Virgin Group: Leadership Style - Term Paper Example

Table of Contents 1. Introduction 2 2. Literature review 3 2.1. Leadership style and its effect on organizational culture 3 2.2. Leadership style and organizational culture 3 2.3. The leadership style followed in Virgin 5 3. Conclusion 7 4. Recommendation 7 Reference 9 1. Introduction This project will attempt to discuss issues related to the management of Virgin Group in the light of different factors like the philosophy introduced by the founder of the group, the prevailing organizational culture and the business model existing under the brand name of Virgin.

An analysis of the above mentioned factors have revealed that Virgin Group is a basket of independently operating businesses that act like a separate business entity and are managed independently by distinct management. The founder of the company, Richard Branson’s unique and distinguishable leadership style is reflected in the organizational culture. The matter of concern is that the company is losing its competitiveness because of a few loss making business units. This consequence can be directly related to the leadership style followed by the founder of the company, who is considered as the “hippy entrepreneur” because of his maverick leadership style (BBC NEWS, 2004).

This research will attempt to throw light on the various theories centering on different leadership styles and their effect on the success of an organization. After analyzing the information collected from the literature review and evaluating the managerial issues that have battered the company, a few alternative solutions have been developed that can be used to overcome the problem. These analyses would be inferred in the concluding sections along with a brief recommendation. 2. Literature review 2.1. Leadership style and its effect on organizational culture According to Covin and Miles (1999), innovativeness ensures a smooth journey in the path of success for any organization.

Hence they termed it as “sine qua non” dimension for the entrepreneurs (Duygulu & Özeren, 2009, p.476). Different leaders have conducted various researches to analyze the extent to which the leadership style or more specifically the leader’s behavior influences the organizational culture. Lasching in 2001 conducted a research and found the existence of a strong correlation between leadership style followed by the leaders of the organization and the job satisfaction level of the employees (Lok, 2003, p.321). Bass (1990) opined that the leadership style followed by leaders of the organization influence the motivation and performance level of employees (Lok, 2003, p.324). Therefore the management of the organization should be very cautious while implementing the leadership style. 2.2.

Leadership style and organizational culture Though various theories on leadership style are available, it is not easy to identify the most suited one. Most of the theories have their own share of pros and cons, and hence the onus lies of the management to foresee its effect on the organizational culture before implementing it. The organizational culture can be defined as “system of shared meaning held by members, distinguishing the organization from other organizations” (Robbins, 2009, p.424). These shared meaning are set of common values that are held sacred by the management and the employees of the organization.

Organizational culture can be explained with the help of seven key factors and these are as follows: 1. Innovation and risk taking: This explains the degree to which the employees are inspired to take risk. 2. Attention to details: This measures the extent to which the employees are encouraged to be attentive towards finer details. 3. Outcome orientation: The degree to which the management of the organization focuses on the outcome instead of the technique or the process followed to attain the end result. 4. People orientation: This explains whether the management takes into account the effect of any decision on the people involved with the organization.

In other words, this explains the degree to which the management cares for its workforce. 5. Team orientation: This identifies whether the organization stresses on teamwork or encourages the development of individualism in their employees. 6. Aggressiveness: This specifies the degree of compassion and aggressiveness prevailing among the employees. 7. Stability: Stability is the degree to which the organizational activities are directed to ensure sustainability and growth of the organization.

(Robbins, 2009, p.424) 2.3. The leadership style followed in Virgin A study of the leadership style followed in Virgin would reveal the charismatic yet maverick nature of its founder (Schopen, 2009). This man, instead of being guided by the doctrinal rules and regulations, has laid down his own tenet of conventions. Richard Branson blames poor decision making capacity of the central management behind the failure of organizations. Hence, he gave full freedom of decision making to the managers handling independent companies under the flagship of Virgin.

As a result, the degree of correlation between different units is quite nominal. This however has made the managers of the smaller units concentrate solely on the profit and growth of individual units. At present there are 300 companies operating in 30 countries under the brand name of Virgin Group employing more than 50,000 employees (Virgin, n.d.). These companies belong to different industries. In due course of time, the founder of Virgin undertook many risky projects that failed to prove profitable.

Virgin Rail is one such unit. Hence it can be concluded that many-a-time the leader of Virgin Group has failed to conduct appropriate research work to identify the profitability and sustainability of the venture. There are many loopholes existing in the leadership style followed by Richard Branson. The founder of the company strictly follows the principles that he had developed himself in due the course of time. They form the core mission of the company and every member is expected to follow it.

However, with time, these core principles are losing their competitiveness, and Richard Branson has remained oblivious of the change in circumstances. Research suggests that the company can enhance its competitiveness by focusing on the core competence of the products and services offered by the company. “The core competence is some combination of resources, skills, knowledge and technology that distinguishes an organization from its competitors in the eye of the customers” (Campbell, et al., 2002, p.296).

Virgin Group is a highly diversified group and has its operations in different industries as presented in the below given chart. Figure 1: Richard Branson and the Virgin Group of Companies (Source: Grant, 2004, p. 315) The business portfolio of Virgin Group has been found to be hovering over many sectors. As a result, the customers fail to correlate the brand name of the company with any specific product or services offering. This reflects that the leader of the company has failed to identify the core business sector where the company should proceed for attaining sustainable future growth.

Virgin mobile is often considered as one man army as because the entire company has imbibed the principles and values propounded by the founder of the company. However, often these values and principles stand in contradiction to each other. For instance, his way of conducting business reflects ‘just live life’ and ‘just do it’ attitude. He often takes abrupt decisions and introduces changes that were not pre-decided. This keeps the employees on their toes and often they fail to adopt themselves to sudden changes.

He encourages the employees to diversify the risk but often this leads the company to risky projects and ventures. Richard Branson claims to prioritize his staff over customers and stakeholders but he has been found to violate his proclamation by entering projects with sole motto of profit making. Therefore, it would not be wrong to claim that the leadership style followed by Richard Branson lacks consistency. 3. Conclusion The leadership style followed by the management has serious implication on business culture, employee satisfaction and sustainable growth of the company.

An analysis of the leadership style followed by Richard Branson reveals that it suffers from certain loopholes. The ‘easy going’ attitude of the founder of the company has not always gone down well with the organization often resulting in a paradigm shift from its core competency. Such issue puts to question the credibility of the business strategy as well as the leadership style followed by the founder. 4. Recommendation The above analysis has made it evident that that leadership style followed by the company demands immediate amendments.

Richard Branson should understand the need to develop a core competency because it makes the company unique in the eyes of customers. Along with it, he should also ensure that the rest of his business units are in alignment with the core competency and the ones that do not, should be divested. A paradigm shift is also required in the philosophy followed by Richard Branson. His lofty ideals should also have a strong realistic foundation. Contemporary business demands organizations to be more customer-centric in their operations.

So, Richard Branson should change his philosophy from staff oriented business policies to customer oriented business policies. This will help in better understanding of customer requirements and attaining sustainable growth in the global market. Reference BBC NEWS (27 September, 2004), Profile: Richard Branson. Retrieved on August 27, 2010 from http://news.bbc.co.uk/2/hi/uk_news/3693588.stm. Campbell, D., Stonehouse, G. & Houston, B. 2002. Business strategy: an introduction. Butterworth-Heinemann.

Duygulu, E & Özeren, E. (August 20, 2009), The effects of leadership styles and organizational culture on firm’s innovativeness. African Journal of Business Management Vol.3 (9), pp. 475-485. Grant, R. M. (October 26, 2004), Richard Branson and the Virgin Group of Companies in 2004. Case 15. Retrieved on August 27, 2010 from http://www.blackwellpublishing.com/grant/docs/15Virgin.pdf Lok, P. & Crawford, J. April 2003. The Effect Of Organizational Culture And Leadership Style On Job Satisfaction And Organizational Commitment.

The Journal of Management Development. 23, ¾; ABI/INFORM Global, pg. 321. Robbins, S. P. (2009). Organisational behaviour: global and Southern African perspectives. Pearson South Africa. Schopen, F. (January 28, 2009). Leadership is about more than charisma. Retrieved on August 27, 2010 from http://business.timesonline.co.uk/tol/business/management/article5600542.ece. Virgin. (No date). About Us. Retrieved on August 27, 2010 from http://www.virgin.com/about-us/