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Harvard Case - Ferio Pugliese: Leading WestJet's New Carrier Encore

"Ferio Pugliese: Leading WestJet's New Carrier Encore" Harvard business case study is written by Gerard Seijts, Jean-Louis Schaan, Robert Way. It deals with the challenges in the field of Organizational Behavior. The case study is 13 page(s) long and it was first published on : Feb 12, 2015

At Fern Fort University, we recommend that Ferio Pugliese and the WestJet leadership team adopt a comprehensive strategy for launching and managing Encore, focusing on a strong organizational culture, effective leadership, and a robust change management process. This strategy should prioritize employee engagement, talent development, and a customer-centric approach, while addressing potential challenges in areas such as organizational structure, resource allocation, and communication.

2. Background

This case study focuses on Ferio Pugliese, the CEO of WestJet Encore, a new subsidiary of WestJet Airlines launched in 2013. Encore aimed to offer a lower-cost, regional service utilizing smaller aircraft. The case explores the challenges Pugliese faced in establishing Encore, including building a new organizational culture, managing a diverse workforce, and navigating the complexities of a rapidly growing company.

The main protagonists are Ferio Pugliese, the CEO of Encore, and Clive Beddoe, the founder and former CEO of WestJet. The case also highlights the roles of other key individuals within WestJet, including the leadership team, pilots, and flight attendants.

3. Analysis of the Case Study

The case study presents a complex scenario involving a range of organizational behavior and management challenges. To analyze the situation, we can utilize several frameworks:

1. Organizational Culture:

  • WestJet's Strong Culture: WestJet's existing culture, characterized by its 'people-first' philosophy and focus on employee engagement, was a significant asset. However, it also presented a challenge for Encore, as the new subsidiary needed to maintain this culture while adapting to the demands of a regional carrier.
  • Building a New Culture: Pugliese faced the task of building a new culture within Encore that aligned with WestJet's core values while addressing the specific needs of a smaller, more cost-conscious operation. This required a delicate balance between maintaining the existing culture and fostering a distinct identity for Encore.

2. Leadership Styles:

  • Transformational Leadership: Pugliese's leadership style can be characterized as transformational, emphasizing vision, inspiration, and empowerment. He sought to motivate employees by communicating a clear vision for Encore and fostering a sense of ownership among team members.
  • Collaborative Leadership: Pugliese recognized the importance of collaboration and teamwork, particularly in building a new organization. He actively sought input from employees and stakeholders, fostering a sense of shared responsibility.

3. Change Management:

  • Resistance to Change: The introduction of Encore was a significant change for WestJet, leading to concerns among existing employees about job security, career progression, and the potential impact on the company's culture.
  • Managing Change: Pugliese implemented a comprehensive change management strategy, focusing on clear communication, employee training, and addressing concerns through open dialogue. He also emphasized the benefits of Encore for both the company and employees.

4. Team Dynamics:

  • Building High-Performing Teams: Pugliese understood the importance of building high-performing teams within Encore. He focused on recruiting talented individuals, fostering a collaborative environment, and providing opportunities for professional development.
  • Addressing Conflict: As with any growing organization, Encore faced internal conflicts, particularly related to resource allocation and decision-making. Pugliese needed to develop effective conflict resolution strategies to maintain team cohesion and productivity.

5. Organizational Structure and Design:

  • Decentralized Structure: Encore adopted a decentralized organizational structure, empowering regional managers to make decisions and respond quickly to local market conditions. This structure facilitated agility and responsiveness but also presented challenges in maintaining consistency and alignment with WestJet's overall strategy.
  • Resource Allocation: The case highlights the challenges of allocating resources effectively between Encore and WestJet, particularly in areas like training, marketing, and technology. Pugliese needed to find a balance between supporting Encore's growth and ensuring that WestJet's core operations were not negatively impacted.

4. Recommendations

Based on the analysis, here are the key recommendations for Ferio Pugliese and the WestJet leadership team:

1. Enhance Organizational Culture:

  • Clearly Define Encore's Culture: Develop a clear and concise statement of Encore's culture, emphasizing its alignment with WestJet's core values while highlighting its distinct identity as a regional carrier.
  • Promote Cultural Integration: Implement programs and initiatives to foster cultural integration between Encore and WestJet, ensuring a seamless transition for employees and maintaining a consistent customer experience.
  • Foster a Culture of Innovation: Encourage a culture of innovation and continuous improvement within Encore, allowing employees to contribute ideas and solutions for operational efficiency and customer satisfaction.

2. Strengthen Leadership and Management:

  • Develop Leadership Skills: Provide leadership development programs for managers at all levels within Encore, focusing on skills such as communication, delegation, conflict resolution, and change management.
  • Empower Regional Managers: Empower regional managers to make decisions and respond quickly to local market conditions, while ensuring alignment with Encore's overall strategy and WestJet's core values.
  • Promote Diversity and Inclusion: Implement policies and initiatives to promote diversity and inclusion within Encore, fostering a welcoming and inclusive environment for all employees.

3. Implement Effective Change Management:

  • Communicate Clearly and Regularly: Maintain open and transparent communication with all stakeholders, including employees, customers, and investors, about Encore's progress, challenges, and future plans.
  • Provide Training and Support: Offer comprehensive training programs for employees transitioning to Encore, addressing concerns and providing the necessary skills and knowledge to succeed in their new roles.
  • Address Resistance Proactively: Identify and address potential resistance to change proactively, seeking feedback from employees and addressing concerns through open dialogue and collaborative problem-solving.

4. Optimize Organizational Structure and Design:

  • Review and Refine Structure: Regularly review Encore's organizational structure and design, making adjustments as needed to ensure efficiency, agility, and alignment with WestJet's overall strategy.
  • Allocate Resources Strategically: Develop a strategic resource allocation plan for Encore, ensuring that the necessary resources are available to support its growth while maintaining the effectiveness of WestJet's core operations.
  • Leverage Technology and Analytics: Utilize technology and analytics to improve operational efficiency, enhance customer service, and make data-driven decisions about resource allocation and strategic planning.

5. Enhance Employee Engagement and Talent Development:

  • Develop Employee Engagement Strategies: Implement employee engagement strategies that foster a sense of ownership, pride, and belonging among Encore employees, including recognition programs, team-building activities, and opportunities for career development.
  • Invest in Talent Development: Invest in talent development programs for all employees, providing opportunities for training, mentoring, and career advancement within Encore and WestJet.
  • Create a Positive Work Environment: Foster a positive and supportive work environment that values employee contributions, promotes work-life balance, and provides opportunities for growth and development.

5. Basis of Recommendations

These recommendations are based on a comprehensive analysis of the case study, considering the following factors:

  • Core Competencies and Consistency with Mission: The recommendations align with WestJet's core competencies in customer service, operational efficiency, and employee engagement, while ensuring consistency with the company's mission to provide safe, reliable, and affordable air travel.
  • External Customers and Internal Clients: The recommendations prioritize customer satisfaction and employee well-being, recognizing the importance of both groups for Encore's success.
  • Competitors: The recommendations consider the competitive landscape in the regional airline industry, emphasizing the need for innovation, cost-effectiveness, and a strong customer-centric approach.
  • Attractiveness - Quantitative Measures: While the case study does not provide specific financial data, the recommendations are designed to improve operational efficiency, enhance customer satisfaction, and foster employee engagement, which are key drivers of financial performance.
  • Assumptions: The recommendations are based on the assumption that WestJet is committed to the success of Encore and will provide the necessary resources and support for its growth.

6. Conclusion

Ferio Pugliese's leadership and WestJet's commitment to a people-first culture provide a strong foundation for Encore's success. However, navigating the challenges of building a new organization, managing change, and fostering a distinct culture requires a thoughtful and strategic approach. By implementing the recommendations outlined above, WestJet can ensure that Encore thrives as a valuable addition to its portfolio, expanding its reach and strengthening its position in the competitive airline industry.

7. Discussion

Alternatives:

  • Merging Encore with WestJet: This option could streamline operations and reduce costs but would require significant restructuring and potentially lead to job losses.
  • Focusing solely on cost-cutting: This approach could lead to a decline in customer satisfaction and employee morale, potentially damaging WestJet's brand reputation.

Risks and Key Assumptions:

  • Economic downturn: A decline in air travel demand could negatively impact Encore's financial performance.
  • Competition: Intense competition from other regional carriers could erode Encore's market share.
  • Employee morale: Failure to address employee concerns and maintain a positive work environment could lead to decreased productivity and turnover.

8. Next Steps

  • Develop a detailed implementation plan: This plan should outline specific actions, timelines, and responsible parties for each recommendation.
  • Establish a communication strategy: This strategy should ensure clear and consistent communication with all stakeholders, including employees, customers, and investors.
  • Monitor progress and make adjustments: Regularly monitor the implementation of the recommendations and make adjustments as needed to ensure that Encore is on track to achieve its goals.

By taking these steps, WestJet can successfully launch and manage Encore, creating a new and profitable business unit that strengthens its position in the airline industry.

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Case Description

In early 2014, Ferio Pugliese looked back on his turbulent first year as president of WestJet Airlines Ltd.'s new regional air service Encore. Encore represented the company's most significant organizational change in its 18 years of dramatic growth. Expanding the airline's fleet to include smaller, short-haul aircraft that could service smaller destinations throughout Western Canada had not been without growing pains. For example, a number of employees reportedly felt they were losing their sense of belonging in the company that prided itself on employee satisfaction. Pugliese wondered how he should proceed in putting Encore on a successful path.

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