Situational Leadership (an example)

Introduction

Sometimes a leader’s style does not easily adjust to different situations.

An example of this is Alan Joyce’s period as CEO of Qantas (an Australian-based domestic and international airline.). He was CEO from 2008 to mid-2024.

Before becoming CEO, he was the inaugural CEO of Jetstar (a subsidiary of Qantas) that catered for the ‘lower end’ of the Australian market, ie cheap airfares with no-frills.

His achievements in Qantas include:

• successfully establishing Jetstar as a commercial airline
• establishing Project Sunrise (non-stop flight between Australia and major global cities like New York and London, using specially equipped ultra-long-range
  aircraft) that resulted in an era of growth
• built up the loyalty division into a powerful business
• despite many airlines going out of business, he delivered record profits

“...By 2016 Qantas has gone from a basket case to a record $1.58 b profit……$2.47 b profit…… delivered in 2023…”

AFR, 2024

• Qantas’s share price went from $A1.17 in 2014 to $7.34 by end of 2019, ie pre Covid
• successfully handled the impact of the Covid crisis
• named as one of Qantas's, and Australia's, best chief executives
• awarded the Australian Financial Review's Business Person of the Year (2017) based on his performance

“…one of Australia's greatest corporate turnarounds in one of the world's most volatile industries…”

AFR, 2024

• named a Companion of the Order of Australia (AC) in the Queen’s Birthday 2017 Honours List for his services to “the aviation transport industry”
• world-class safety record
• supporting social issues like same-sex marriage, First Nations Voice to Parliament, etc.

Unfortunately, he is one of those leaders whose achievements buy them a level of latitude that later the company comes to regret. For example, in 2023, Richard Goyder (then chairman of Qantas) described Alan Joyce as

“…the best CEO in Australia by the length of the straight……unbelievably hard working……transparent and open to being challenged…”

Myriam Robin et al, 2024.

Yet 12 months later, after an external investigation, Alan Joyce's role as CEO was terminated.

He created a command-and-control leadership style; with a top-down culture that caused governance issues and an unquestioning environment, especially around the relationship between himself and the Board.

There was a lack of focus on, ie

“…Problems with the way information (and particularly bad news) flowed to the board……a lack of debate and challenge…”

Chanticleer, 2024a

Furthermore,

“…Too much deference to a long-tenured CEO who had endured and overcome multiple past operational and financial crises……The mode of engagement between the board and management did not always facilitate robust challenge on some issues…”

Tom Saar as quoted by Chanticleer, 2024a

At times it appeared that the board was sidelined and/or had no specific role, especially on the social issues like same-sex marriage, etc.

His style of top-down leadership worked well during the Covid pandemic which started as a health scare and then became a financial crisis that needed hard decisions, made quickly. Unfortunately, in the post-pandemic environment, the top-down leadership style was not appropriate anymore.

Some other issues impacting Qantas when Joyce was CEO included:

• unfair dismissal of some employees (1,780 baggage handlers)
• flight cancellations
• service decline
• selling tickets for cancelled flights, eg ‘ghost flight’ tickets (2023)
• buy-back of shares
• sale of his Qantas shares
• too much focus on financial performance and not enough on stakeholders and non-financial risks
• relationship with Federal governments, eg

“… In 2013 Mr Joyce lobbied the Gillard government to stop Virgin's foreign shareholders, Air New Zealand, Etihad and Singapore Airlines from recapitalising the number 2 airline, complaining that subsidised state-owned carriers were out to destroy Qantas. A year later, it lobbied the Abbott government to guarantee a $3 billion loan - which was refused - and six months later it posted a 2.8 million loss. The airline pocketed $2.7 billion in pandemic subsidies. Then in 2023 the Albanese government, for reasons never properly explained, refused Qatar Airways’ application to fly more planes in and out Australia, at that time restriction applied to international aviation capacity…"

AFR, 2024

• grounding the Qantas fleet in a battle with the union
• deferred fleet replacement to strengthen its balance sheet and credit rating
• regulatory requirement that Qantas maintain 50% Australian ownership, etc.

Some fines, etc that Qantas had to pay during Joyce's tenure included:

• $A 100 million for misleading customers by selling tickets for flights that it had already cancelled; this is extra to the $A 20 million compensation payment to impacted customers
• $A 90 million for the unfair dismissal of baggage handlers during Covid-19; this is extra to the $A 120 million compensation payment to impacted workers
• $A ¼ million for discriminating against a Health and Safety Representative who raised safety concerns

Summary

“…Successful chief executives are rare, and they need to be celebrated. However, if they are not constantly challenged and kept in line by a strong board that is vigilant on culture and customers, things will end up badly for everyone…”

Chanticleer, 2024a

In Alan Joyce's case, his style of leadership was more suitable for a crisis situation, like the Covid-19 pandemic, than normal operations.