Top Management Trends By David Pollitt

A senior British Airways executive once referred to Virgin boss Sir Richard Branson as ‘the smiling pullover’. One wonders what term BA attaches to its other controversial archrival, Ryanair boss Michael O’Leary.

HTrends Ruddock describes how O’Leary has made Ryanair into Europe’s most successful, most profitable and most highly valued airline, with the highest operating margins in the industry, the lowest costs and the fastest growth.

Among the reasons for Ryanair’s success, the author cites: 25-minute turn-arounds, that enable the airline to get two more flights per day from each of its aircraft; ensuring that the fleet is made up of only one aircraft type, so that air and maintenance crew can easily transfer from one plane to another; having no business class; maximizing the seating; selling refreshments rather than giving them away; and concentrating on providing low fares rather than good customer care.

O’Leary promises nothing other than a safe, cheap flight - and customers, many of whom could not previously afford to fly, cannot get enough of it. Passenger numbers have soared from 3.9 million in 1998 to 15.7 million in the year to March 2003, with profits rising from £30.6 million after tax to £164.2 million.

The sole cloud on O’Leary’s horizon appears to be the legal challenge from Air France to Strasbourg Airport providing Ryanair with zero-cost facilities and marketing budgets as a way of promoting tourism and inward investment in the region. But that apart, the future looks bright. Ruddock reports that O’Leary believes he has changed the fundamentals of the airline market to such an extent that he has created a new market that will grow and grow.

At the time when Microsoft shares traded at around $70, the value of the company’s offices, factories, vehicles and machinery was estimated at only $7 a share. The rest was made up of the knowledge and expertise of the workforce. But employees walk out of the office at the end of each day - sometimes never to return. How can companies protect their business interests when their key staff leave? Watson spells out what constitutes the legitimate use of business information.

When a company classifies a piece of information as confidential, it cannot be used other than for the legitimate purposes of the employer without the employee being in breach of contract. But after the end of their employment, ex-employees are free to use this information unless a confidentiality clause has been written into the employment contract.

Employees’ contracts often contain covenants that restrict their activities after their employment has ended. But these covenants must be carefully drafted because tribunals will always want to be sure that they are not acting in restraint of trade. The employer must be able to show that he or she has a legitimate interest to protect - such as a trade secret or a connection with a customer - in relation to the person’s employment. The covenant must be no wider than is needed to protect that interest.

Of course, an employer cannot prevent former employees from using their skills, knowledge or experience for the benefit of the new employer, although deliberately memorized lists are the employer’s property and can be protected.

Other restrictive covenants might prevent the former employee from touting for custom from the employer’s clients, or prevent the former employee from operating a competitive business within a certain radius of his or her old employer’s premises, or from joining a named competitor. This could be particularly relevant to sales personnel. Restrictive covenants can also be used to prevent ex-employees from poaching staff. Tribunals are increasingly willing to accept these covenants if the employer can show that he or she has invested in a complement of skilled staff. The covenant should specify the seniority and expertise of the staff in question.

In general terms, firms should never try to enforce restrictive covenants if they cannot prove that the former employee’s breach has caused actual harm.

Source Emerald Now

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