The current paper focuses on the roles of the leadership team, the strategic control, and decisions in sustaining the development process and the changes that are made at Rolls-Royce. The company under analysis designs and produces world-class engine technologies since the last century and continues dominating in the market. The paper aims at examining the leadership decisions of the last decade, the role of the leadership team, its characteristics, and recent strategic changes that define the future of Rolls-Royce and its leaders, involving more projects and customers.
Technology of Leadership
Company’s success is linked to the leadership team and its decisions. Companies depend on leaders to cope with various situations and design effective development strategies. A business environment is dynamic and requires leaders to react and make necessary changes in order for organizations to survive and avoid bankruptcy. An industry of engineering has a number of companies that gained a reputation of a leader over the years. Rolls-Royce is one of them with the experience of producing engine technologies. To become a leader, different decisions were made, and the consequences of them still have their influence. The paper concentrates on such decisions, analyses the role of leadership team, and recent changes that were made in response to industry trends on the example of Rolls-Royce.
The company under consideration defines itself as a leading engineering company, with a reputation for delivering excellence for customers on land, in the air and at sea Rolls-Royce offers products that are generally described as advanced and unique as the leadership team pays attention to operational performance. The company has a long history that results in the current processes and tasks that its leaders undertake. Different solutions were suggested that enabled Rolls-Royce to become a global company and known producer of engines and corporate jets. To understand the decision that company’s leaders make in the present, the past of Rolls-Royce has to be revealed and described.
Company’s History and Major Strategic Decisions
Presently, Rolls-Royce is the leading turbofan aircraft engine producer and, along with Pratt Whitney and General Electric, is one of the “Big Three companies”. Rolls-Royce manufactures technologies that are considered to be the leading engineering decisions. Yet, before Rolls-Royce achieved this level of global recognition, a series of actions led the company to bankruptcy in 1971 due to financial, technical, contractual, and other problems. The British government decided to help Rolls-Royce and controlled the company and all its operations until 1987 when Rolls-Royce was privatized. The government provided Rolls-Royce with the needed financial support and allowed the completion of a few projects, including the RB211 project. The relationship between the government and Rolls-Royce were productive, but the government had the ultimate control over financial questions and strategic planning. However, such policy did not interfere with the company’s management and leadership, even after Rolls-Royce was privatized. Moreover, Rolls-Royce has a set of traditions that define the company’s policy and its further development.
The current status of Rolls-Royce is a result of solutions that were suggested in the twentieth century. One of the main strategic decisions was the introduction of the concept of “Power by the Hour”. This concept is focused on customers and helps them save money by paying not for the final product but for the hours that were spent on manufacture. The notion “Power by the Hour” was established over 50 years ago but it is still a trademark of Rolls-Royce. Furthermore, when an engine is broken, the company replaces it. Other companies develop similar programs for customers, but Rolls-Royce keeps its leading position and authority. The trademark of Rolls-Royce still exists in the twenty-first century and even rapid changes in business do not affect it as the leadership team applies efforts to maintain the strategy.
Rolls-Royce leaders have a high level of cognitive and practical intelligence. It was achieved by a special policy that promotes long-term relationships between employees and the organization. For example, it was easier for an applicant to be hired by Rolls-Royce, if he had a relative working for the organization. There was a tendency according to which people stayed with Rolls-Royce for the whole working period. This particular direction of employment occurred on the shop floor and among the top managers. Almost every director worked for the company for more than twenty years. It should be noted that this strategy is revised at present and may be significantly changed.
The Characteristics of the Leadership
The leadership of Rolls-Royce is based on a system of interaction between the employees and the company. The leadership maintains its efficiency by influencing, motivating, and allowing others to contribute to the process and increase the effectiveness and success of the company. Workers are considered to be members of the organization. Thus, people devote themselves to the company’s cause. Such relationships were built over the years and the leaders of the company are considered to be a part of Rolls-Royce.
Moreover, Rolls-Royce appreciates its leaders, who are mostly engineers with outstanding abilities and incentives, able to exercise strategic control. The number of the company leaders is not res tricted to people in the executive circle. Thus, Rolls-Royce may be characterized as an organization that has a shared leadership.
At Rolls-Royce, people are engaged and ready to accept leadership responsibilities. It is the company’s aim to allow people realize their potential. The words of one of machine programmers at the Rolls-Royce support this idea: “I saw people around me, all front-line employees. They weren’t actually leading the company, but they were people you would listen to and follow. We didn’t have titles, but people had respect for what we did”. Any employee may be a leader under various circumstances. Leadership is not founded on formally assigned positions and anyone who has an interesting idea that is able to inspire others can be a leader. It should be noted that leadership may be applied to more than one person at the same time. This phenomenon creates an atmosphere where a team work is promoted and highly appreciated.
Employees benefit from good leadership and supportive partnerships within the company. People developed close collaborative working environment. Thus, a constructive dialogue and regular meetings contribute to company’s success. The Rolls-Royce leaders are known to be qualified people, who are able to analyze different situations, suggest improvements when necessary, and help choose the right way of development. As it was mentioned above, high priority is given to the company’s engineers who “tended to stay within the same department for years, and sometimes decades, with the likelihood that they would become experts in a specific component and/or subsystem of the aircraft engine”. It is another feature of the company leadership that has to be changed.
The contemporary structure of the official Rolls-Royce leaders should be described to illustrate who makes all the changes. There is the Board, Executive Leadership team, and Corporate Governance. The Board and Executive Leadership team consist of less than fifty members. However, it is stressed that the Board attaches the highest priority to Corporate Governance, and considers that the strength of the group’s corporate values, its reputation and its ability to achieve its objectives are influenced by the effectiveness of the system by which it is directed, managed and controlled in the interests of all its stakeholders Rolls-Royce, n.d., n.p.
The leadership system is built on effective management that requires commitment of employees and their active participation on the regular basis. The company and its leaders are being reformed. Some managers are removed and other people are given an opportunity to lead the company. A financial state of Rolls-Royce made the Board review the top managers and remove some of them. It should take a couple of years to see the results of these actions and meanwhile, improved investment characteristics are expected.
It is caused by the fact that the company intrinsically incorporates long-term relationships that business needs to be transferred. The process of manufacturing may take a few years before the products finally enter the market and the company needs to be ready to operate with such orders. The change of leadership is supposed to enable Rolls-Royce to adapt and develop.
Strategic Changes
The leadership team is aware of the difficulties related to the intense competition in the market and constantly develops various forms of differentiation to support the product and customers. Taken into consideration the experience of the company and its employees, certain strategic changes have been made by leadership in response to industry trends. Presently, the Rolls-Royce leaders fall under the process of restructuring. It is a new approach that is taken in an effort to “simplify executive accountabilities, increase leadership focus on operational performance and allow the company to build on its world class engineering capabilities”.
Such policy has never been applied before and signifies that Rolls-Royce grows into a new company with innovative methods. According to this decision, senior managers were removed, including the leaders of departments of power systems, marine, nuclear, civil, and defense aero-engines. Such actions also transformed the top level positions. For example, Colin Smith who has been the Group Director of Engineering Technology was appointed to be the Group President. Chris Barkey became the Group Director after working as an Engineering Director. It is believed that these and other changes will help Rolls-Royce overcome some issues and stay the leader of the engineering market. The company’s hierarchical structure is also changed for the purpose of eliminating bureaucracy.
The jet engine market requires such changes. The operational level of the company has its effects on the whole structure of Rolls-Royce. Therefore, responsibilities need to be strictly appointed and controlled by the chief executive (Warren East as of today). Another strategic change is related to promotion of younger employees and their talents. This action should strengthen Rolls-Royce and lead the organization to the future of engineering.
In response to changes in the industry, the company shifted its focus from engineering and employees hierarchy to business environment. The aim is to be more proactive and realize new ideas. In the past, implementations of designs and realization of projects required a long time. The change of company’s structure helps meet requirements of new era of engineering. For example, a production of an engine RB211 led Rolls-Royce to the point of bankruptcy. Recently, even more ambitious project was completed without such complications. For instance, a turbofan engine Rolls-Royce Trent 1000 equipped a famous Boeing 787 Dreamliner. The engine proved that the company has the strength and knowledge needed to produce technology. Consequently, the company received a number of orders to manufacture more engines.
Rolls-Royce applies itself in the five businesses (civil and defense aerospace, nuclear and power systems, and marine). This activity attracted customers from more than a hundred countries worldwide and in 2014 Rolls-Royce invested £1.2 billion on research and development. The decision to continue research signifies that the company wants to be a leader in the future and is ready to work on more ideas and develop advanced technology.
Acknowledging that the world changes rapidly and there is a need for more power for societies, Rolls-Royce conducts researches to develop technology able to present innovative power systems. Innovations are a part of Rolls-Royce success. However, competitive companies try to develop new technology. The equipment has to meet customers’ current requirements and future expectations. To achieve this, “Rolls-Royce employs over 54,000 people in more than 50 countries. Over 15,500 of these are engineers”. This change is based on the reputation of the company but reshapes its identity, as well as company’s priorities and purposes.
The analysis of Rolls-Royce demonstrates the central role of the leadership team in both strategic decision-making and developing the knowledge-intensive industry. The ideas that were implemented during the last decade made considerable changes and allowed the company to mobilize its engineering potential. There is a high level of employee’s commitment that leaders inspire. In addition, leaders organize the working process and examine new ideas and concepts in order to implement them in the future. These are the main roles of the leadership team. Rolls-Royce is proud to present leaders with a high level of cognitive and practical intelligence who work with a focus on operational performance and customer’s needs. Various strategic changes have been made by leadership in response to industry trends. The main change is connected to the process of reorganization of the inner company’s structure. As a result, senior managers were removed to allow new people take the leading positions. This change was made for the purpose of increasing the productivity of the company and application of the new projects (for example, turbofan engines for Boeings, such as Dreamliner). Another decision was to invest in research and development. Such changes mean that Rolls-Royce tries to adapt to new business environment and keep its positions as one of the “Big Three”. The analysis shows that Rolls-Royce has its own technology of leadership that is still in the process of development.
