managers make it out to be. People respond to their surroundings. If someone is messing things up royally, offer them a role that might be more suitable, or a job in another area of the business. You’d be amazed how quickly people change for the better, given the right circumstances, and how willing they are to learn from costly mistakes when offered a second chance. If you’ve over-promoted someone and it hasn’t worked out — which happens — then offer them their old job back rather than firing them. It’s your fault for over-promoting them. Not theirs.
A lot of companies these days call themselves ‘families’. Usually, this is just an embarrassing bit of public relations flannel. I think companies can be like families, that it’s a good approach to business, and that Virgin’s created better corporate families than most. We’ve done it by accepting the fact that we have to think beyond the bottom line. Families forgive each other. Families work around problems. Families require effort, and patience. You have to be prepared to take the rough with the smooth. You have to put up with your troublesome siblings. They’re your family: you can’t just throw them out on the street.
The higher up you go in a company, the more perilous your job position is if you don’t perform. In football, dropping out of the Premiership — or failing to get into the Champions League — can be disastrous. The board of directors, or the club chairman, must hit upon a formula for success, and the buck has to stop with the coach. Sacking the coach is easy. The hard part is making sure you’re getting someone better than the person you’re dropping. In football, that doesn’t always seem to be the case.
I often read about chief executives, managing directors and large company bosses who are told to resign from their high-profile companies by investors because they have made a hash due to poor business decisions. In the United States, for example, we’ve had Angelo Mozilo, the CEO of Countrywide Financial, Citigroup’s boss Chuck Prince and Merrill Lynch’s Stan O’Neal all departing with $100-million-plus compensation packages despite their businesses being caught in the sub-prime mortgage meltdown.
Too many top executives are given massive payouts and allowed to walk away, leaving others to sort things out. I think the opposite should happen. In most cases, leaders should stay on until any problems are sorted out — or a solution found — and then they can go and with a fraction of the money they would earn if successful.
After the terrorist attacks on New York City, Washington and United Flight 93 on September 11, 2001, our ‘Council of War’ met each day to look at the unfolding situation. I see from my notebooks that my first phone calls — of many hundreds made within those vital hours — were to our bankers, to let them know of the cash position; and to the UK government, seeking their support and encouraging a common approach. We also had to talk candidly to other airlines to get a proper picture of events, so we needed temporary anti-trust immunity — we didn’t want to be accused of working in consort. I called the New York mayor, to pass on my condolences.
Transatlantic air travel stopped and I pleaded with Stephen Byers, the Transport Secretary, not to let the position of Britain’s airlines be weakened when the US government was supporting its own national carriers. We didn’t get the same cushion of support as the American airlines — and we couldn’t and didn’t hide in Chapter 11 administration. If Virgin Atlantic hadn’t responded decisively to the Twin Towers attack, then we would certainly have gone out of business. We began renegotiating our bank lending and our aeroplane contracts and we did everything necessary to cut our costs. We had to reduce our US capacity by a third, and so we began looking at other international routes instead, such as launching into Nigeria, China and India. Then we had to relay the bad news: reluctantly, we were letting 1,200 Virgin Atlantic people go. It was the first mass redundancy in Virgin’s history. We offered our people part-time work, job sharing and unpaid leave. We also tried to find them work in other parts of the business. Our managers made tough decisions that hurt many people, but we promised to get them back on board as soon as conditions improved — and, thankfully, most returned.
Dealing with Virgin Atlantic’s flight engineers was particularly difficult for us. A breed of aviators with a passion for flying, they had considerable skill, and were tremendously loyal and committed to our company. And here we were, putting them out of a job.
If your rival airlines introduce planes that require only two people in the cockpit — that’s the captain and first officer — rather than three, as was still the case with Virgin Atlantic when we had the flight engineer on board, then you’re faced with a serious business issue.
The reliability of a new generation of planes and the increasing sophistication of fly-by-wire systems meant that airlines could reduce the number of flight crew in each cockpit and, in the process, save a great deal of cash. Unfortunately, the flight engineers were the victims of progress and obsolescence in the airline industry. There was no longer any need for them, and we had to tell many of our engineers that they had to go. It happens sometimes. It’s horrible. And there is no way around it. If we hadn’t done this, we wouldn’t have been competitive.
Over the years in the Virgin Group our diversification has been a bonus. We’ve been able to move people around our various companies, offering different jobs until things improved again. But this wasn’t easy with our flight engineers. They had extremely specialised skills and we didn’t think that converting them to commercial pilots would work for us. Our captains and first officers were normally highly experienced pilots who had spent up to ten years on short-haul flying.
Since we were saving cash by laying these people off, they deserved the lion’s share of the savings in their redundancy pay. It was far more than the legal minimum and I think most of them appreciated the gesture. It was a decent package. The engineers thought it fair and — just as important — so too did their colleagues who were staying on with the company.
Many elements of leadership can be prepared in advance, planned and rehearsed. You don’t have to be Winston Churchill to be a good leader.
That said, I think there is such a thing as natural leadership. It takes a certain generosity of spirit to trust people, and to judge their merits and limitations fairly. It takes not a little bravery to bear bad news to people. Optimism, openness to possibilities and sheer self-confidence — some people have more of these qualities than others.
So, in addition to the practical steps you can take, I think there is a huge amount to be gained in following the examples of great natural leaders. You can certainly read about them; but you should also be asking who among your circle is a leader you can learn from. I am hugely privileged to have met some great natural leaders in my time. Some are internationally famous; many are not. To describe all the help, influence and mentorship I’ve been sustained by over the years would make another book, so for now, let me just tell you about one important figure in my life: Nelson Mandela.
When people think of ‘Richard Branson’, they tend to think first of all about Virgin’s involvement in the music industry. It’s a piece of our heritage we’re extremely proud of. When I cast my mind back to what shaped me most as a businessman, however, I find myself remembering an even earlier phase of my career; and I recall my brief, fortunate and illuminating adventures in journalism.
What, after all, could be better for a young man searching for answers in life, than to go around interviewing people? I was never going to be a great journalist, but one skill I did have was being able to keep my mouth shut. I let the people I was interviewing do the talking. I was also quite unembarrassed when it came to asking what, in hindsight, seem naive and obvious questions. Both are skills I’ve carried into business, and they have served me incredibly well. The ability to listen, and the willingness to stick your neck out and ask the obvious question, are criminally underrated business essentials.
I was brought up in the mid-1960s and this was generally a caring and compassionate time, when a lot of young people became socially aware and began to understand how the world treated minorities, what their rights should be, and how a fairer deal might change things. From the other side of the Atlantic, I followed with fascination the struggles of black Americans against racism, discrimination and economic inequality.
In March 1968, I was proud to be marching to the US embassy in Grosvenor Square in London in protest at US involvement in the Vietnam War. I strode side by side with left-wing firebrand Tariq Ali and actress Vanessa Redgrave, and I remember the fear when the police on horseback charged us with truncheons and tear gas. I was also invigorated by the thought that young people were doing something direct and positive. And through the prism of
