Management and organisation

Richard Branson: CEO of Virgin Group

Sir Richard Branson is a self-made billionaire with more than 200 companies, who does not fit the mould of a CEO in a dark suit with conventional behaviour and appearance. He is as likely to be
seen kite surfing the English Channel, absailing down a tall building in India for the launch of Virgin Mobile, dressed as Che Guevara when turning up at a press conference, or wearing butterfly
wings whilst running the London marathon as he is in a board room.

His business and life vision has been broad and adventurous, and under his guidance has developed a diverse empire of Virgin companies including airlines, telecommunications, a record label, credit
card lending and a hotel chain. Branson’s more recent Virgin Galactic venture has had some setbacks, but he maintains his vision and sets the example to his employees that we all can dare to dream
and make these dreams happen.

Branson is often studied in the business world for the keys to his success, part of which appear to be his management style and decisions he makes. He is known to take risks, but calculated risks.
For example, a little known fact is that his first company, Virgin Records, was founded in 1972 as a very small boutique label, with not a lot of money behind them. The first artist he signed was
an unknown progressive rock musician, Mike Oldfield, who produced an album of a single piece of music with no lyrics. No ‘single’, zero ‘hit’ potential it seemed. It was a huge gamble. However, the
album was Tubular Bells, and went on to be one of the highest selling albums of all time, selling 17 million copies. It was the foundation of the Virgin Empire and Branson’s success. Likewise he
took another huge risk in 1976 when he signed a totally new type of music act, the Sex Pistols, who re-wrote musical history and heralded in the start of the punk movement. These risks clearly both
paid off.

He is definitely highly passionate about business ventures and believes in the importance of fun which he brings to the workplace. He was quoted as saying, “Some 80% of your life is spent working.
You want to have fun at home; why shouldn’t you have fun at work?” Branson values removing barriers in the corporate hierarchy and sharing ideas and social events with his workers. Listening to
others is important to Branson, particularly his employees, as is allowing them to keep motivated through applying their skills in areas and new projects he is not as good at.

Branson argues that delegating to others helps workers develop, whilst creating the opportunity for him to have more leisure time with his family and to be freed up for more strategic business
development. Branson encourages his employees to think and make their own decisions rather than telling them, justifying this approach by saying they are paid to think and self-lead, not to follow.

Branson is often involved personally in selecting staff to ensure the right fit for the Virgin culture, as workers need to operate in a rapidly changing environment, need to make decisions and need
to be empowered to act. Branson acknowledges however that the leader’s challenge is to know when to step back and to know when to intervene. Branson’s philosophy is that being people focussed is
the key to business success, and that managers who have a people focus will achieve better outcomes.

Branson has a ‘non-policy’ on holidays for staff in that they can take holidays when they want them which, he believes, will ultimately increase productivity. Branson’s approach also includes
respect for employees by giving them support and sometimes stepping back and delegating. Branson operates from the premise that if employees leave it will be because they do not feel valued and
because their work does not give them a feeling of satisfaction, not because they do not receive enough money.

A classic Branson quote that sums up his attitude is “Customers do not come first. Employees come first. If you take care of the employees, they will take care of the customers”
Terry Gou (pronounced Gwaw): Owner of Foxconn Factories
Apple is one of the richest companies in the world. This is in part due to the efficiency strategies it utilises in choosing companies in its global manufacturing. Terry Gou operates Hon Hai
Precision, the world’s largest contract manufacturer. Employing more than 820,000 workers, it is a major supplier to Apple, Sony, HP and Nokia. The factory is best known as ‘Foxconn’.
Unlike the previous example of Virgin employees, where the words ‘happy’ and ‘empowered’ and ‘fun’ underpin the culture, employees at Foxconn’s Chinese factories have sometimes been required to do
24 hour shifts, or woken up at 4am to meet an urgent order from Apple. Even though there are a range of worker benefits, such as swimming pools the pressure is constant to work harder in the quest
for ever-increasing efficiency and productivity, often in an environment that is highly physically, as well as mentally, toxic and stressful, with dangerous chemicals and ‘forced’ overtime.
Management practices at Foxconn are quite different from those in many other countries, with the driving leadership goal being to make an ever increasing profit with higher worker output. In one
of the Apple manufacturing plants in Chengdu there are even banners that remind the worker that they need to work hard today or else they will need to work hard tomorrow to find a new job.
There have been at least 11 suicides and further suicide threats being made due to harsh working conditions and worker treatment. Gou’s response to the suicides however did not involve changing
conditions for the workers, but instead focussed on erecting suicide nets in some factories to stop jumpers. There was, however, some counselling and a pay increase, but not a change in nature of
the work, working conditions or hours of work.
In many countries such working conditions would not be tolerated and could be considered unethical. However in countries where manufacturing is outsourced there can often be different management
practices and treatment of workers. The challenge facing Terry Gou is that Apple chooses his company to manufacture for them, not just for price but also for fast delivery time. The flow-on impact
for employees is a relentless driving for more production, with long hours and low pay. As mentioned, employees do have some benefits, such as cafeterias and medical facilities, but they have
boring, repetitive jobs, minimum wages, forced overtime, plus the ever-present threat of dismissal.
In addition, Gou’s leadership style is ‘secretive’ and even new product launches are kept quiet. The employees operate in a culture in which jobs are carried out with military style precision and
workers are tightly controlled. There is no clear consultation with workers and there was even an attempt by Gou to make workers sign a letter absolving his company of any responsibility if they
chose to commit suicide. Gou’s leadership is still based on an old model which combines intense drive with a martial style of leadership, which is based on his hero Genghis Khan. Gou’s favourite
sayings, which guide his leadership approach and demonstrate what he expects of his workers, are:
• “Work itself is a type of joy”,
• “A harsh environment is a good thing”,
• “Hungry people have especially clear minds” and
• “An army of one thousand is easy to get: One general is tough to find.”
Questions:
1. a) What leadership style do you feel is exhibited by Richard Branson? Define and discuss the characteristics of the style and cite specific examples from the case to support your argument.

b) What leadership style do you feel is exhibited by Terry Gou? Define and discuss the characteristics of the style and cite specific examples from the case to support your argument.

2. Define and briefly discuss the ‘path-goal leadership theory’. (House 1971), (House & Mitchell 1974). House describes four leader behaviours. Identify these behaviours and discuss:
• which one you believe is most evident in the leadership of Richard Branson, and,
• which one is most evident in the leadership of Terry Gou.
It may be that you will argue that there is more than one of the leader behaviours demonstrated by Branson and/or Gou. Cite examples from the case to support your arguments.
3. Discuss how you believe the leadership styles of both Branson and Gou could impact on worker’s motivation, from either a positive or negative perspective. Consider the theories of
motivation we will cover to provide a justification for your answer. For example, you may note the relationship to path-goal leadership theory, as path-goal leadership theory is derived from the
motivation theory of ‘expectancy’. NOTE: This example is not the sole answer you may provide here however.

4. If you were a consultant hired to improve leadership at Foxconn, what changes would you recommend to Terry Gou to create a workplace that is more harmonious, less stressful and less toxic
for employees.

Do you believe the nature of some of the characteristics of Chinese culture may influence the success of these changes?