Management Theory for Michael O’Leary Essay Example

at such a privileged institution as Clongowes wood school for boys, his own family were far from high society, they were farmers although be it, on a very large holding in the midlands, Michael got on well with his more affluent friends at public school, he acquired the nick name ducksie from his classmates for whatever reason no one seems to know.

In 1979 he started a Bachelor in Business programme at Trinity Collage Dublin. He graduated in 1983. Following his graduation from Trinity he was employed as an account in Stokes Kennedy Crowley (later known as KPMG). Whilst there he Studied the Irish tax system and then left to open two news agent shops in Walkingstown and Terenure, Dublin. While he was working in SKC, he had again meet Tony Ryan, who at the time was owner and head of GPA (Guinness Peat Aviations), an aircraft leasing company, who was one of the firm’s clients.

O’Leary advised Ryan on his personal income tax affairs whilst working with the firm and afterwards. Ryanair Carrer In1987 Tony Ryan hired O’Leary as his personal tax adviser. Ryan’s main interest at the time was with GPA, and he had made a lot of money from the aircraft leasing business through the 70s and 80s, but like so many other millionaires before him, he decided to invest in a small airline. He set up Ryanair to ferry passengers between Waterford and London Gatwick as a kind of taxi service mainly for his three sons, it was a pipsqueak airline that seemed to have little or no future at the time.

Like most small airlines at that time Ryanair was

high on cost and low on passengers, it was O’Leary’s brief to try and find a way to stop the Airline leaking cash. 12 months into the job O’Leary’s advice for Ryan was to close the carrier down and cut his losses, but Ryan decided to ignore his protegee and asked him to go to the USA to study Southwest Airlines business model. The US carrier had profited from deregulation of the American market and their low price seats and quick turn around between flights, as well as no business class seating appealed to O’Leary.

So on his return he ditched business class in favour of a one size fits all approach. He worked the airlines people and planes much harder and halved fares. His new business model worked well “spectacularly well” so much so that British Airways abandoned their Dublin to Heathrow route. He competed with the major airlines by providing a "no-frills" low-cost service. Flights were scheduled into regional airports, which offered lower landing and handling charges than larger established international airports.

O'Leary was Deputy Chief Executive of Ryanair between 1991 and 1994. In January 1994 he was promoted to chief executive of Ryanair. Before he became chief executive O'Leary persuaded Ryan to cut him a secret financial deal, he would take home 25 per cent of any profits above ? 2m. By the end of 1996, he had banked ? 20m and when the airline floated on the Dublin Stock exchange and the NASDAQ Stock exchange in 1997, he was handed a 22 per cent stake in the airline.

In 1998, flush with new capital, the airline placed a massive $2 billion

order for 45 new Boeing 737-800 series aircraft. His thanks to Tony Ryan for his new found welth was to edge him out of the chairmanship soon afterwards. O’Leary always seemed to be one step ahead of the other European airlines and in 2000, with online booking initially said to be a small and unimportant part of the business, he could see that online booking contributed to the aim of cutting flight prices by selling direct to passengers and excluding the costs imposed by travel agents.

Within its first year the website was handling three-quarters of all bookings, and today it is the only way anyone can book a Ryanair flight. Other cost cutting messures O’Leary has introducded include, cabin crew having to pay for their own training, uniform and meals. Head office staff are forbidden from charging their mobile phones at work and they must supply their own pens. In February 2005, Ryanair announced an order for a further 70 Boeing 737-800 aircraft, along with an option for a further 70.

This was expected at the time to allow Ryanair to increase passenger numbers from the 34 million that flew in 2005 to 70 million expected in 2011. In an example of O’Leary’s relentless prioritising of cost over all other factors, the aircraft will be delivered without window shades, seat back recline and seat back pockets, which result in savings of several hundred thousand dollars per aircraft and give continued savings through reduced cleaning and repair costs.

O’Leary is is still the chief executive of Ryanair he is still possesed with cutting costs and finding new ways to raise revenue he has recentley introduced

mobile phone calls on Ryanair flights at 3 Euro a minute charge, he is also shutting down all Ryanair check-in desks within a year and he has recently sugested that he may put coin slots on the toilet doors onboard Ryanair flights to charge 1 Euro for a call of nature. Aer Lingus Take Over and Long Haul Future On the 5th October 2006 Ryanair launched a €1. 8bn bid to buy Irish National carrier Aer Lingus. O'Leary said “the move was a “unique opportunity” to form an Irish airline. The "new" airline would carry over 50 million passengers a year. ” Aer Lingus floated on the Irish Stock Exchange on 2 October 2006 following a decision by the Irish government to sell more than 50% of its 85. 1% share in the company. Workers retained a 15% stake. The shares began trading at €2. 20 each, valuing the firm at €1. 13bn. O’Leary said Ryanair had bought a 16% stake in Aer Lingus and was offering €2. 0 per share for remaining shares. On the same day, Aer Lingus rejected Ryanair's takeover bid, With a total of 47% of Aer Lingus in the hands of the Irish Government, the employee share ownership trust and other entities that publicly rejected the bid and a further 4% in the hands of the Bank of Ireland and AIB who were considered highly unlikely to sell, the takeover bid was effectively dead. The Ryanair website described the attempted take over as, "In October we make an all cash offer for the small regional airline, Aer Lingus.

Having lost his fight to buy Aer Lingus O’Leary announced in April

2007 that Ryanair intend to operate a trans atlantic-service of there own which would slash prices on long haul flights. The new airline would be separate from Ryanair and operate under a different branding ( Ryan Atlantic ) . It is planned that the new airline will eventually operate a fleet of 40 to 50 new Airbus A350 from their main European hubs to 6 new base’s in the USA and Canada. . Personal Life O’Leary lives in Gigginstown House near Mullingar. He is Married to Anita Farrell “a Dublin Banker” they were wed in 2003.

Their first son Matt was born in September 2005 and their second boy Luke was born in April 2007. A lot of his free time is spent breeding Aberdeen Angus Cattle on his farm. He has also spent a lot of his welth on building up a growing string of race horses. He has already tasted success on the turf, his horse War of Attrition won the Cheltenham Gold Cup in 2006. In 2004 he puhchased a hackney plate for his Mercedes so that he could legally make use of Dublin’s bus lanes and speed his way around the city and to the airport on the M50. School of management

So what school of management could one place Michael O’Leary under? From this authors research I would consider him to be in the scientific management school of thought. He firmly believes in an organisational framework, with himself and his managers controlling all aspects of decision-making. He feels it is important for management to have accurate, factual data regarding the work processes of the company, so much so that he

himself has been known to help on the baggage reclaim at Dublin airport from time to time “more likely for publicity than any thing else”.

He makes sure that his staff and crew’s are trained to the unique specifications that Ryanair operate, which are far removed from the industry norm. As Frederick Taylor illustrated: management should gain full control over the workers and what went on in organisations. Workers would become “human machines” told what to do and when to do it as well as how long to take. When you look at O’Leary’s style of management you start to see a lot of the practises Taylor spoke of all those years ago.

O’Leary is no more against workers, and for managers than Taylor was, he too feels that these methods enable workers to improve their performances for which they are paid accordingly, he has put in place a system that works for his company where everyone knows the rules and what is expected of them. O’Leary’s similarities with Taylor extend to fact they both aired their criticism of mangers for the arbitrary and inconsistent way they go about their jobs, “in O’Leary’s case” this shot is usually fired across the buoy of other Airlines executives “most commonly Aer Lingus”.

It is the system that matters no one is bigger or better than the system he has put in place to cut costs and seek out new avenues for raising revenue. Conclusion Michael O’Leary has become one of the most recognisable faces in Ireland today, he has almost single handily changed the face of air travel throughout Europe and made Ryanair the most profitable carrier

on the continent. His different approach to the business of aviation and advertising has set him apart from his contemporises.

Ryanair has lead the way in low cost, no frills air travel while O’Leary has been CEO of the company. His controversial outspoken style leads one to think that here is a man who believes in, and trusts the method and system he operates. He undoubtedly loves nothing more than the sound of his own voice at times, and a lot of what he says has to be taken with a pinch of salt, for instance his laims to be the so-called Irish “poor voice” do not quite ring true, having been born into an affluent enough farming family and educated at Clongowes School for boys, not to mention the fact that his wedding in 2003 was attended by Irelands great and wealthy, including JP Mc Manus, Charlie Mc Creevy, Mary Harney and Sir Tony O’Reilly to name but a few. What ever ones personal view of the man, you cant but be impressed by his achievements in business and maybe just a little proud of the fact that this gutter mouthed airline maverick is one of our own, “not a poor son of Erin” but a son of Erin all the same.