Breaking in a new culture: the Virgin Blue story

by 03 Dec 2003

Virgin is one of the best known brands on the face of the earth today, with a strong focus on culture, values and pioneering leadership. Virgin Blues Brett Godfrey and Bruce Highfield speak with Craig Donaldson about the makings of successful cultures and what it takes for HR to earn the respect of the CEO

Virgin Blue was launched three years ago with less than 300 employees, and today its headcount stands at 2,800 – and is still growing. Maintaining a consistent culture through such rapid growth has presented its fair share of challenges for Virgin Blue, but successfully doing so has come with its fair share of rewards as well.

“The culture of the Virgin group is a worldwide phenomenon,” says Bruce Highfield, HR director for Virgin Blue. “The brand itself has a very strong culture and people recognise it for quality, value for money, challenging the establishment and a fun work environment, I think.”

Before Virgin Blue’s first aircraft ever took off, Highfield says there was a 94 per cent recognition of the brand. This was further reinforced by a survey that listed Virgin Blue as one of the top 10 brands in the Asia-Pacific region, and one of the top five trusted brands in Australia.

Establishing the culture

Not all companies are as fortunate as Virgin in having such a high profile leader as Richard Branson. In setting up the airline, Virgin took a number of steps to assist in seeding its unique culture throughout Virgin Blue.

“Many of our senior management team had worked for the Virgin group before and they brought that culture here,” says Highfields. “We have a top leadership team of 12 that have been here since the start, and when we started we slept on rubber mattresses in shared accommodation. We’re a very tight-knit group and have got a lot of respect for each other’s talents.

“Having a top team that really works effectively together is really half the battle. Culture starts at the top, and the leadership style of the boss is what filters down,” he says.

Brett Godfrey, Virgin Blue’s CEO, feels that the Virgin Blue culture works well in Australia, and acknowledges the work in creating that distinct Virgin culture.

“We’re a very different airline to Virgin Express and even Virgin Atlantic. You take some fundamental principles like being family, and you build your local niche around that,” he explains.

“Richard [Branson] once said that Virgin Blue was more Virgin than Virgin. In my opinion, I think the culture here surpasses those of the other Virgin airlines. That’s not to put them down, but the culture here works brilliantly for the local environment. I’ve been at three Virgin airlines now and we’ve created our own here, so I think it’s a fabulous culture in many ways.”

Godfrey gives the example of when Virgin Express (Virgin’s European carrier) bought another airline, which came with its own distinct culture. He recalls that when they tried to change the culture there were issues.

“So I was adamant that when we started this airline we would do it from scratch. There was an airline in New Zealand for sale and we didn’t want to go near it. I felt we had to start with our own – our airline wouldn’t have been ours if we bought someone else’s baggage,” he says.

“Unless you get it right, you can’t restructure culture. You can restructure your business, but if you’ve burnt people or if you’ve killed their enthusiasm or commitment then changing their office spaces or even putting a few more dollars in their pocket will not unduly affect the culture that exists.

“It’s a bit like the Titanic – once you’ve built it and it takes to the water, it’s too late to change its direction. That’s why it was really important that we got it right from the outset.”

Recruiting for cultural fit

While Virgin Blue has had the benefit of having a cohesive management team establishing its culture, Godfrey says the airline goes to great lengths to ensure that the culture is supported at all levels.

“Culture is about how you go about doing business with your staff, as opposed to how you do business with your customers, so you’ve just got to get the recruitment right. We probably spend more money on recruitment than any other company I’ve been associated with,” he states.

“Even cabin attendants go through a five-stage recruitment process, whereas at another airline I was with, you could literally go into a pub on a Saturday night, hand out some business cards, train a few people up and they would be it. The view at that airline was that it was an easy job, and maybe it was in some ways. But to get it right and have people come back again and again, our staff have got to be absolute perfectionists in terms of their customer service ability.”

Highfield says that the airline looks for people who are optimistic, enthusiastic and humble. While he acknowledges the achievements of Virgin Blue – such as claiming a 30 per cent market share in an industry that has seen established competitors fall by the wayside – Highfield says the airline can’t afford to rest on its laurels. “Most of us are concerned about what’s still to be achieved, so I think a good dose of humility is important.”

The airline uses behavioural event interviewing, in which applicants are asked questions to indicate particular behaviours and motivations that align with a Virgin Blue personality template. One of the key competencies in the template is a strong focus on customer service, which Godfrey says is paramount to the Virgin Blue culture.

“We have an internal storyboard that says we put our people first. And all we ask of our people is to is to put the person that’s important to them first, and that’s the customer. We back our people even when there may be complaints or concerns. We give them the benefit of the doubt at the least, because we spend such an effort recruiting them so we feel we know them pretty well,” he says.

Highfield says the motivations of interested applicants are also examined in the recruitment process. “We ask why people want to work for Virgin Blue. It’s not good enough for them to say, ‘Well, I’m fun and funky,’ or ‘I’m coming to Virgin to have a good time.’ They miss the point, and you get that quite a bit, which is pretty interesting. But if you can get a group of people who are committed, respectful of one another and who are motivated to see others develop and do well, you avoid the politics of those sorts of destructive behaviours.”

Employee engagement

Despite the global downturn in the aviation industry and challenges such as terrorism and SARS, Godfrey says that high levels of employee engagement have enabled the airline to keep staff motivated and committed.

“Our cost base is superior to our competition, and no doubt they’ll all make inroads over the next decade – and sooner rather than later they would probably hope. But the one thing they can never ever replicate is our corporate culture, and the Virgin Blue culture is unique,” he says.

“For example, our people still believe – even after two and half years – that they’re on a crusade. That emanates out of the HR department in terms of how we keep people feeling in volunteer mode.”

Godfrey says another factor in the airline’s employee engagement is that staff need to believe in what they do. In Virgin Blue’s case, he says staff feel particularly responsible for airfare prices being less than half the price they were a few years back when the airline entered the market.

“Everyone can relate to air travel. If you can say you’re part of a team and you’ve got the morale to say to your friends at a party that you’re partly responsible for the fact that you can now fly between Sydney and Melbourne for $69, that’s historic. So they also feel that what they’re doing has got some very positive benefits to it,” he says.

Godfrey also says that Branson takes a personal approach in dealing with staff: “Richard was out here recently, and he doesn’t let a chance go by to say hello to a staff member and shake their hand. It’s all about how you treat your people.”

Business model

While people management within Virgin Blue might seem utopian to many organisations, Godfrey says that HR has had to work hard at achieving the successes it has met with. Foremost among those goals is a solid understanding of the business.

“A good HR professional is not just thinking about hiring and firing; they’re thinking strategically about how they add value to the business. You can’t add that value to the business unless you understand it,” Godfrey states.

Highfield acknowledges Godfrey’s point of view, and likens the business structure of Virgin Blue to a person’s body. Supporting the body of the airline are two legs – an operational leg, which is made up of aeroplanes, airports and engineering, and a commercial leg, which consists of branding, revenue management and sales. The legs report to the deputy CEO, while the four arms of HR, IT, customer service and corporate affairs report to the head of the airline: the CEO.

“Both myself and my function need to have a very clear understanding of what our business model is and how that impacts on our industrial relations model and our remuneration incentives, opportunities and so on,” Highfield says.

HRs reporting structures

In recognition of the importance HR plays within Virgin Blue, Highfield reports directly to Godfrey and is part of Virgin Blue’s strategic management team.

“I’ve never been associated with a company that had HR reporting through the CFO,” Highfield states. “I think it would be a sad day when that occurred. I think it’s imperative that the people function reports into the CEO or be part of the executive team – that’s pretty well accepted these days.”

HR misconceptions

HR often lacks a clear direction or sense of purpose when compared to other functions, and Highfield says that HR teams can be usually characterised from anything such as a policy police force to a sort of chaplaincy service.

“I wouldn’t state it in relation to Virgin Blue, but that’s my general experience. There’s probably a common misconception about what HR is there to do, and they often don’t get involved in the business unless there is some sort of industrial relations problem,” he says.

One of HR’s biggest misconceptions about itself is that the function itself can’t be outsourced. “It’s costly but it’s eminently doable and you can buy top-shelf advice. If you can’t get it from your HR team they’re relegated themselves to functional administrators.”

HR and CEOdom

HR is still struggling for credibility when it comes to running for the position of CEO, and Highfield says that for this to happen HR has to have a very strong understanding of financials and general management experience.

“There’s a need to have a broad working knowledge of all the parts of an organisation. I sense a bit of a trend in that senior HR managers are coming out of general management positions, before going into their HR role,” he says.

Godfrey says the risk in the past is that HR professionals weren’t exposed to the business and were seen as a back office function. However he believes this is changing, and gives the example of HR within Virgin Blue: “Bruce does know the business very well, because he is basically the protector of culture. The HR department appreciates the first important part of our business – not how much we pay for aeroplanes or how good the deal is we got from an airport – but it all comes down to how well our people are perceived and managed.”

Highfield acknowledges that airlines are very much a people business, and gained wider business skills in helping to set up Virgin Blue. “In the early days I was involved in marketing and advertising type positions. I used to sit down with the CEO, deputy CEO and management team to consider the environment we were facing, the type of company we wanted to be, how we would employ people and how we’d run the business,” he says.

“HR has been involved in designing the people side of the business to match the business model. I’ve been blessed because HR is intimately involved with the business.”