Executive Summary: Singapore Airlines
Singapore Airlines was established as a separate entity in 1972, when it split up with the Malaysia-Singapore Airlines. However, if the actual history of the formation of the company is considered, then, Singapore Airlines was founded in 1947, when it was inherent to the Malayan Airlines. In those days, just three flights per week, to Kuala Lumpur, Ipoh and Penang, were all that the people in Singapore were privileged to. But, there were very fast developments in the situation in a span of two decades. During this period, Singapore’s Kallang Airport gained an international exposure and started making huge additions to its fleet. Soon after the birth of the Federation of Malaysia on February, 1963, the Malayan Airlines came to be known as the Malaysian Airlines, and in 1966, it was renamed the Malaysian-Singapore Airlines. But, in 1972, fifteen years from the day it was founded, Singapore Airlines split up with Malaysian Airlines and acquired a separate identity.
This split however, helped the airlines to take its decisions itself and the company was able to implement many innovative schemes which helped it not only to gain a greater popularity, but also to expand its business by a far greater extent than its Malaysian counterpart. The airlines that started off with just a single plane that took off just thrice in a week some six decades ago, has today managed to develop quite a large and advanced fleet today, that covers 93 destinations in 38 countries.
However, the success of any organisation depends upon a number of factors. Inspite of thorough and regular research programs, many organisations haven’t been able to succeed in their fields. There still remain some intrinsic problems that many fail to notice initially but which become prominent as time passes by. This paper is a case study to identify any such problems that might hinder the successful working of an organisation and what the possible ways to avoid them could be (The Creation of Singapore Airlines, 2009)
Chapter 1: Organisational Structure and its Basic Elements
A. Organisational Structure
Organisational Structure is an ordering among a group of people who coordinate among themselves for achieving a predetermined target. A good organisational structure plays a major role in the maintenance of discipline in a company and hence, is very important for a smooth run, because a proper and clear hierarchy not only distinguishes among the different duties that different people should perform but also makes the best use of a person’s potentials. An organisation could be structured in either a hierarchical (top-down) or a functional manner (managed by different heads in different departments), according to the size and the diversity into which a company indulges itself (Organizational Structure, n.d.).
The Singapore Airlines is one of the biggest in terms of turnover as well as coverage in the airlines industry. But, the secret behind it is a good organisation. It follows a hierarchical organisational structure being a subsidiary of the Singapore Government and a number of vice-presidents underneath responsible for a variety of operations.
The Singapore Airlines had long been exemplified as one with a very flexible organisational structure that had forever helped it to emerge out of contingencies. But, the more important part for the success behind an organisation is the relation that exists between its various elements.
B. Elements of Organisational Structure
(i) Complexity of the Organisation
The Singapore Airlines today has a strength of about 2000 pilots, 7000 operating cabin crew and 170 ground staff. In addition, to the core work of commuting people, it also is involved in a variety of activities aimed towards social welfare and environmental protection, for which the company employs a large number of executives The company also indulges in researches aimed at improvement of its services and enhancing its circle of operations. The company had historically been a pioneer in the adoption of new technologies in the aviation industry in fields of both flight and in-flight facilities. It became more evident when the company became the first to own and operate the largest aircraft in the world, A380, in 2007 between Singapore and Sydney (Dooley, K. 2002, pp1)
(ii) Centralisation of Structure
For Singapore Airlines, although the ultimate power rests in the hands of the Government of Singapore via the Ministry of Finance, the government had always been very strict about its non-involvement in the management of the company and thus has recruited a number of efficient vice-presidents who are assigned to the proper running of the organisation. Thus, theoretically although it could be said that the firm has a centralised structure, yet practically this can not be supported on a firm ground.
(iii) Formalisation of Structure
Formalisation implies the degree by which an organisation formalises its process of setting rules, regulations and restrictions on its members. The Singapore Airlines had never been an autocrat in the field but had rather focused on keeping the regulations low so that its employees are comfortable in the environment they work and feel free to propose any probable changes that might be in favour of the organisation. Keeping the rules and regulations minimal have added to the productivity of its employees and has helped it to grow so fast.
Chapter 2 – Dimensions of Organisational Structure: Mintzberg’s Theorem
Henry Mintzberg identified six different types of organisational structures suitable for different types of organisations passing through different phases, namely – Simple Structure, Machine Bureaucracy, Professional Bureaucracy, Division Organisation, Innovative Organisation and Idealistic Organisation.
At the beginning, the organisation adopts a simple structure that is not being able to afford a highly organised hierarchy in the initial stage. As the firm starts growing, it adopts a more organised structure according to the type of business. Machine Bureaucracy would be ideal for those firms that are more dependent on researches and innovations, while Professional Bureaucracy implies the presence of a large number of specialists in the organisation. Division Organisation is suitable for those that involve themselves in a number of products, for which the coordination between the various links in the middle management becomes important. Innovative Organisational Structure is that in which formal training is imparted to the employees for the efficient running of the system. Lastly, the Idealistic Organisational Structure is that in which the company fixes a set of policies that becomes the company motto and everyone is bound to adhere to it. The last five organisational configurations being discussed represent a proper hierarchical or functional structure and develop only after the company attains a certain level of growth (Organisational Configurations, 2009).
Singapore Airlines is a mature airlines firm that follows a hierarchical organisational structure. However, the company cannot be said to be following a single configuration, but rather it is inclined to both Machine Bureaucracy and Professional Bureaucracy. None of the other structures are found to exist within the organisation – neither does it indulge itself in a large variety of products so as to follow a Division Organisation, nor does it impart any formal training to its employees who are already trained at the time of recruitment (the case of Innovative Organisation) and nor is there any such strict company motto that is intrinsic for an Idealistic Structure. Rather, the company’s nature to employ already specialized people in its organisation, as is the case for all aviation firms, and its involvement in a large number of research projects meant to promote both its internal and external affairs proves that the firm follows a Machine Bureaucracy as well as a Professional Bureaucracy type of organisational structure.
Chapter 3 – Determinants of Organisational Structure: Organisational Goals
Organisational goals are those that help a company to smoothly run its operations by avoiding any chaotic environment and giving a direction and motivation to the company. Setting organisational goals help a company to know the exact targets that it needs to achieve and plan a strategy that would be most appropriate to acquire them. In other words, planning of organisational goals help a firm to act in a more effective and efficient manner. The goals that a company sets mainly are based upon two key facts – ends focus and means focus. The natures of these goals however keep on changing depending on that of the team (Setting Organisational Goals, n.d.).
The chief organisational goals of the Singapore Airlines had been the achievement of a stable and a pioneer position in its respective field of operation. The company had indeed been the first in launching a number of new programs, new techniques and devices. The most notable is the fact that the airlines became the first on October 25, 2007, to own and operate the world’s largest commercial aircraft – the A380 between Sydney, Singapore, London, Tokyo, Paris and Hong Kong. The airlines company also researches upon the changing tastes of its consumers and keeps on changing its customer services accordingly. It has enhanced the entertainment services, food services and other in-flight services according to the changing tastes of its customers and this is the reason why a large number of people had been loyal to the company for many years. Moreover, it had been making additions to its fleet on a regular basis so as to ensure maximum coverage in its operations, both for the convenience of the people as well as helping itself to earn greater profit margins.
Chapter 4 – Organisational Effectiveness
There are four approaches that judge the organisational effectiveness, namely – goal attainment approach, systems approach, strategic constituents approach, balanced scorecard approach. The goal attainment approach identifies the goals of the organisation and paves a path to achieve them. It should be the ideal approach when goals are clearly measurable with respect to time and the organisation’s capability. The greatest advantage of this criteria is that it can be very straight-forward, provided the goals are properly specified.
The Systems Approach is that which utilises the scarce resources derived from the surrounding environment, effectively, for the accomplishment of organisational goals. This approach should be ideally used when there is a clear link between the inputs used and the output produced by the company. The main advantage of this approach is that, before deciding upon the company goals, it assesses the impact that the completion of the targets set by the firm would create on the society and the environment.
The Strategic Constituencies approach is that which stresses upon the successful completion of the demands of one or more constituencies internal to or an external of the organisation. This approach is adopted by an organisation in case the constituencies have a very strong influence in the firm’s operations. The benefit of this approach is that the firm evaluates its budget and compares it with a number of competing ones before it pins up on one or more organisational goals.
A balanced scorecard approach to assess organisational effectiveness should be adapted to judge whether the small-scale operations in a firm are aligning with its larger-scale activities. This approach is the ideal one to evaluate a firm’s long-term interests. Thus this approach helps in aligning the firm’s direction of operations accordingly after citing the goals in a proper manner. Since it is an approach emphasising on the long run, so, it must be very patient in its activities.
It is a widely known fact that any organisation that wants to sustain in the industry and create a stable and strong ground for itself, must focus on the long-term interests. Singapore Airlines is one such firm that had always aimed towards long-run gains and that is the reason why it is at present in the most stable position compared to all other aviation firms in Asia. Again this particular firm had always aimed at becoming a pioneer in its field of operations and had in most cases been able to achieve its aim. This needs a true understanding of the firm’s capabilities and the constraints that might hinder its operations, before it sets a goal for itself. Thus, it could not be said that the firm had been a loyal follower of a particular approach to measure its organisational effectiveness. Rather, the approach it had been following could be separately identified as having the characteristics of both the goal attainment approach and the balanced scorecard approach.
Chapter 5 – Structural Problems
Whatever be the organisational structure adopted by a company, in most cases, it cannot be problem-free. Especially in a hierarchical structure, the main problem is that of communication. The decisions that the bureaucrats at the top of the organisation make take a longer span of time to trickle-down to its grass root workers. Moreover, because of this lack of communication, the ambience in the organisation could be very chaotic thus disturbing the smooth functioning of a firm. However, any such problem is not expected to arise in case of Singapore Airlines since the topmost position is held by the Government of Singapore that has strictly kept itself aloof from all operational activities of the firm. Instead, it has divided the different departments and employed a number of vice-presidents as the heads of those sections. This eases out the process by a large extent.
Another probable problem that might arise in a particular organisational configuration is that of very restrictive rules and regulations that often confine the activities of its employees under the impression of being very disciplined. The employees in such firms neither get enough enthusiasm to work and nor to innovate. But, Singapore Airlines had been very vigilant of this fact and had always allowed its employees to have their own space which had helped the company not merely to grow but also to become one of the fastest growing and innovative in the industry.
At a time when the Asian aviation industry on the whole is at the verge of a collapse, the Singapore Airlines appears to be its only ray of hope. The company had always made provisions for a flexible organisational structure by adjusting its management force according to the economic situations. Since it belongs to a small country, the airlines had always made the best possible use of the globalisation factor and thus had responded to regional crises on a comparatively low scale. For example the present downfall that has almost gulped the Asian aviation industry, is mainly caused by an initial surge in the flow of wealth in the pockets of the Asian middle-class and then a sudden decline in the foreign exchange rate in terms of dollars when most of the debts were denominated in terms of dollars. Moreover, the immense rise in fuel costs is also one of the reasons. However, Singapore Airlines had strategically handled its business in a way that nothing other than a global meltdown could affect it. It had already spread its wings to a large number of countries and already had acquired a huge number of loyal customers through some unique customer services that it provides (Asia Pacific Management News, June 24, 1998, para 2 & 9-11).
Asia Pacific Management News, June 24, 1998, Asian airline industry teeters on collapse [Online]. Available at http://www.apmforum.com/news/apmn185.htm [Accessed on August 23, 2009]
Center for Awareness, Service and Action, n.d. Setting Organisational Goals [pdf]. Available at http://www.sandiego.edu/csl/casa/pdf_folder/skill_building/org_development/setting.pdf [Accessed on August 24, 2009].
Dooley, K. 2002. Organizational Complexity [pdf]. Available at http://www.public.asu.edu/~kdooley/papers/iebm.PDF [Accessed on August 23, 2009]
McShane Steven L., Glinow Mary Ann Von, 2008, Organisational Structure [PPT]. Available at http://www.tarleton.edu/~fry/350ppts/Chapter%2015.ppt [Accessed on August 23, 2009].
Organizational Structure, n.d, Organizational Structure [Online]. Available at http://www.organizationalstructure.net/ [Accessed on August 23, 2009]
Singapore Airlines, 2009, The Creation of Singapore Airlines [Online]. Available at http://www.singaporeair.com/saa/en_UK/content/company_info/siastory/history.jsp
[Accessed on August 24, 2009]
The Executive Fast Track, 2009, Organisational Configurations [Online] Available at http://www.12manage.com/methods_mintzberg_configurations.html [Accessed on August 23, 2009].
Robbins, S.P. and Barnwell, N. (2002) Organisation Theory. Prentice Hall: Sydney.