Essay On Leading In The 21st Century: A Case Study Of Richard Branson And Terry Gou

Richard Branson: CEO of Virgin Group

The following case comprises two short scenarios describing situations in two very different companies, where the leadership styles and behaviours of the CEO of one company and the owner of the second company are evident on a day- to-day basis. 

Sir Richard Branson is a self-made billionaire with more than 200 companies, who does not fit the mould of a CEO in a dark suit with conventional behaviour and appearance. He is as likely to be seen kite surfing the English Channel, absailing down a tall building in India for the launch of Virgin Mobile, dressed as Che Guevara when turning up at a press conference, or wearing butterfly wings whilst running the London marathon as he is in a board room.

His business and life vision has been broad and adventurous, and under his guidance has developed a diverse empire of Virgin companies including airlines, telecommunications, a record label, credit card lending and a hotel chain. Branson’s more recent Virgin Galactic venture has had some setbacks, but he maintains his vision and sets the example to his employees that we all can dare to dream and make these dreams happen.

Branson is often studied in the business world for the keys to his success, part of which appear to be his management style and decisions he makes. He is known to take risks, but calculated risks. For example, a little known fact is that his first company, Virgin Records, was founded in 1972 as a very small boutique label, with not a lot of money behind them. The first artist he signed was an unknown progressive rock musician, Mike Oldfield, who produced an album of a single piece of music with no lyrics. No ‘single’, zero ‘hit’ potential it seemed. It was a huge gamble. However, the album was Tubular Bells, and went on to be one of the highest selling albums of all time, selling 17 million copies. It was the foundation of the Virgin Empire and Branson’s success. Likewise he took another huge risk in 1976 when he signed a totally new type of music act, the Sex Pistols, who re-wrote musical history and heralded in the start of the punk movement. These risks clearly both paid off.

He is definitely highly passionate about business ventures and believes in the importance of fun which he brings to the workplace. He was quoted as saying, “Some 80% of your life is spent working. You want to have fun at home; why shouldn’t you have fun at work?” Branson values removing barriers in the corporate hierarchy and sharing ideas and social events with his workers. Listening to others is important to Branson, particularly his employees, as is allowing them to keep motivated through applying their skills in areas and new projects he is not as good at.

Branson argues that delegating to others helps workers develop, whilst creating the opportunity for him to have more leisure time with his family and to be freed up for more strategic business development. Branson encourages his employees to think and make their own decisions rather than telling them, justifying this approach by saying they are paid to think and self-lead, not to follow.

Terry Gou (pronounced Gwaw): Owner of Foxconn Factories

Branson is often involved personally in selecting staff to ensure the right fit for the Virgin culture, as workers need to operate in a rapidly changing environment, need to make decisions and need to be empowered to act. Branson acknowledges however that the leader’s challenge is to know when to step back and to know when to intervene. Branson’s philosophy is that being people focussed is the key to business success, and that managers who have a people focus will achieve better outcomes.

Branson has a ‘non-policy’ on holidays for staff in that they can take holidays when they want them which, he believes, will ultimately increase productivity. Branson’s approach also includes respect for employees by giving them support and sometimes stepping back and delegating. Branson operates from the premise that if employees leave it will be because they do not feel valued and because their work does not give them a feeling of satisfaction, not because they do not receive enough money.

A classic Branson quote that sums up his attitude is “Customers do not come first. Employees come first. If you take care of the employees, they will take care of the customers” 

Branson has also gone further with his role, beyond the specifics of the organisation. He argues that in the past effective corporate leadership was only measured by delivering desirable results to shareholders. Whilst that may still be necessary it is not sufficient in the contemporary business world. Branson argues that the public – employees, politicians, customers – have greater expectations in relation to the moral and ethical standard of their leaders and are holding them to account.

So how does Branson propose that this can happen? How can leaders be more morally and ethically right? Branson articulates this in the following quote:

“First off, businesses need to get their own house in order. Be an agent of positive change in your own enterprise and adopt responsible practices to eliminate the risks that often lie at the root of inequality and poverty. Build more sustainable supply chains. Pay a living wage. Promote gender equality and women’s empowerment. Respect and advance gay rights. Minimise your footprint on the environment.”

Branson is under no illusion that this perspective is not the easy road to follow in business, but his ethical values are articulated in the following statement, when discussing why business leaders should do these things:

“These can be daunting tasks, but they make perfect business sense. Why? Because fighting inequality and safeguarding our planet for future generations means building and growing tomorrow’s markets. I’m sure by now you get the idea: being an ethical business and being a successful one are not opposites. They are two side of the same coin.”

Branson’s philosophy is reflected in how he articulates “Virgin’s purpose”. He is a champion of the concept of “changing business for good”, and that business needs to serve a greater good in society. This has driven him to establish a number of sub-entities of Virgin, committed to ethical practices. These include: The B Team, The Elders and the Rocky Mountain Institute/Carbon War Room.

Branson's Management Style and Decisions

Apple is one of the richest companies in the world. This is in part due to the efficiency strategies it utilises in choosing companies in its global manufacturing.  Terry Gou operates Hon Hai Precision, the world’s largest contract manufacturer. Employing more than 820,000 workers, it is a major supplier to Apple, Sony, HP and Nokia.  The factory is best known as ‘Foxconn’.

Unlike the previous example of Virgin employees, where the words ‘happy’ and ‘empowered’ and ‘fun’ underpin the culture, employees at Foxconn’s Chinese factories have sometimes been required to do 24 hour shifts, or woken up at 4am to meet an urgent order from Apple.  Even though there are a range of worker benefits, such as swimming pools the pressure is constant to work harder in the quest for ever-increasing efficiency and productivity, often in an environment that is highly physically, as well as mentally, toxic and stressful, with dangerous chemicals and ‘forced’ overtime.  

Management practices at Foxconn are quite different from those in many other countries, with the driving leadership goal being to make an ever increasing profit with higher worker output.  In one of the Apple manufacturing plants in Chengdu there are even banners that remind the worker that they need to work hard today or else they will need to work hard tomorrow to find a new job.

There have been at least 11 suicides and further suicide threats being made due to harsh working conditions and worker treatment. Gou’s response to the suicides however did not involve changing conditions for the workers, but instead focussed on erecting suicide nets in some factories to stop jumpers. There was, however, some counselling and a pay increase, but not a change in nature of the work, working conditions or hours of work.

In many countries such working conditions would not be tolerated and could be considered unethical. However in countries where manufacturing is outsourced there can often be different management practices and treatment of workers. The challenge facing Terry Gou is that Apple chooses his company to manufacture for them, not just for price but also for fast delivery time. The flow-on impact for employees is a relentless driving for more production, with long hours and low pay. As mentioned, employees do have some benefits, such as cafeterias and medical facilities, but they have boring, repetitive jobs, minimum wages, forced overtime, plus the ever-present threat of dismissal.

In addition, Gou’s leadership style is ‘secretive’ and even new product launches are kept quiet. The employees operate in a culture in which jobs are carried out with military style precision and workers are tightly controlled. There is no clear consultation with workers and there was even an attempt by Gou to make workers sign a letter absolving his company of any responsibility if they chose to commit suicide. Gou’s leadership is still based on an old model which combines intense drive with a martial style of leadership, which is based on his hero Genghis Khan. Gou’s favourite sayings, which guide his leadership approach and demonstrate what he expects of his workers, are:

• “Work itself is a type of joy”,
• “A harsh environment is a good thing”,
• “Hungry people have especially clear minds”and
• “An army of one thousand is easy to get: One general is tough to find.”

1. Outline how you think Branson demonstrates the elements of either ethical or non-ethical leadership. What ethical behaviours is he demonstrating? How is he demonstrating the ‘traits’ of an ethical leader?

2. If you were a consultant hired to improve leadership at Foxconn, what changes would you recommend to Terry Gou to create a workplace that is more harmonious, less stressful and less toxic for employees. Do you believe the nature of some of the characteristics of Chinese culture may influence the success of these changes?

Richard Branson: CEO of Virgin Group

Branson’s leadership can definitely be called charismatic leadership to a great extent. He has gone beyond the conventional styles of leadership, in order to achieve significant business goals along with enhancing the prospects of employee motivation. Charismatic leaders are transformational leaders that focus towards inspiring the people they lead. This can be very well understood through the leadership aspects of Richard Branson. The behavior of Branson depicts great regard for the employees of his organization. This is an important trait of charismatic leadership where leaders tend to be enthusiastic and excited in nature (Davidson, Wood and Griffin 2009). The leaders also clearly communicate their vision across the organization and ensure that their subordinates get the idea that they want to focus on. The leadership trait that is depicted by Richard Branson greatly demonstrates ethical leadership aspects. The owner of virgin is one of the most sought after leader in the corporate world. As it is very clearly mentioned in the case study, he effectively maintains his vision and sets examples in front of his subordinates to follow.

Branson is an adventurous charismatic leader who sometimes even portrays some of the traits of situational leadership. This can be well evaluated through the various risks Branson has taken in his life. Many of these risks have spurred the development of his organization making him rise in the level of charismatic leadership each time. The situational theory stresses on the situational effectiveness of leadership rather than the ideal traits of leadership. Many times the right qualities are not sufficient to make a person a better leader. Situational leadership model take into consideration the situational contexts within which leadership takes place. Hence, a manager needs to be judged on the basis of the qualities, the effective roles one perform and definitely the situational contexts in which the leadership takes place (Bolman and Deal 2017). Richard Branson depicts these characteristics very effectively. Branson’s leadership techniques have been greatly situational. This can be seen through his association with lesser known music artists in 1972 and 1976. In both cases the albums and the artists became great hits and revenue earners. In 1972 it was Tubular Bells and in 1976 were the hugely popular punk band Sex Pistols. As a leader he is passionate about the things he does and the people that form essential part of his organization. He had said that if he takes care of his employees, they will take care of the customers. Branson allows employees to open up about their experiences. This is a very good initiative as it allows for better interaction of the leadership and the subordinates (Fan 2000). In accordance with a leadership grid based on behavioral leadership Branson’s leadership technique can be said to be very close to 9,9 factor. In this factor the leadership exhibits maximum concern for the employees as well as the organization. The qualities of leadership exhibited by Branson reminds of the ineffectiveness of the assumptions of the best practices of leadership. This gives a perspective of leadership that depends on how the leader should act rather than how the leader should be idealized. This is essentially an ethical dimension of leadership that is worth following for every leader.

Terry Gou (pronounced Gwaw): Owner of Foxconn Factories

If hired as a consultant for the Foxconn group, the first duty of a person will be to re-evaluate the practices of the organization. This re-evaluation needs to take place concerning the ways in which employees are approached. The company is definitely focused towards maximizing productivity. However, the main issue that arises is the unethical treatment of the workforce in the process. A definite plan for building a friendlier workplace is required (Schermerhorn et al. 2014). This need to be done in order to harmonize the production process with motivational factors that affect the employees. Terry Gou needs to immediately consider labor ethics. Firstly, 24 hour shifts need to be eliminated from the process as this is clearly unethical. Employees should not be forced to do 24 hour shifts as this can be greatly detrimental to their health. The goals of the organization definitely needs to incorporate the aspects of employee ethics, employee motivation and organizational responsibilities towards the employees. These aspects are necessary to be included for the future development of the organization. If considered on the scale of the leadership grid. The leadership that is displayed by Foxconn can be said to be 9,1. Here, the leadership shows high concern for production but very less concern for the people that work towards achieving the same (Jones, George and Hill 2000). The appalling condition of the leadership can be seen through the 11 suicides that have taken plcee over the years. The company should immediately improve employee relationships. The HRM team needs to directly approach the employees and listen to their grievances. It becomes very important that the organization starts to implement essential employee motivation mechanism. Simply, installing nets to stop suicides will not do. The company needs to increase incentives and decrease the working hours. Forced overtime should immediately be stopped. The organization should focus on motivating employees for overtime through better incentive schemes rather than force. A very disturbing fact is the toxic environments within which the employees have to work. It becomes important that the company undertakes research in order to assess the toxicity of the working environments and take immediate actions accordingly (Bartol et al. 2011). The company need to immediately optimize its functions in accordance with the universal labor ethics laws. It is important that changes are essentially made to the operational process of the company. The company need to work under strict service level agreements through which the organizations with which it has relationships need to be given strict deadlines. This will stop the unethical pressure on the employees for meeting deadlines unwarrantedly. The company need to immediately implement employee motivation techniques (Robbins and Judge 2014). It becomes very important that effective CSR techniques are implemented at an organizational levels for the company. The organization needs to work towards establishing better employee relationships. The company has to ensure that all the necessary elements of organizational management are taken into consideration while implementing decisions towards productivity.

References

Fan, Y., 2000. A classification of Chinese culture. Cross Cultural Management: An International Journal, 7(2), pp.3-10.

Davidson, P., Wood, S. and Griffin, R.W., 2009. Management: Core concepts and applications.

Jones, G.R., George, J.M. and Hill, C.W., 2000. Contemporary management. Irwin/McGraw-Hill.

Robbins, S.P. and Judge, T., 2014. Essentials of organizational behavior. Pearson,.

Schermerhorn, J.R., Davidson, P., Poole, D., Woods, P., Simon, A. and McBarron, E., 2014. Management: Foundations and applications, Milton, Queensland: Wiley.

Bartol, K., Tein, M., Matthews, G., Sharma, B. and Scott-Ladd, B., 2011. Management foundations: a Pacific Rim focus. Management Foundations: a pacific rim focus, 3rd edition.

Bolman, L.G. and Deal, T.E., 2017. Reframing organizations: Artistry, choice, and leadership. John Wiley & Sons.