Ryanair: A Lesson for Leaders, Managers, Unions and Society

caterpillar turning into butterfly

There's been a lot of feedback on my earlier post on Ryanair supporting the post but also pointing out the great things that Ryanair has achieved for society such as low fares, the boom and ease in travel, growth in jobs, etc....all of which are true. However, there seems to be a confusion between the outcomes achieved and the means used to achieve them.

The ruthless cost reductions and, more importantly, the speed in which they executed them, could only have been achieved by someone with the drive and ruthlessness of O'Leary. It also helped that Ryanair who, at the time of his appointment, were struggling badly and needed to try something drastically different or else close down. 

In the words of John Sculley, when he took over an almost bankrupt Apple  Computers and fired Steve Jobs, "When you are in danger of loosing everything, be sure to risk everything!". 

It can reasonably be argued that the large, vested interest groups, including the unions and management, that exploited consumers and created the stodgy, bloated airline industry of old  that O'Leary took on, deserved everything they got. 

There is however a lesson here for all governments, organisations, managers, shareholders, unions and employees, in every sector: exploiting the system for selfish interests, at the expense of weaker stakeholders or society in general, will create a pent-up demand for a superhero of  Michael 'Leary's caliber. 

Industries. organisations and indeed society in general, are all finely balanced ecosystems ,who's development needs to be carefully nourished and cultivated. When an ecosystem is pushed out of balance, it will eventually "tip over" into a revolutionary state that will redefine its next future.

The previous airline ecosystem of vested interests and feathered nests was "tipped over" by Ryanair but, in failing to understand the dynamics of systems,  O'Leary pushed self-interest too far and now its their turn to feel the wrath of the system revolution. By changing its attitude to customer service, Ryanair tried to bring some balance back to the airline ecosystem in Ryanairs favor.

However, blinded by the huge growth in the sector, in passenger numbers and in profitability, Ryanair overlooked the single most important metric in their business model, even more important than customer satisfaction and that's employee satisfaction. So unimportant are employees to Ryanair that they have outsourced most of them to 3rd parties!

No organisation, especially service organisations, can build a sustainable business model on exploiting its staff, even if in the short term they put up with it. Any manager with a basic understanding of people and management, will be aware of Maslow's Hierarchy of Needs. People will put up with a lot while satisfying their basic needs for personal and family welfare and zero-hour contracts can meet those basic needs but in a very precarious and volatile manner.

Except in very exceptional circumstances, where people can pick and chose their work, people with an effective alternative will always seek to avoid a zero hour contract, if only because of our innate human need to secure those basic needs for our families and for ourselves.    

Its inevitable therefore, that those forced by circumstances to suffer the indignities of such employment, will seek to improve their circumstances, or move on. In some industries unfortunately, this business model works due to a ready supply of unskilled labor.  How this has worked for so long in a regulated  industry where the skill of the workforce is of such vital importance (despite what O'Leary says) will be the subject of may academic thesis in years to come.. The mystery therefore is not why a zero-contract revolution is happening now  at Ryanair, but how the situation ever arose in the first place. The lesson therefore, for all managers and shareholders or governments and civil servants, is:

The "side effects" of creating a social system that exploits the welfare of one community for the benefit of another, is the creation of a cauldron of pent-up anger that will eventually boil over. 

It's unfortunately a feature of such complex systems as organisations and socity, that the links between cause and effect are not usually close in time or space. As such, those that often reek havoc on organsiations or society, are given the opportunity  to  retire with sufficient spoils to enjoy a comfortable retirement. 

Sometime the revolution that arises from "tipping over" a social system allows such retirements to happen and sometimes they don't.

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