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Singapore Airlines

People in organizations
When you run a large organization, you are likely to have a large number of employees. The Singapore Airlines Group
has more than 29,000 employees. This large workforce comprises a diverse mix of people who bring a range of skills,
attributes and personalities to the workplace. They are employed in the Groups homebase in Singapore and in as many
as 80 diverse locations, all around the world.
An airlines employees include people whose work is predominantly in the air for example, pilots and cabin crew,
whilst others work on the ground like baggage handlers, check-in staff and engineers. Depending on how an airline is
organized and on how much work it contracts out, it may also employ chefs, cleaners, telesales personnel, insurance
experts and accountants. Some airline employees will spend nearly all of their time in offices, whilst others work in
passenger terminals, cargo terminals or aircraft hangars. Somewhere behind the scenes there will also be a group of
managers who make sure that the airline and its many operations run smoothly. All these people are of different
This case study shows how one large company, Singapore Airlines, organizes itself to make the most effective use of its
resources, particularly its human and fiscal resources to achieve its organizational goals.

Organizational Systems
In the most efficient organizations, all employees should know and understand their role and how it fits into the work of
the organization as a whole. They will also want to do the best that they can, not only in the interests of the organization
that employs them, but also in their own interest. With such a large and diverse group of employees operating in widely
differing working environments, giving each of them a sense of belonging to a community with a common goal is a
huge organizational undertaking.
Modern organizations like the Singapore Airlines Group need a structure that enables people to work and deal with one
another in a co-ordinated and co-operative way as they work towards the goals of the business.
An organogram is a chart that shows how an organization is made up and how its systems fit together. Organization
charts help to distinguish between the levels of post as well as the layers of authority and responsibility attached to each

Dividing up an Organization
A very small business does not really need a formal structure and is unlikely to have one. As it grows, however, some
sort of formal structure will be required. As it grows even larger, its ability to construct a proper organizational structure
may well determine its fate.
Departmentation is the process by which certain activities or parts of an organization are grouped and then assigned to
managers and other staff. How this is done depends upon a range of issues related to each organization.
Ideally, the chosen structure will:

include every part of the organization

relate each part to every other part

Show where the authority and responsibility of different individuals and their departments lie

enable everyone within the organization to assess their roles and status.

There are five main methods of grouping different parts of an organization.

These are by:
Function - Dividing the organization into broad sectors that reflect the specialism or function of each sector.
Product - Basing the structure around products, with a different division for each type of product.
Process - Creating a structure that mirrors the particular steps or phases of the production process.
Geographical area - Relating parts of an organization to the activities they provide for each geographical region.
Matrix - Setting up a mix of the above methods.
When finalized, a companys organization chart will show:

How various parts of the business are linked together

The principal lines of decision-making

The allocation of authority and responsibility.

Running a Service Business

Airlines operate in a competitive environment. A key area of competition for them is the quality of customer service.
Customer service helps to distinguish one airline from another, and to give one an advantage over the other.
In order to provide the type of service that customers want, airlines need to be flexible. They must allow employees
scope to make decisions that take into account changing circumstances in a variety of environments.
It is mainly for this reason that Singapore Airlines gives considerable autonomy to each part of the organization.
Decentralizing a business.
There are many issues associated with decentralizing a business. These include:

Maintaining lines of communication

The structure must continue to provide information for employees so that, even though they work for just one
unit, they know how other parts of the enterprise are working to serve the customer.

Staff motivation
The structure must provide job satisfaction and be capable of motivating all employees, whatever their job.

Achieving Goals
Employees need to know the goals set for them.

Thinking globally whilst acting locally

Employees need to respond positively to local needs whilst remaining conscious of the global nature and
standard requirements of the Groups activity.

In developing its organizational structure, Singapore Airlines has put these considerations at the forefront of its thinking,
placing an emphasis on empowering individuals to make decisions. This enables employees to make decisions which
allow them to respond to changing conditions more effectively.

The SIA Group Subsidiary Companies

The several subsidiaries of Singapore Airlines today employ around half the people within the Group. Singapore Airport
Terminal Services (SATS) was the first subsidiary to be created, in 1972. Although SATS is a separate company with its
own stock exchange listing, the majority of its shares are owned by its parent company, Singapore Airlines. With a focus

upon areas such as passenger ground services, cargo services, security services and catering, SATS has total autonomy;
it makes its own business decisions.
The independence given to SATS has enabled it to focus upon developing expertise within its own specialized areas of
operations to a level that is also attractive to other airlines. As a result, SATS is able to sell services to other airlines such
as Qantas and British Airways. By doing this, it has provided a new revenue stream for both itself and the Group.
Silkair is a highly focused airline serving the smaller cities and towns of South East Asia. It uses Airbus A319 and A320
aircraft, and has a lower overall cost structure than that of the parent company.
SIA Engineering provides a range of engineering services for the airline itself and other customer airlines.
These subsidiaries have distinctive conditions of service and methods of operation that apply to the specific categories of
staff they employ. In dividing up the Group into distinct business units, one aim was to make each operation more
profitable. Each separate entity is a profit centre whose performance can be measured. With independence has come
accountability; managers and staff must be willing to accept responsibility for how their subsidiary performs and for any
errors made.

SIA Management
The functional organization chart shows lines of authority between different managers. It also illustrates the flat structure of Singapore
Airlines; there are few levels of authority within the hierarchy. By creating a flatter organizational structure, it was possible to push
autonomy downwards. This creates a more dynamic and flexible business that empowers people to make decisions in response to
customer needs and to changes in the business environment. This in turn leads to job enrichment; all jobs at all levels are made
worthwhile and more satisfying.
A key problem that can result from organizing by function is that people become compartmentalized. They come to know one part of
the business well, but have no experience of the business as a whole. This may limit not only their understanding of it but also their
empathy towards it.
To avoid this, Singapore Airlines has a policy of moving key staff around, using a process of job rotation. This process has provided
managers with cross-functional expertise and a better knowledge of the business as a whole. There are limits to this practice; it cannot
be applied to key specialist areas such as engineering, for example.

Overseas Operations
As a global business with operations in more than 80 countries, Singapore Airlines has also divided up the overseas
business by geographical area. For each region, it has created a senior vice president with authority for that region.
Being organized geographically makes it easier for a large company to:
respond quickly to local issues and problems
build up knowledge of specific markets
tailor its strategies to local conditions, laws and customs.
Within this structure, general managers for each country have the independence to make their own decisions, allowing
the organization to respond more quickly and appropriately to market conditions.

Singapore Airlines has looked to provide an efficient operational structure that identifies clearly where decisions are
made, by whom and with regard to which sections of the business.
As the Group pursues its corporate objectives, it is looking to free up its managers to make decisions within their own
sphere of influence, without continuous reference back to headquarters.
At the same time, the Group wishes to retain a sense of common purpose. For example, the Group magazine Outlook
helps to bring all employees together by providing information upon a range of common issues, including promotions

and service anniversaries. Wherever they work, every employee within the Group is united in a number of other ways,
through the Singapore Airlines song, through wearing similar, but defining, uniforms and through sharing a common
business culture philosophy and goals. There is profit sharing, through bonuses and share options. This gives staff a
further incentive to ensure that the business as a whole is profitable.
As markets and opportunities change over time, it is important that the Singapore Airlines Group has a structure that
allows managers and staff to quickly respond to business threats and to exploit new areas of opportunity to move the
business forward.


What is an organogram? Draw an organogram to illustrate how the organization of your school is structured.

Explain the difference between a) dividing an organization by function and b) dividing an organization by

Describe two factors that influenced how Singapore Airlines divided its organization.

Identify two advantages and two disadvantages of working for a decentralized subsidiary.

It is important for all organizations to evaluate their organizational structure. Discuss how Singapore Airlines
might do this.

Accountability: The extent to which individuals and managers are held responsible for the outcome of the decisions
they make.
Autonomy: Independence to make decisions within a decentralized working environment, where decision-making is
passed down from the top of the organization to those at lower levels.
Customer service: The quality of the service offered to customers, and as experienced and remembered by them.
Flat structure: An organizational structure that provides a wide span of control within only a few layers of
organizational hierarchy.
Job rotation: The systematic movement of employees to various parts of an organization and/or from one task to
Stock exchange listing: The companys shares are quoted and traded on a stock exchange.
Subsidiaries: Businesses that are owned by another business.

Answer 1 It is useful for young people to relate the construction of an organization chart to their own circumstances.
Within a secondary school, for example, there will be at least 2 forms of division, by academic departments as well as by
pastoral responsibilities. There will also be different decision-making layers within a hierarchy. Colleges may have a
different structure, with 20 or more academic schools, and then different functions providing catering facilities or
student services.

Answer 2 A functional organization is divided according to functional areas, although each organization will have its
own way of dividing its functions. Some functions may well be over-arching. For example, a firm that makes 5 different
products may well have a marketing department that acts on behalf of all 5 products, and an accounts department that
acts for the firm as a whole. A process-based organization will divide according to processes. In this case, each
department takes responsibility for its part of the process within the production chain. For example, a manufacturer of
chicken nuggets may have a buying department, a storage department, a manufacturing department, a freezing
department, etc. Heavy engineering firms often organize on the basis of both process and product e.g. the boiler shop
and the foundry may be separate organizational entities, each with their own person in charge.
Answer 3 A number of factors influenced how SIA divided the organization, including:
clear divisions of responsibility that gave scope for autonomy - e.g. set up a supplier of ancillary services to airlines that
could become so good as to supply other airlines also; lines of communication it is important to create a structure that
provides information for employees about events and activities within the Group, so that they feel part of the business as
a whole; staff motivation the structure must provide job satisfaction and be capable of motivating each employee,
whether they are a captain of a 747, an engineer or a steward; the opportunity to provide good service so that each
employee can appreciate the value that they are adding in providing service for customers; how to think global and act
local so that within the context of a global company, employees can respond to local needs.
Answer 4 Advantages may include autonomy, responsibility and being able to respond to local needs. Disadvantages
may include issues of accountability to a parent group, limitation upon being able to take risks (where is the line
drawn?), having to follow a host culture or feeling distanced from the parent company.
Answer 5 The evaluation will usually take the form of asking "To what extent is the organizational structure meeting the
objectives of the business? Is how the organization operates proving to be enabling or disabling? Has the structure
allowed us to move swiftly enough to take advantage of opportunities as they arose? Do we have any problems with
regard to who does what? What are our customers saying about us?"
The forum in which such an evaluation takes place is likely to be a meeting of the persons who manage the various
sections/divisions of the company. They in turn should be coming along not just with anecdotes and impressions, but
with hard evidence to support any assertions they wish to make and any modifications they wish to suggest.
Again, tutors will find it useful to allude to how evaluation is carried out in the educational institution in which they
work, and which the students themselves experience. Students responses to Question 1 might well have revealed a
considerable amount of innocence/ignorance and misconception with regard to how the school/college is organized and