¶ … Virgin's Organizational Culture
Model of the organization
Organizational culture is built around three aspects: (1) complexity, (2) formalization, and (3) centralization.
Complexity: Complexity depends on the hierarchical structure of the organization, the larger it is generally the more complex it is. Complexity, then, is reduced to three tiers: vertical, horizontal, and geographical.
Vertical: The larger the depth of layer the more 'vertical' the organization is. A complex and broad organization, therefore, would generally have more layers than one less complex (Bartol, Twein, Matthews, & Martin, 2007). Branson was an exception to this. Though leader of exceedingly broad and complex operations, he managed to reduce the structure of verticality by splitting Virgin Groups up into multiple small companies. Branson believed that employees preferred to work under small companies than under large impersonal corporations. By the late 1980s, for instance, he had fragmented his collection of companies into more than 100 loosely connected enterprises, each of which was run by a small, streamlined staff. "Virgin had minimal management layers, no bureaucracy, a small board of directors, and no massive global headquarters" (IBS, p.4).
Horizontal complexity describes the pattern of task-distribution. A company may either distribute its tasks generously to a handpicked select force, or the tasks are fissured into non-complex smaller portions and these, then, distributed amongst a non-skilled workforce. Virgin, and, in fact, all of Branson's companies had implicit trust in their employees. He picked employees who resembled the brand of the company, the company, in turn, was highly motivated, and were given enormous power and responsibility; a quality that Branson believed would help the company excel since it empowered it to develop its own decisions and run its own affairs.
Geographical complexity, the last tier of the organization, is the term accorded to an organization whose personnel and task distribution are distributed through various geographical localities. Branson's companies fragmented into numerous small operations (since, as Branson explained, "In a small company, you can create a different type of energy, People feel cared for" (IBS, p.5). Virgin Groups were nationally and internationally geographically disseminated.
2. Formalization: Formalization describes the attitude of the organization, namely whether the organization is rigidly structured, directing itself according to an inflexible and monitored superstructure of conventions and rules, or whether its atmosphere is more flexible and relaxed, allowing minimal enforcement of rules and structure and encouraging, on the contrary, innovation and rule bending (Ott & Shafritz, 2008).
The Virgin Group Companies excellently illustrate the latter. Branson, himself rebel per excellence (he had, for instance, shocked the marketing world by creating his trademark name 'Virgin', i.e. lack of knowledge about the business, and with no preconceived ideas inventing his own route to success) empowered the group to run their own affairs with one Virgin company helping another. Rather than a rigidly defined set of rules, the individuals of each company were given power and responsibility, and this, Branson believed, encouraged the employees as well as the heads of each specific company to excel in a manner in which they would have otherwise not done had they been accountable to one CEO. More so, each company was encouraged to develop its own distinct identity, and Branson encouraged employees to maintain their innovativeness and individuality. Innovation and individuality was one of the characteristics that Virgin sought in its employees, and the work place environment represented this relaxed code with its "casual dress code, open plan offices, music, flexible timekeeping, commitment to training and development, and in its celebratory culture" (IBS, p.4). In a radical departure from the British corporate norms of the 1970s and 1980s, Branson replaced the traditional suit and tie for sweater and slacks and, instead of working in the traditional corporate office, operated from the bow of his barge.
3. Centralization: Centralization describes the extent to which power is disseminated throughout the organization; whether authority is vested in upper management echelons, or whether it is equally distributed through each layer of the organization. Generally, the larger the organization and the more rigidly structured its formalization, the more centralization will skew towards an upper management hierarchy. Some organizations, being heavily dependent on technology, will equally vest their authority in specialized technologies and in experts that control and monitor these technologies, (Ott & Shafritz, 2008).
Virgin's autonomy is decentralized. It is equally distributed throughout its various companies. In fact, Branson's choice for running his business from his barge was so that it gave his subordinates, spread out in more than 25 buildings,...
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