized by minimal bureaucracy under Branson’s leadership.
Essentially, Branson removes bureaucracy across his firms because he wishes to horizontally flatten Essentially, Branson removes bureaucracy across his firms because he wishes to horizontally flatten the hierarchy within the Virgin Group. Company employees are highly competent and are classified as the hierarchy within the Virgin Group. Company employees are highly competent and are classified as knowledge workers, who are significantly self-managed. The potency of such workers is enhanced through knowledge workers, who are significantly self-managed. The potency of such workers is enhanced through Branson’s leadership style, that emphasizes low role ambiguity, a wide span of control, role participation, Branson’s leadership style, that emphasizes low role ambiguity, a wide span of control, role participation, and ample access to resources tailored to the role (Spreitzer, 1996). Branson has been known to exhibit and ample access to resources tailored to the role (Spreitzer, 1996). Branson has been known to exhibit consideration for his employees, and actively seek feedback.
consideration for his employees, and actively seek feedback.
Branson stresses inter-role responsibilities, where his top workers often are accountable for Branson stresses inter-role responsibilities, where his top workers often are accountable for company success across different firms within the group. His strong disbelief in hierarchy and formal company success across different firms within the group. His strong disbelief in hierarchy and formal corporate structure contributes to organizational cohesiveness, which is embodied by his statement “(The corporate structure contributes to organizational cohesiveness, which is embodied by his statement “(The
companies) are empowered to run their own affairs […] in a sense, we are a community, with shared ideas, companies) are empowered to run their own affairs […] in a sense, we are a community, with shared ideas, values, interests and goals. The proof of our success is real and tangible”. (Spreitzer, 1996)
values, interests and goals. The proof of our success is real and tangible”. (Spreitzer, 1996)
Branson has adopted a very unusual strategy that defies conventional reliance on core competencies. Branson has adopted a very unusual strategy that defies conventional reliance on core competencies. Industry experts often term Branson as a wildcard, who prefers to utilize gut rationale rather than Industry experts often term Branson as a wildcard, who prefers to utilize gut rationale rather than
conventional business decision-making processes. His methods of structuring an organization, although conventional business decision-making processes. His methods of structuring an organization, although non-traditional, foster an environment that allows employees to strive. This organizational structure is a non-traditional, foster an environment that allows employees to strive. This organizational structure is a major reason that contributes to the success of Virgin Group.
major reason that contributes to the success of Virgin Group. The Virgin Group:
The Virgin Group: ConclusionConclusion
It is evident that the Virgin Group is a successful international organization. This success is a It is evident that the Virgin Group is a successful international organization. This success is a
product of leader Richard Branson’s unique view on organizational culture and structure. Although many of product of leader Richard Branson’s unique view on organizational culture and structure. Although many of
his practices are considered unconventional, it is clear that they are effective. The underlying theme of the his practices are considered unconventional, it is clear that they are effective. The underlying theme of the organization’s culture is the push for innovation, aggressiveness and team orientation. These three facets organization’s culture is the push for innovation, aggressiveness and team orientation. These three facets contribute to Virgin’s high exposure as well as its value-added products. With regards to organizational contribute to Virgin’s high exposure as well as its value-added products. With regards to organizational structure, Branson believes that the Virgin Group should possess attributes of a small business. He believes structure, Branson believes that the Virgin Group should possess attributes of a small business. He believes in building a strong relationship with employees, allowing them to express themselves. These fundamental in building a strong relationship with employees, allowing them to express themselves. These fundamental values and beliefs lead Branson to form a structure, which demonstrates high empowerment, high
values and beliefs lead Branson to form a structure, which demonstrates high empowerment, high
autonomy and low bureaucracy. Virgin’s recent penetration into the Canadian mobile market is an example autonomy and low bureaucracy. Virgin’s recent penetration into the Canadian mobile market is an example of the company’s forward-thinking and results-oriented capabilities. This thriving expansion has proven that of the company’s forward-thinking and results-oriented capabilities. This thriving expansion has proven that Virgin’s organizational culture and structure have brewed corporate success. If Virgin continues to operate Virgin’s organizational culture and structure have brewed corporate success. If Virgin continues to operate in this manner, as well as being aware of the problems with expansion, it will slowly progress through the in this manner, as well as being aware of the problems with expansion, it will slowly progress through the ranks of some of the most influential and dominating companies.
The Virgin Group: Appendix The Virgin Group: Appendix
Figure 15.1: The Virgin Group of Companies Figure 15.1: The Virgin Group of Companies
(Grant, 2004) (Grant, 2004) Glossary: Glossary: Centralization: Centralization:
The extent to which dec
The extent to which decision-making power is localized in a particular part of an ision-making power is localized in a particular part of an organization.organization. Customer departmentation:
Customer departmentation:
Relatively self-contained units deliver an organization's products or services to specific customer Relatively self-contained units deliver an organization's products or services to specific customer groups.
groups.
Flat organization: Flat organization:
An organization with relatively few levels in its hierarchy of authority. An organization with relatively few levels in its hierarchy of authority. Formalization:
Formalization:
The extent to which work
The extent to which work roles are highly defined by an organization.roles are highly defined by an organization. Functional departmentation:
Functional departmentation:
Employees with closely related skills and responsibilities are assigned to the same department. Employees with closely related skills and responsibilities are assigned to the same department. Geographic departmentation:
Geographic departmentation:
Relatively self-contained units deliver an organization's products or services in a
Relatively self-contained units deliver an organization's products or services in a specificspecific geographic territory.
Hybrid departmentation: Hybrid departmentation:
A structure based on some mixture of functional,
A structure based on some mixture of functional, product, geographic, or customer product, geographic, or customer departmentation.
departmentation.
Organizational culture: Organizational culture:
The shared beliefs, values, and
The shared beliefs, values, and assumptions that exist in an organization.assumptions that exist in an organization. Organizational structure:
Organizational structure: The manner in which an
The manner in which an organization divides its labour into specific tasks and achievesorganization divides its labour into specific tasks and achieves coordination among these tasks.
coordination among these tasks. Product departmentation: Product departmentation:
Departments are formed on the basis of a particular product, product line, or service. Departments are formed on the basis of a particular product, product line, or service. Span of control:
Span of control:
The number of subordinates supervised by a
The number of subordinates supervised by a manager.manager. Socialization:
Socialization:
The process by which people
The process by which people learn the norms and roles that are nlearn the norms and roles that are necessary to function in a groupecessary to function in a group or organization.
or organization.
Socialization tactics: Socialization tactics:
The manner in which organizations
The manner in which organizations structure the early work experiences of newcomers.structure the early work experiences of newcomers. Strong culture:
Strong culture:
An organizational culture with intense and
An organizational culture with intense and pervasive beliefs, values, and assumptions.pervasive beliefs, values, and assumptions. Tall organization:
Tall organization:
An organization with relatively many levels in its hierarchy of authority. An organization with relatively many levels in its hierarchy of authority.
The Virgin Group: References The Virgin Group: References 1) Author Unknown. (2003 Dece
1) Author Unknown. (2003 December). Breaking in a new culture: mber). Breaking in a new culture: the Virgin Blue story.the Virgin Blue story. Retrieved July 31 from:
Retrieved July 31 from:
<http://www.humanresourcesmagazine.com.au/articles/0B /0C01A00B.asp> <http://www.humanresourcesmagazine.com.au/articles/0B /0C01A00B.asp> 2) Author Unknown. (2002, July). When something
2) Author Unknown. (2002, July). When something is rotten. Retrieved August 1is rotten. Retrieved August 1stst2006 from:2006 from:
<http://www.bain.com/bainweb/publications/publications_detail.asp? <http://www.bain.com/bainweb/publications/publications_detail.asp? id=8347&menu_url=publications_results.asp>
id=8347&menu_url=publications_results.asp>
3) Author Unknown. (n.d.). Richard Branson 1950–. Retrieved July 27
3) Author Unknown. (n.d.). Richard Branson 1950–. Retrieved July 27thth 2006 from:2006 from:
<http://www.referenceforbusiness.com/biography/A-E/Branson-Richard-1950.html>
1950.html> 4) Author Unknown.
4) Author Unknown. (2005, August). The (2005, August). The Importance of Being Importance of Being Richard Branson: A Richard Branson: A YYoung, Funoung, Fun Culture. Retrieved July 27
Culture. Retrieved July 27thth 2006 from:2006 from:
http://www
http://www.informit.com/articles/articl.informit.com/articles/article.asp? e.asp? p=393257&seqNum=3&rl=1p=393257&seqNum=3&rl=1 85 Branson, R.
85 Branson, R. (1998) Losing My Virgi(1998) Losing My Virginitynity. Three Rivers . Three Rivers Press: New York.Press: New York. 6) Damanpour, F. (1996)
6) Damanpour, F. (1996) Organizational Complexity and InnoOrganizational Complexity and Innovation: Developing and vation: Developing and TTesting esting Multiple Contingency Models.
Multiple Contingency Models. Management Science, 42(5), 693-716.Management Science, 42(5), 693-716. 7) Grant, Robert M. (2004, October). Richard
7) Grant, Robert M. (2004, October). Richard Branson and the Virgin Group of Branson and the Virgin Group of Companies inCompanies in 2004.
2004. Blackwell Publishing. Blackwell Publishing. Pages 16-18.Pages 16-18. 8) Johns,
8) Johns, G. & G. & Saks, A. Saks, A. M. M. (2001).(2001). Organizational Behaviour: Understanding and managing Organizational Behaviour: Understanding and managing life at work.
life at work. Fifth Edition. Addison Wesley: Toronto.Fifth Edition. Addison Wesley: Toronto. 9) Kleinman, D. & Vallas, S. (2001)
9) Kleinman, D. & Vallas, S. (2001) Science, Capitalism, and the Rise of the "KnowledgeScience, Capitalism, and the Rise of the "Knowledge Worker": The Changing Structure of Knowledge Production in the United States. Worker": The Changing Structure of Knowledge Production in the United States. Theory and Society, 30, 451-492.
Theory and Society, 30, 451-492. 10) Lawler, E.E. (1992) The Ultimate Advan
10) Lawler, E.E. (1992) The Ultimate Advantage. Jossey-Bass: San Francisco.tage. Jossey-Bass: San Francisco. 11) Spreitzer, G. (1996)
11) Spreitzer, G. (1996) Social Structural Characteristics of Psychological Empowerment. TheSocial Structural Characteristics of Psychological Empowerment. The Academy of Management Journal, 39(2), 483-504.
Academy of Management Journal, 39(2), 483-504. 12) Thurow, L.C. (2000)
12) Thurow, L.C. (2000) Dimensions of Globalization. Dimensions of Globalization. Annals of the American Academy of Annals of the American Academy of Political and Social Science, 570, 19-31.
Political and Social Science, 570, 19-31. 13) Virgin Group. (n.d.).
13) Virgin Group. (n.d.). Virgin: Our People.Virgin: Our People. Retrieved July 27Retrieved July 27thth from:from:
<http://www.virgin.com/aware/people.asp> <http://www.virgin.com/aware/people.asp>
