IntroductionMonarch Airlines Ltd wasan ill-fated British airline based in Luton, which went into administration onOctober 2nd 2017 (Rodger, 2017). This essay will pointout a significant economic problem in this company, pitfalls in its organizationalstructure and leadership, and put forward relevant solutions. summary of the economics The economicproblems 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-makingauthority, most of them had to be homegrown.Moreover,Monarch could not make a timely response to the unexpected problems, such as theincreasing fuel prices of 2012 and the reluctance to travel due to the recentprevalence of terror attacks, which did not seem to affect their competitors’sales to the same extent (Financial Times. 2017).transaction and transformational leadershipAs thecurrent situation of Monarch’s and leadership, Monarch has to gain moreeffective management style, which could help it to get rid of the strugglingsituation. An application of “transactionand transformational leadership”is needed for Monarch’s management style, which is the kind of leadership paymore attention to the relationship of supervision, organization and group ofperformance. The “transactions” here is the promise and reward for goodperformance 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,1990).
If Monarch’s leaders could use this leadership approach successfully, the leaders at all levels can be trained to becharismatic in verbal and nonverbal performance. For instance, first-level project leaders in hi-techcomputer firms and senior executives of insurance firms have conducted thisleadership approach successfully (MacKenzie, Podsakoff and Rich, 2001). What is more, a former president of Mesta MachineCompany, Lorenz Iversen. He always said to his employees, “Wegot this job because you’re the best mechanics in the world!” Hepracticed management-by-walling-around and stimulated the development of manyof Mesta’s patented inventions.At the same time, he is remembered for instilling pride and commitment in hisemployees (Hayes, Wheelwright and Clark, 1988).Hiring outsideBecause of thesituation of the home growth leaders in Monarch, when it was struggling, hiringoutside is considered as a cheaper, less disruptive andfaster approach, which is popular within the industry.
Monarch should not regard this method as anegative issue, because of the blind confidence of the original system. Huson,Parrino, and Starks (2001) have indicated that the trend in outside hiringreflects greater board diligence in monitoring the CEO and it is not driven bycompanies replacing poorly performing CEOs. Moreover,if monarch could cost-effectively developing talent, it can reduce bottle-necksat block advancement, speeding up processing time and improvingforecasts to avoid mismatches(Cappelli,2008)Furthermore,this approach is not suitable for ever situation. Before hiring outside, Monarchshould take account that hiring outside is feasible ornot for Monarch. Firstly, Monarch needs to estimate the duration of theemployee they need, it would gain the payoff easier if the length of time islonger. secondly, it should consider how accurate is the duration, because theinaccurate estimation means greater risk and cost of internal development. ifit cannot be exact, Monarch needs the outside hires.
Last but not theleast, Monarch need to have the hierarchy of skills and jobs, which can make itpossible for the brand-new inexperienced employees to learn on the job. Itwould make the internal talent developing easier (Cappelli,2008).multidivisional structure · The mean ideaof Chandler’s (1962) structure andleadership approach is “multidivisional structure”,which is also called M-form. This approach is to reduce the decision-makingworkload of the top management when diversifying the liners of business and aimto improve the efficiency in organizational design (Shleifer and Vishny, 1991). Most decision-making rights hold inone person or a group of people is a tough issue for Monarch’s development.
Anexample of Monarch ‘s central decision making can be seen in their CFO, ChristopherJohn 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 problemsof both internal and strategic control that confront large multiproduct firm(Williamson, 1975). If this approach applied in Monarch, this framework will letMonarch experience a growth in efficiency due to the integrate the internalcontrol and gain the direction due to the strategic control, which is better thanthe function (U-form) structure. Because in a diversified U-form, achief executive officer is confronted with too much information toprocess, which is Monarch’s current situation.
when the M-form structure appliesin Monarch, the internal control improves dueto the information-processing requirements of chief executive officer decline. The needfor top executives to deal with day-to-day operations and need for coordinationbetween every department would both decrease. Introducing annualbudgeting and centralized financial controls further solving the internal control problems (Hoskisson, 1987).
Conclusion Inconclusion, the organizational structure and leadership problem in Monarch isthe means reason for its downfall. The key issues thisessay indicates are the home growth leaders and the slow response for unexpectedissues. And the improvement and changes for their organizationalstructure and leadership is needed for Monarch to better theinternal control. To solve those questions, the internal organizationalstructure and leadership management method should take into account seriously.