LEADERSHIP AND THE

MANAGEMENT OF CHANGE
AIRASIA BHD

MGT 6444 ASSIGNMENT

SARAH KAMINI A/P KUPPUSAMY
0315504

LEADERSHIP AND THE MANAGEMENT OF CHANGE

MASTER IN MANAGEMENT

MR CHIN TUCK PIEW

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 TABLE OF CONTENT
1. INTRODUCTION page: 3

1.1 ORGANIZATIONAL PHILOSOPHY page: 4

1.2 LEADERSHIP STYLE & MOTIVATION page: 5

1.2 NEXT LINE LEADERS page: 6

1.3 CULTURES & VALUES page: 6

1.4 MOTIVATION page: 7

1.5 IMPACT ON LEADERSHIP page: 9

1.6 SELECTION & RECRUITMENT page: 10

1.7 MANAGEMENT OF CHANGE page: 11

CONCLUSION page: 12

REFERENCES page: 13

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INTRODUCTION

AirAsia Berhad is a well-established organization in Malaysia. It is a listed on the main

Board of Bursa Malaysia Securities Berhad since 2004. AirAsia Berhad is part of the AirAsia
Group, a world-famous low cost airline that operates extensive networks both domestically and
internationally. AirAsia pioneered low cost airfares in Asia and is now currently the largest low
fare, no-frills airline in Asia. It is also one of the largest airlines in all of Asia in terms of
passengers carried. AirAsia has also been voted the Worlds Best Low Cost Airline in 2009 and
2010. The airline was established by a Malaysian conglomerate in 1993 and commenced
operations in 1996.

Under the leadership of Tony Fernandes, the airline is flying high, and their vision is to
be the largest low cost airline in Asia so that they can provide a low cost service that will allow
the three billion people to fly to more destinations across the region. Hence, their mission is to be
the top company to work in, where employees are treated like family.

In this study, the leadership style is studied in order to see how the organization is
operation in todays era. This will cover organizational philosophy, leadership style, next line
leaders, culture and values, motivation, impact on leadership, selection and recruitment and
finally management of change.

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1.1 ORGANIZATIONAL PHILOSOPHY

Every organization believes in building its own organizational philosophy or better

known as the organizations values and beliefs in the organization. Organizational philosophy is
broken up into two parts that is the organizations vision and mission statement. This is important
because a vision is a picture or view of the future. Something not real yet, but imaged. What the
organization could and should look like. Part analytical and part emotional (Hashim, 2008). A
vision is important to organizations because it deals with fundamental and major strategic issues
that affect the future of organizations. For instance, it serves as an important guide and provides
direction to the organization Meanwhile, mission statement important for an organizational by
briefly describing why it exists and what it does to achieve its vision. This structure is important
in defining the organizations framework and in planning and guiding the organizations work.

In AirAsia Berhad, they use a philosophy that tells us Now Everyone Can Fly. This
philosophy of low fares is aimed at making flying affordable for everyone. This clearly explains
AirAsia Berhad aims to make travel easy, convenient and fun for its guest. However their vision
statement is To be the largest low cost airline in Asia and serving the 3 billion people who are
currently underserved with poor connectivity and high fares. For example AirAsia Berhad have
shown statistically that Air Asia was named the Worlds Best Low Cost Airline in the annual
World Airline Survey by Skytrax for five consecutive years in 2009, 2010, 2011, 2012 and 2013
and has been ranked Top 5 among the most recognized and admired airlines in the Asia Pacific
Top 1000 Brands 2008 (AirAsia). Meanwhile, one of their mission statements is to be the best
company to work for whereby employees are treated as part of a big family. This mission
statement is practiced widely in the organization whereby all staffs until the baggage staffs has
the CEOs mobile number and is treated fairly.

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1.2 LEADERSHIP STYLE & MOTIVATION

It is believed that there are some leadership styles without which an organization cannot
survive. Every organization be it a church, college, university, hospital or business needs a
visionary leader who can communicate a clear vision in a compelling way. Organizations that
arent sustained by a captivating vision will eventually die (Hybels, 2002). Besides that,
according to Kurt Lewin (1939), has identified different styles of leadership through research.
There are various styles of leadership and the collective leadership styles include autocratic
leadership, bureaucratic leadership, charismatic leadership, democratic/participative leadership,
laissez-faire leadership, people/relations-oriented leadership, servant leadership, task-oriented
leadership, transactional leadership and transformational leadership. In the early study of
leadership, Barnard (1938) defined leadership as the ability of a superior to influence the
behavior of subordinates and persuade them to follow a particular course of action (Kamisan &
King, 2013).

In AirAsia Berhad, the leadership style practiced by Tony Fernandes as the CEO of
AirAsia is charismatic leadership. Despite having received various international awards and
accolades for AirAsia and himself, Tony Fernandes remains a very down-to-earth and
approachable boss who has a quick smile for everyone. For example, all the employees in
AirAsia have Tonys mobile number. Tony Fernandes was named FORBES ASIAs 2010
Businessman of the Year and Forbes named him as a single, charismatic pioneer. He is
undoubtedly a charismatic speaker as he speaks at a level that the layman can understand. In fact,
from his dressing; a universal cap and ordinary shirt, he does not take himself too seriously
despite being the CEO of a multi-billion-airline carrier.

One of the leadership traits Tony Fernandes has adopted is walk the talk. This means
that he tries he level best to mix around with his employees, whereby he has worked on the
ground or in the cabin crew. This has made him to learned a lot from working on the airline
himself. He makes business decisions based on his own experiences, observations and feedback
from his crews. In the hospitality industry, a great leader must walk the talk. It is critical that he
is seen with his employees and learned from ground experience. Staffs will then be appreciative
of their leader and be motivated to do their best.

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1.3 NEXT LINE LEADERS

Leaders are a person who influences individuals and groups within an organization as
well as motivates them to achieve their goals (Kamisan & King, 2013). In AirAsia this is
believed to be the biggest challenge because the organization s division is huge. In choosing the
next line leaders in the organization is always an opportunity. AirAsia Berhad makes it very clear
that any individual would like to join AirAsia you do not have to stay where you are, ten years
down the road. There is always an opportunity awaiting for an individual to climb up the ladder.
For an example that was shared during the interview was that when AirAsiaThailand started
there was this woman who was hired as a flight attendant. A year into it she came and asked,

Tony, I would like to be a pilot. Is that possible? his response was, go sit through the classes.
If you qualify I will hire you as a pilot. She passed. She became a first officer and subsequently
she is now a full-time captain and flying the plane

This is how AirAsia chooses its next line leaders, as long you have the dreams and the passion to
be the next leaders. This is a very different kind of practice adopted in this organization.

1.4 CULTURES & VALUES

Culture is conceptual word; Culture is a set of values, beliefs, common understanding,

thinking and norms for behavior that are shared by all members of a society. You cannot
precisely define it, but you can sense it and feel it (Mobley, Wang & Fang, 2005). To have a
strong and effective organizational culture, you will want to be asking questions like these: Do
all employees in my organization have a common understanding of our purpose, strategy and
goals? What are the core values in our organization and do all have a common understanding of
these values?

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 In AirAsia, corporate culture reflects Tony Fernandes own personality. The Group
prides itself on building a strong, team-orientated corporate culture, whereby employees
understand and subscribe to the Groups core strategy and actively focus on maintaining low
costs and high productivity AirAsia motivates its employees by awarding bonuses based upon
each employees contribution to AirAsias productivity, and expects to increase loyalty through
its ESOS [employee share ownership scheme] which will be available to all employees. The
Groups management encourages open communication that creates a dynamic working
environment, and meets all its employees on a quarterly basis to review AirAsias results and
generate new ways to lower costs and increase productivity. Employees frequently
communicate directly with AirAsias senior management and offer suggestions on how AirAsia
can increase its efficiency or productivity. In AirAsia, loyalty is a crucial element that is looked
into and encourages its employees to be always loyal, honest and work as a team.

1.5 MOTIVATION

Motivation can be defined as the attribute that moves us to do or not to do something

(Lai, 2011).

In AirAsia motivation comes from many different aspects. There are so many of aspect
that we can see in the organization such as letting know that the employees have done a good job
itself is a motivation. Other than that, having the employees a chance to meet up with higher
executives and present their idea or showing the progress of their work is another motivation to
the employees. A high portion of AirAsia costs was the salaries and benefits for its employees.
Hence, the airline implemented flexible work rules, streamlining administrative functions that
allowed employees to perform multiple roles within a simple and flat organizational structure. In
AirAsias case, a flatter hierarchy improved sped-up communication, resulting in an effective
and focused workforce.

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 AirAsias rumination policy focused on maximizing efficiency and productivity, whilst
keeping staff costs at levels consistent with low-cost carrier industry standards. Although salaries
offered to employees were below that of rivals, all employees were offered a wide range of
incentives such as productivity and performance-based bonuses, share offers, and stock options.
This motivated employees, giving them a sense of ownership.

In AirAsia Berhad, it is identified they are using Herzbergs Two-Factor Theory, which is
hygiene and motivators factors. For the hygiene factors, in AirAsia Berhad they practice an open
culture-friendly, whereby opinions are accepted. Moreover to the organization their employees
come first then customers. Meanwhile, in terms of motivational factors the organization
practiced job rotation for example during the interview the interviewer mentioned if a baggage
handler would want to shift to an administration job, Tony Fernandes will agree in order they
have the passion and dreams. Besides that, the organization recognizes employees needs
(empathetic), for example

The aircraft maintenance people were complaining regarding their jumpsuit attire and asked
Tony Fernandes could you redesign our attire. He said I spend a lot on designing this and
therefore he tried it on. He saw the difficulty faced by the aircraft maintenance people.

This clearly shows that the organization looks at their employees needs and this will eventually
motivate the staffs in the organization.

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1.6 IMPACT ON LEADERSHIP

AirAsia Berhad presents a practicality and difficult perspective in the organization.

Realism is the structure of allowing and limiting rules and resources that help frame the roles
of workers in operation of an organization (Burns, 2009). In AirAsia Berhad, in effort to
cultivate and affirm job enrichment within the responsibilities of the employees, a degree of
power is given to them in order to improve the relations of their employees. Nevertheless this
power is restricted to how and when is permitted to be used.

It is believed that leaders in this organization are alert that this behavior encourages trust,
flexibility and creativity enabling employees to integrate the companys value. An interaction
exits between the employees and the organizations structure. This will result to less
autocratic style with more people-oriented leadership style. In AirAsia Berhad, Tony
Fernandes has set best examples of the culture and values in order for his employees to adopt
the same values. The charismatic leadership style of influencing employees the values and
culture of change, culture of rapid response, culture of being honest and straightforward,
clarity of communication and teamwork indirectly results in its goals of delivering customer
satisfaction as a reflection of its leadership.

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1.7 SELECTION & RECRUITMENT
AirAsia Berhad recruitment and selection of employees in the organization include
internal sourcing, external sourcing, third-party to source competent and experience
candidate to join the organization. Internal sourcing here basically recruits employees within
the organization. Reviewing the performance of the employee within their existing teams
does this. Internal sourcing help in terms of time and expenses that include advertising or
background checking on new employees. In AirAsia Berhad internal sourcing is mainly used
as they create opportunity for its employees. Internal sourcing helps to cultivate loyalty and
equality among each other in the organization (Richason IV, 2013).

Moreover, another strategy used for selection and recruitment in the organization is via
external sourcing. External sourcing attracts different and diverse selection to the
organization although it may attract both experience and inexperienced candidates. Besides
that, third-party sourcing such as JobStreet.com. Third-party sourcing uses different methods
in selecting candidates for the organization including background checks, arranging
interviews and matching candidates to the job.
Interviewing is another method used by the organization in order for a better selection
and recruitment In AirAsia Berhad, their standards of selection and recruitment are very
high, and they have implemented programs in order to select a good candidate with good
attitude. According to Wan Ezrin, the group people strategy mentioned during the selection
process they look for candidates that are fun, loyal and has a vision.
Once the candidates have been shortlisted these candidates are trained, appointed classes
to attend, sent to leadership campaigns thus receive coaching and counseling. The
organization uses the key performance index to evaluate the employees performance, this is
done twice in the year whereby to ensure they are following the goals of the organization.

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1.8 MANAGEMENT OF CHANGE

It is said that employees that is trained and disciplined in AirAsia Berhad are constantly
reminded to face changes to remain in the competitive market. Through organizational learning
employees are trained and encouraged to learn as they make improvements, amending and
making corrections wherever whenever it is required of them in AirAsia Berhad.

Based on systems theory, it states that organizations are open systems and is open to the
environment and external factors of personnel and resources (Scott, 1987). AirAsia Berhad has
to regulate and control processes to keep these processes stable in order for good performance.
The organization put is effort in providing opportunities to it employees and readily resources in
order for quick response, creative thinking and critical thinking. However, researchers criticize
that difficulty arises in relating organizations structure to performance and there is no agreed
definition of good performance (Mansfield, 1984).

AirAsia Berhad strongly believes in multitasking system and is introduced in various

workstations to empower the team to self-sustained on their resources in order to operate
efficiently. Management of change is important to be understood in this world of globalization in
order to deliver employees competency skills in their respective fields for the better.

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CONCLUSION

There are many diverse definitions of leadership and it is believed leadership is a rational
and practical approach of influencing followers. The leadership and management style of
AirAsia Berhad in real life mainly look at the basic skills and dependent towards the
environmnet. This study helps to understand leadership in practical way rather then theory. It
explains how this successful organization motivates and retains its employees as well as training
employees nurturing them to incorporate values required to lead a large organization that values
philosophies and culture of employees in complex situations in the generation of constant change
that is required in order to survive. The culture and values practiced by AirAsia Berhad have
brought the industry to a next line. Hence, the leadership style practiced in the organization has
made a tremendous outlook and rapid response that allows flexibility and rejects the classical
leadership styles of autocracy in organizations. It encourages a workplace that satisfies and
motivates employees to continue striving for excellence. The selection and recruitment process
have positively shown employees passion and dreams in retaining in the organization. There is
no leadership style is best in all situations as good leaders should be wise enough to choose the
best approach in managing and handling team members. Hence, to be an effective leader, the
leader should be very aware adapting and finding the best approach to any situation.

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REFERENCES

Interview Wan Ezrin, Group People Strategy Officer for AirAsia Berhad, Malaysia

AirAsia Berhad, 2013, AirAsia Berhad [ONLINE] Available at:

http://www.airasia.com/my/en/about-us/hi-we-are-airasia.page. [Accessed 20th May 2014].

Burns, B. (2009). Managing Change (Fifth ed.). London: Prentice Hall.

Hashim, M. K. (2008). Vision. In Strategic Management. Kuala Lumpur: Thomson Learning.

Hybels,B. (2002). Courageous Leadership. Michigan: Zandervan.

Kamisan,A., & King,B. (2013). Transactional and Transformational Leadership: A Comparative

Study of the Difference between Tony Fernandes (Airasia) and Idris Jala (Malaysia Airlines)
Leadership Styles from 2005-2009. Journal of Business Management, 8, 107-116

Lai,E.R., (2011). Motivation: A Literature Review Research Report. Available at:

http://images.pearsonassessments.com/images/tmrs/motivation_review_final.pdf [Accessed 20th
May 2014].

Lewin, K., LIippit, R., White, R.K. (1939). Patterns of aggressive behavior in experimentally
created social climates. Journal of Social Psychology, 10, 271-301

Mansfield, R. (1984). Formal and Informal Structures. (M Gruneberg and T Wall ed.).
Chichester: Wiley.

Mobley,W.H., Wang,L. & Fang,K. (2005). Organizational Culture: Measuring and developing it
in your organization. Available at: http://www.ceibs.edu/link/latest/images/20050701/1394.pdf
[Accessed 20th May 2014].

Richason IV, O. E. (2013). Methods of Recruitment and Selection. Retrieved November 17,
2013, from Houston Chronicle: http://smallbusiness.chron.com/methods-recruitment-selection-
2532.html

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Scott, W. (1987). Organisations: Rational, Natural and Open Systems. Englewood Cliffs, NJ,
USA: Prentice-Hall.

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