Tony Dundon, Professor of Human Resource Management & Employment Relations at Alliance Manchester Business School and Work & Equalities Institute.
The fiasco of Ryanair cancelling thousands of flights because of pilot holiday rostering has brought to the fore many bigger issues about corporate governance and sustainability. Only several weeks after the UK government’s reforms to try to improve transparency and regain public trust in the corporate world, Ryanair seem to revel in its own crisis for media spin, displaying what may appear as a disregard for the value of people and service delivery. It is a case study par excellence in strategic (mis)management.
The flight cancellation debacle wiped some €1.4 billion off Ryanair’s shares within days, albeit partially restored since. It is estimated it will cost the company between €25-30 million. It is, however, doubtful it will have any long-term impact or improved institutional learning for an organisation that places bad reputation as part of its core mission.
Ironically, Ryanair’s woes are delivered under a corporate vision entitled ‘Always Getting Better’. While there has been an investment of around $US38 billion in new aircraft fleet since 2013, the gains are clearly skewed to shareholders (and, in particular it’s CEO, Michael O’Leary) and certainly not for its staff or corporate ethics. It can be suggested there are advantages to customers in terms of additional seat capacity and booking processes, but being stranded in another part of the world with no support and little advance notice will remain a painful experience which lives long in the consumers’ memory.
Consumer Relations, Employment Sustainability and Branding
Ryanair has, for a long time, had a poor reputation in relation to how it treats staff. The flight cancellation issue has, however, made the degrading treatment of not only pilots, but all staff, much more public. It brings into focus the role of the consumer in shaping the employment governance and human resource management space to a much greater extent.
One classic own goal was when Michael O’Leary accidently (although publically) referred to Ryanair pilots as ‘glorified taxi drivers’. No wonder many left for employment elsewhere at rival Norwegian Air. If there are lessons to be learnt for other corporate leaders, then people are more than an abstract asset. No organisation should ever display such disregard for human feelings and emotions, particularly in service-orientated roles were the skill and engagement of staff becomes important, no matter how bargain basement the price it gets.
Going back to Wealth of Nations, the seminal 1776 tome penned by philosopher Adam Smith, the market is a known ‘social institution’ and not something that is governed by some innate natural law of the universe. Treating people badly is a lack of basic understanding about positional power. The poor treatment of people can inevitably come back to bite. In this case, pilots and cabin crew have the empathy of the public, as well as the affected customers. Their response is an equally importance case study par excellence: this time the capacity of collective labour mobilisation as a countervailing source of power to the unilateral dictate of corporate leaders.
Examples of poor treatment are now wide-spread and have long been known at Ryanair. Cabin crew sign on and work for 10 or 12 hours a day, yet only get paid for the time in the air, pilots have to pay for their own uniforms and other staff have been threatened with discipline if they don’t ‘sell’ enough products in-flight to boost revenue. The precariousness of such working is made all too clear to the customer with the current mismanagement of what is essentially a basic personnel arrangement: that of holiday rostering. Even more evident is that many staff are not direct Ryanair employees, but hired via a complex web of recruitment agencies; all of which is designed to avoid protective worker and citizen rights in favour of corporate greed. Michael O’Leary and Ryanair has been vocally non-union (if not actively anti-union) for some time, not because of a rational business model or logic, but because he epitomises the corporate ideologue who is power dependent. Had Ryanair bargained and consulted with staff through an independent forum such as a trade union, the chances are such a debacle that has led to the loss of millions of euros for the company, not to mention untold customer heartache and upset, would have been easily avoided. The lack of genuine and effective employee voice is itself evidence of poor management. And, as with all ideologues there is a blind spot: failing to see the countervailing collective counter-mobilising force among pilots themselves, cabin crew and now disaffected customers serves to intensify antagonism.
Corporate (in)accountability and weak government platitudes
The government’s narrative – to make business more transparent with ideas for worker voice on the board, pay gap analysis and other incentives to regulate business greed – seem all the more shallow following Ryanair.
The airline has been criticised by the European Court of Justice (ECJ) for seeking to deal with employee complaints and grievances through the Irish courts, regardless of where employees are based. This directly undermines worker protections further and makes grievance handling all the more complicated for staff. It may transpire yet that current investors will find the whole people management approach simply unpalatable.
Of more pressing policy debate is that the Ryanair issue exposes the limitations in the British government’s white paper to improve corporate conduct. The plans for better employee-customer voice will have had little or no change to Ryanair’s decisions and would have still left customers stranded and employee concerns unheard. The best that could be hoped for is Michael O’Leary makes some comment in the Directors Report and this is made available at some stage on their website. Small if any pressure for change or improvement in that regard then.
A further limitation is that the government’s policy approach and white paper is primarily based on voluntarist principles. With a desire to avoid legislative protections and a future post-Brexit corporate world removed from the remit of the ECJ, there is little prospect that corporate governance will advance the interests of workers or individual customers in the future.
Without more regulatory policy interventions curbing the unfettered power excesses of corporate leaders, Ryanair and many others like them will, in all probability, advance their vested interests over those of others.
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