QUESTION

Virgin Blue unveils more changes

New uniforms, a new business class product and new airport lounges are among some of the
initiatives Virgin Blue Holdings has unveiled as part of its bid to lure more corporate
travellers.
The airline group has flagged more changes to come over the year to December 31, 2011,
including a new marketing campaign, new product across the fleet and a revamped Velocity
frequent flyer program.
Virgin Blue has roughly 10 per cent of the business market and hopes to double that share
over the period ahead to reduce its reliance on leisure travellers.

Chief executive John Borghetti says solid progress is being made to build Virgin Blue’s share.
Moreover, recent weak consumer sentiment and uncertainty in the economic outlook
validated the airline’s strategy to reposition itself as a viable and attractive option for
corporate flyers.
Among the things announced on Wednesday, Mr Borghetti confirmed the first routes for
Virgin Blue’s widebody Airbus A330 aircraft would be between Sydney and Perth, with
services to start in May.
The aircraft would feature a new business class cabin and a “superior economy class”, the
airline said.
“With our competitive pricing strategy, we believe this will be a compelling proposition for
corporate travellers, whether they travel in business or economy class,” Mr Borghetti said.
Virgin Blue revealed its choice of turboprop aircraft for the partnership with Skywest to fly to
regional routes, announced last month, was the 68-seat ATR-500 and ATR-600 turboprop
aircraft.
The airline also unveiled new uniforms for cabin crew and staff on Wednesday, and said it
would open a lounge at Coolangatta airport by June 30 this year.
A further two lounges would be added by the end of the year.
Business class would be rolled out across the domestic fleet by December 31, Virgin Blue
said.
The new uniform for cabin crew and ground staff, designed by Project Runway winner Juli
Grbac, were shown off at a fashion show at a Sydney CBD shopping centre featuring
supermodel Elle Macpherson.
Mr Borghetti said the company was on track to strengthen its position in both the leisure and
corporate market in 2011/12, with the full implementation of all the new initiatives to be
rolled out by the end of the year.
Virgin Blue on Wednesday reported a 62 per cent decline in first half net profit to $23.8
million, which was at the lower end of company guidance and below market forecasts.

Source: Chong, J 2011, ‘Virgin Blue unveils more changes’, The Sydney Morning Herald, 23
February, first edition, viewed 31 January 2012, http://smh.com.au

SOLUTION

Executive summary:

Virgin Blue is a well known airline firm which has announced some changes to be made in the airline for better comfort and satisfaction of the customers. The firm is also making changes in internal working pattern and company structure so that change policy could be better achieved and market capture of the firm could be accelerated. Recommendations have been made for such changes to occur like change in advertising pattern from primitive to newly introduced and highly zealous method, change should be done in motivation level of employees so that they could adopt easily with the change about to occur, performance of the employees should be monitored so that short term and long term accomplishment of the target could be evaluated and corrected if any rectification is required. With help of systematic change policy and motivated employees who could contribute in company’s success, the market capitalization and customer satisfaction could be easily increased.

Introduction:

Virgin blue has announced various transformations in its strategies and business goals so as to increase profits and customer turn-up for the brand and unveils those changes so that more development and profitability could be reached. The following case examines the scope of those changes and expectations with the firm on the success of the new business development announcements. The organizational change which it is planning to enter is due to low market capture and decrease in profitability ratio as seen by latest reports. The case revolves around trying to find out the reasons for introduction of the changes and successful accomplishment of the same.

Why is Virgin changing?

The core reason behind organizational changes being taken place as seen by market forecast in Virgin majorly is low market capture, decline in net profit and lowered profitability. In order to recollect the lost customer faith and sentiments, it becomes very important for the firm to bring business changes and attract the corporate and regular clients towards the flight facilities and newly introduced luxuries. It is nothing but a strategy to gain competitive advantage over the competitors and gain a pace in terms of customer satisfaction and loyalty for the brand. Introduction of new strategies, policies, comfortable sitting and other facilities, luxury business class and comfortable economy class, all such introductions and their advertisement on rigorous scale to make them known to the customers especially corporate clients is very crucial step taken by the brand. Their act of unveiling the strategic and motivational transformations can be considered as method of business expansion and customer brand awareness.

What changes are coming in Virgin?

The need for change is simply growth and better market capture, the actions required for change is change in management policy, change in employee behavior, change in reward and recognition pattern to motivate employees, change in short term benefits and performance monitoring of the employees, change in punishment pattern if change is inhibited by any work group or employee and finally change in organizational structure so that change policy of growth and market capture could be reached.

Kotler’s eight step analysis on Virgin Airlines:

The analysis of Virgin Blue business expansion can be done according to Kotler’s eight step model as discussed below.  The changes which the flight is coming with are: luxurious business class introduction, more comfortable economy class than before, use of Airbus, wide body aircraft, new uniforms for staff so as to attract the customers towards brand efficiency and opening of a new lounge for customer comfort and luxury.

Step two of Kotler’s model says that powerful change group would have been made there. All these steps of expansion have been taken to focus customers from different ends i.e. firstly focusing on regular corporate clients by means of introducing new business class so that people of regular income source could be targeted, apart from business tie-ups, second target has been set at economy class regular or casual passenger also so that even if people are travelling from economy class, they should have good comfort and luxury. Introduction of wider Airbus style would increase the area of flight and therefore passengers can be more comfortable and relaxing even if they are in economy class. Team membership as per the transformations and employee’s proficiency would have been made there. [West, 2009] Team is very important way of creating perfect task plans and accomplishment becomes easy to monitor also. After making the team of employees, goals would have been set in two standards: long term goals and short term goals. Long term goals like customer satisfaction, competitive advantage over the competitors, comfortable and safe journey, corporate tie-ups and short term goals like establishment of Airbus, introduction of what colors and pattern in the new uniform, how to make the comfort level of economy class better and satisfying. For setting those goals, research and surveys of several months would have been done at Virgin so that customer need analysis and market analysis could be easily done. After setting the goals, then they would have distributed the job responsibilities to their subordinates by means of meetings and first line officer communication. The conveying of job responsibility individually determines the individual effort to be made thereby making the goal achievement more systematic and less conflicting. Job responsibility distribution is a major step because in any project team success depends on individual’s success and vice versa. After deciding upon job responsibility, they would have opted for regular monitoring and progress report analysis so that each step could be easily monitored. It is also necessary that each team must be given necessary powers to take actions on their own decision making capacity so that functioning could be made smooth. I would also suggest recruiting one marketing team of professionals who would be involved deeply in advertising looks, product campaigning through media or other resources, public relations maintenance so that the launch could be made bigger and better. Financial freedom for establishment of new policies and procedures will be given to teams and their budget will also be made so that they should know initially their range of changes and development they are free to make.

Another very important part of planning is vision establishment that can be done through making five year vision or so and also deciding upon long term expansion goals simultaneously. For achievement of the same, the firm can take up vision of larger market share by 2015 and also the vision of making the airline top airline in corporate client list by end of 2015. Larger vision gives wider scope, therefore by 2015, the vision of the firm should be to become the top level airline in Australia for corporate client relations and market capture should be 30% rather than 20%. Apart from this, they can also focus on regular increase in profitability and market capitalization on per year basis so that dividend distribution and business expansion could also be accelerated.

Communicating the ideas to public is the most complicated part of establishing or planning to establish any business change. In case of Virgin business expansion, for communicating the ideas to the common public one can opt for the best way of advertising the necessary changes through means of television advertisements on new and very large scale, banners and hoardings on bus-stands, metro stations, railway stations, corporate houses etc. for advertising and brand awareness, a separate team of professionals could be recruited on high designation who will have authority to make as many changes as he or she wants but under the budget barrier. Communicating to the staff can be a difficult task but in order to convey the change to the staff and also keep those motivated to stay with the firm can be made possible by effective HR policies and communications. [Doganoglu and Klapper, 2006] It can be done by sending mails to each and every employee about the vision 2015 and redecorating the office atmosphere with new brand advertisement and effective colors and pattern of interiors. After this, employees must be sent a mailer on bulk scale about the rewards and recognitions being attached with new task for the employees. There should be huge level of motivational rewards like monetary rewards after achievement of performance standards set by their superiors, revised performance appraisals should be done so that new job responsibility and change could be attached with monetary and non monetary rewards for the employees. Good performers can be motivated with yearly good hike in salary, incentives, bonus for excellent performance; outstanding achievers can go to foreign trip with the company top officials, promotions for goal achievement on yearly appraisal basis and some other similar initiatives. All these will motivate employees to perform well as monetary and non monetary rewards like promotion and job enrichment become good source of employee motivation even in times of change. [Brush, 2006]

Another phase in doing organizational change with a specific vision is that employer and the top level management should also do analysis of short term goals and their achievement. Regular monitoring of the performance and successful completion of the task is very important and for that purpose what is most needed is performance review at short intervals and their communication to the staff. In actual sense it can be said that the actual vision or the goal has to be step by step conveyed to the staff so that regular monitoring and reviews could be also known to the staff members. If monitoring is limited to top level management and employees are told about their growth and success at the end, it may not enhance the performance of the under-performed employee and with the help of regular communication of the goal achievement, weak employees and weak teams can also perform extremely well. Now, the hurdle of communicating the short term achievements in what mode and which method so that motivation can be given to employees and on the same time, exact performance appraisal cannot be disclosed from the very beginning. Both these needs to be achieved because short term goal communication and performance achievement in short term both are necessary for more pressurized work and high productivity. Secondly, complete performance appraisal cannot be made known because if employees get aware of their exact rating in the beginning, then they feel relaxed and decrease their efficiency because they have already attained their level of satisfaction. Thus the method of communication has to be made in such a way that immediate news of achievement of highest standards and the name of the team can get disclosed without disclosing the desired standard of achievement. Immediate achievements of highest of all to be known in the firm towards the change policy can motivate other teams as well to perform with high efficacy and competency. [Petroni and Colacino, 2008] The methods of communication in use can be emails every morning or so, disclosing the best team performance on given task or change policy, attained target of all teams individually to their mail ids and to their reporting officers. Another method can be of broadcasting company affairs and success rate disclosure towards the firm’s latest change policy for example increase in stock prices, increase in customer responses in recent times etc. By means of conveying the recent growth and success percentage to the employees, company can make its employees feel being a part of the change journey and not just a victim of the change policy of the firm. With every growth and development, employees can be motivated by staff parties, team rewarding for best performance of the week, outing trips for most involved employees and similar stuff.

The firm can accelerate its change policy by means of consolidation of its gain; it can be done firstly by continuing to be strict and non movable on any kind of mercy towards change policy inhibitors, the firm should remove employees or dissolve teams who can or who are acting as change inhibitors.  Only those employees or teams should be kept on the job that perform with the company changes as change inhibitors can also divert competent employees from performing. Therefore, employees should be counseled or mentoring should be given at first instance of low performance on change policy and even if no change is found, punishment transfer or job responsibility demotion should be done so that employees could only focus on the change policy accomplishment and no other company politics. [Opm, 2001] On the other hand, openly praising should be done of that staffs who participates extensively with the new change and rewards should be given on short term basis as well apart from yearly rewarding. An example could be seen of team advertising who extensively announced the change policy with fresh ideas and market is highly ware of the brand changes and customer response is found increasing, then apart from yearly appraisals, that team of advertisement should be given gift voucher or team tour for few days in the mean time for good performance and their self motivation. Establishing of new projects on change policy and its accomplishment can be made so as to involve employees more and more in task accomplishment. It can be done by daily or weekly contests about their task relating to change policy. Employees can be given weekly projects or contests about advertising targets in all malls or shopping centers to be covered within a week and other similar things and on achievement of these short term contests, employees will be called for coffee with sales head, circle head or other top management employees. Feedback should be involved in customer service department as well. Feedback from customers and regular visitors should be rigorously taken and it should be monitored and evaluated and as per feedback received employees should be motivated for good performance and service delivery. Customer service related feedback should be regularly taken by all customers and corporate clients so that weaknesses and strengths could be easily found. Feedback should be taken in a very precise manner otherwise customers may give vague feedback so in order to remove unnecessary answers that may misguide the survey, feedback form should comprise of three to four questions only with objective answers so that customers could tick mark their view and easily get out of the feedback submission.

The change should get embedded in the culture of the firm, not only the look and exterior but the interiors like employee views and customers view about the firm as a airline pioneer should get embedded in the minds of the people associated. This can be achieved only when each team performs with great effectiveness and efficiency for the firm and they also feel the need for change in the firm so that the firm should flourish and dream of the top level board as well as the employees come true. It is not very easy to embed the change in junior level staff, it is very easy to make the senior management acquainted about the change policy but junior level staff is highly volatile and subject to easy attrition therefore, all level employees should be motivated as per their degree of motivation requirement. Junior level staff should be given motivational rewards like promotions for change policy accomplishment, heavy bonuses, gift vouchers and other attractions whereas senior management can be motivated for change by means of job enrichment, self actualization, esteem need satisfaction etc. all such steps of development must be applied depending upon level of employee dedication and satisfaction. [People Stream, 2012] Ultimate goal can be achieved only when all the performers also feel the need for change and growth. The goal of the firm should become the vision of all employees working there and that sense of belongingness can accelerate the performance of each and every staff thereby accelerating the performance of the firm.

Conclusion:

Concluding it can be said that Virgin Blue step for organizational change policy is a very brave step for market capture and growth of the firm in long run. Virgin Blue is a renowned airline firm which saw some degradation in its corporate client base and regular customer pipeline, the firm found a need for change in its policies and service level so that potential customers could be attracted towards Virgin rather than its competitors for that the firm has to extensively go for heavy advertisements, huge management changes like policy of firm, nature of service delivery, accuracy of service, satisfaction of customers, client management, business tie-ups, comfort and satisfaction of the corporate and economy class passengers and brand awareness in the market. For accomplishment of change in short term which may be a year or so can be easily made if the firm makes some necessary changes on ground level and motivate the employees towards the change policy. [Grubb, 2007] If employees of the firm get motivated towards change policy on extensive level, then achievement of the vision of Virgin Blue will not be difficult task to accomplish. For doing the same, we need to implement short term as well as long term goals on the firm so that employees get motivated for their personal as well as organizational growth and development. Kotler’s eight principles for change have been implemented throughout the writing so that change policy can be easily adopted and made a success for the firm. The processes through which these changes mentioned above are attained are transparent and complete communication of the change policy to the management and to the customers. Employees even of front line level must be conveyed of the change policy so that every staff feels equally contributing towards the change. [Bovey and Hede, 2001] After communication, advertising and communicating the changes about to occur to the customers and common public so as to attract more crowds. Advertising the change to the corporate clients also, media could be used on large scale and expenditures on advertising could be increased so that change policy is well known to the public and potential customers. After advertising, the task comes of motivating the employees for high performance and achievement of short term goals and the company must bring necessary changes in its policies and structures so that employees feel the change policy needed and they work towards achievement of the desired goal. Several other steps are also there which have been mentioned above and they are also needed for firm to flourish throughout the change policy requirement.

References:

1. R. West, 2009, a comparative and competitive analysis of virgin blue airlines, Lincoln university, viewed on 7^th May, 2012, < http://researcharchive.lincoln.ac.nz/dspace/bitstream/10182/1778/6/west_mps.pdf>
2. Toker Doganoglu and Daniel Klapper, 2006, goodwill and dynamic advertising strategies, viewed on 7^th May, 2012, < http://digital.sabanciuniv.edu/elitfulltext/3011800000590.pdf>
3. Megan L. Brush, 2006, promotion strategy, CPA, viewed on 7^th May, 2012, < http://cpa.utk.edu/pptpresentations/adverpromotions_mb_7-06.pdf>
4. Alberto Petroni, Pierlugi Colacino, 2008,  motivation strategies for knowledge workers, journal of technology management and innovation, viewed on 7^th May, 2012, <http://www.scielo.cl/pdf/jotmi/v3n3/art03.pdf>
5. OPM, 2001, aligning employee performance plans with organizational goals, performance management practitioners series, viewed on 7^th May, 2012, < http://www.opm.gov/perform/wppdf/handbook.pdf>
6. People stream, 2012, performance management, viewed on 7^th May, 2012, < http://www.peoplestreme.com/what-is-performance-management.shtml>
7. Todd Grubb, 2007, performance appraisal reappraised, journal of human resource education,vol-1, no.-1, page-1-22,  viewed on 7^th May, 2012, <http://scob.troy.edu/JHRE/Articles/PDF/1-1/1.pdf>
8. Wayne Bovey and Andrew Hede, 2001, organizational change, journal of managerial psychology, vol-16, no-7, page-534-548, viewed on 7^th May, 2012, < http://www.bovey.com.au/files/rdm.pdf>

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