Monarch Airlines Ltd was
an ill-fated British airline based in Luton, which went into administration on
October 2nd 2017 (Rodger, 2017). This essay will point
out a significant economic problem in this company, pitfalls in its organizational
structure and leadership, and put forward relevant solutions.
summary of the economics
problems of structure and leadership are the main causes of Monarch’s failure.
As the Monarch’s companies’ house records (Beta.companieshouse.gov.uk, 2017),
obviously, the higher-level management of Monarch have rarely changed,
those people are the leaders of the company who own the decision-making
authority, most of them had to be homegrown.
Monarch could not make a timely response to the unexpected problems, such as the
increasing fuel prices of 2012 and the reluctance to travel due to the recent
prevalence of terror attacks, which did not seem to affect their competitors’
sales to the same extent (Financial Times. 2017).
transaction and transformational leadership
current situation of Monarch’s and leadership, Monarch has to gain more
effective management style, which could help it to get rid of the struggling
situation. An application of “transaction
and transformational leadership”
is needed for Monarch’s management style, which is the kind of leadership pay
more attention to the relationship of supervision, organization and group of
performance. The “transactions” here is the promise and reward for good
performance or the punishment for the poor performance. The “transformation”
here is the approach which could involve fundamentally changing the values,
goals, and aspirations of followers (Bass,
If Monarch’s leaders could use this leadership approach successfully, the leaders at all levels can be trained to be
charismatic in verbal and nonverbal performance. For instance, first-level project leaders in hi-tech
computer firms and senior executives of insurance firms have conducted this
leadership approach successfully (MacKenzie, Podsakoff and Rich, 2001). What is more, a former president of Mesta Machine
Company, Lorenz Iversen. He always said to his employees, “We
got this job because you’re the best mechanics in the world!” He
practiced management-by-walling-around and stimulated the development of many
of Mesta’s patented inventions.
At the same time, he is remembered for instilling pride and commitment in his
employees (Hayes, Wheelwright and Clark, 1988).
Because of the
situation of the home growth leaders in Monarch, when it was struggling, hiring
outside is considered as a cheaper, less disruptive and
faster approach, which is popular within the industry. Monarch should not regard this method as a
negative issue, because of the blind confidence of the original system. Huson,
Parrino, and Starks (2001) have indicated that the trend in outside hiring
reflects greater board diligence in monitoring the CEO and it is not driven by
companies replacing poorly performing CEOs. Moreover,
if monarch could cost-effectively developing talent, it can reduce bottle-necks
at block advancement, speeding up processing time and improving
forecasts to avoid mismatches(Cappelli,2008)
this approach is not suitable for ever situation. Before hiring outside, Monarch
should take account that hiring outside is feasible or
not for Monarch. Firstly, Monarch needs to estimate the duration of the
employee they need, it would gain the payoff easier if the length of time is
longer. secondly, it should consider how accurate is the duration, because the
inaccurate estimation means greater risk and cost of internal development. if
it cannot be exact, Monarch needs the outside hires. Last but not the
least, Monarch need to have the hierarchy of skills and jobs, which can make it
possible for the brand-new inexperienced employees to learn on the job. It
would make the internal talent developing easier (Cappelli,2008).
· The mean idea
of Chandler’s (1962) structure and
leadership approach is “multidivisional structure”,
which is also called M-form. This approach is to reduce the decision-making
workload of the top management when diversifying the liners of business and aim
to improve the efficiency in organizational design (Shleifer and Vishny, 1991). Most decision-making rights hold in
one person or a group of people is a tough issue for Monarch’s development. An
example of Monarch ‘s central decision making can be seen in their CFO, Christopher
John Bennett, who was the CFO for all of their corporate bodies (Beta.companieshouse.gov.uk, 2017).
The M-form is a unique structural frame-work that overcomes problems
of both internal and strategic control that confront large multiproduct firm
(Williamson, 1975). If this approach applied in Monarch, this framework will let
Monarch experience a growth in efficiency due to the integrate the internal
control and gain the direction due to the strategic control, which is better than
the function (U-form) structure. Because in a diversified U-form, a
chief executive officer is confronted with too much information to
process, which is Monarch’s current situation.
when the M-form structure applies
in Monarch, the internal control improves due
to the information-processing requirements of chief executive officer decline. The need
for top executives to deal with day-to-day operations and need for coordination
between every department would both decrease. Introducing annual
budgeting and centralized financial controls further solving the internal control problems (Hoskisson, 1987).
conclusion, the organizational structure and leadership problem in Monarch is
the means reason for its downfall. The key issues this
essay indicates are the home growth leaders and the slow response for unexpected
issues. And the improvement and changes for their organizational
structure and leadership is needed for Monarch to better the
internal control. To solve those questions, the internal organizational
structure and leadership management method should take into account seriously.