Reference no: EM133345644

People Express

The behavioral approach in management, is generally drawn on conclusions drawn from the Hawthorne Experiments, proposes that productivity increases when the workers are recognized as important members of the organizational family. This is what People Express did. Every employee was given a share in the ownership of the company and lifetime employment security was offered to all. People Express became a classic example of organizational success and managerial effectiveness.

Donald Burr was the founder and chairperson of People Express. He has been credited with building a humane kind of organization where employees were given a great deal of freedom of operation. Every employee was a part owner of the company. There was no class distinction between managers and workers. Managers helped workers in carrying out their duties, pilots helped out in handling the baggage and passenger comfort was given top priority. Every employee was given the opportunity and encouragement to know the company well. Even top executives rotated from job to job to learn the major aspects of the business.

People Express was expanding its operations very fast. Within five years of its formation, it acquired Frontier Airlines and because the fifth largest airline in the country. Since the infrastructure and operational resources did not match the fast expansion, People Express experienced its first losses and with it, its managerial style changed. It changed from a participative style of management and a family type organization to a more traditional style. Donald Burr took charge of the airline and began dictating policies and it became risky for the employees to speak out.

One of the ordinal architects of lifetime employment at People Express, Lori Dubose was fired when she started asking questions. Similarly, another director of the company, Harold Parety, who was told to report to work at 06.00 am and stay till 0900 pm., irrespective of whether there was enough work for him to do or not felt it to be an insult to his integrity and quit his job and formed his own airline. Eventually People Express declared bankruptcy because it could not generate enough revenue to meet operating expenses and other debts

Question one
a) Do you think the change in management style contributed towards the final collapse of People Express? Explain your reasons.
b) Why do you think Donale Burr changed his managerial styles? Was he justified in firing Lori Dubose because she disagreed with his managerial policies.

Question two
Is there any school of management thought practices evidenced in the case? Explain your answers with evidence from the case
a) Is there any leadership style that could suit the situation in the case? If there is, how suitable it is?