Aer Lingus promotes from within to secure new high flier
Airline chooses long-serving employee Stephen Kavanagh to lead the firm, highlighting the benefits of nurturing talent
Irish airline Aer Lingus has chosen a long-serving manager from its own ranks to become the firm’s new chief executive. As announced earlier this week, Stephen Kavanagh – who has worked in the company for 26 years – will take over from current incumbent Christoph Mueller on March 1.
Since 2009, Kavanagh has been chief commercial officer of the airline, tasked with improving retail and revenue management, and the announcement coincides with a concerted push from International Airlines Group (IAG) to acquire the Aer Lingus brand and holdings. Kavanagh has already confirmed his support for the bid, explaining that Aer Lingus would become "increasingly vulnerable” if it is not taken over by the corporation, which also owns British Airways.
“It's more challenging than ever,” he said, “because of the global nature of competition. We do serve the island, and if we continue to have that mindset we'll be increasingly vulnerable. It’s a constrained market in terms of opportunity.”
Kavanagh, a University College Dublin graduate, started working for the company in 1988 and has worked in a variety of different positions, from operations and commercial management roles to overseeing Aer Lingus’s stock market flotation as an executive.
Aer Lingus chairman Colm Barrington said: “Stephen has worked in Aer Lingus for over 26 years in a range of increasingly challenging roles and he has a commanding knowledge of both the company and the industry. I am particularly pleased that it has been possible and appropriate for an internal Aer Lingus executive to succeed to the position of chief executive.”
He added: “Stephen has been a key member of the executive team that, over the last five years, has transformed Aer Lingus into a strong, profitable airline with a resilient business model and an improved cost base.”
The biggest immediate challenge that Kavanagh currently faces is convincing the Irish authorities and public of the positive impact the takeover would have on the airline’s recruitment and services. Kavanagh has conceded that a “limited" number of jobs would be lost as a direct result of the takeover, but said that would balance out in the long run, with the deal likely to huge “employment potential” in the future.
The choice between appoint chief executives who are already ingrained in a company’s culture, or outsiders who can provide fresh perspectives, experience and contacts, has long been one of management’s most interesting debates. A study released last May by consultancy Strategy& found that around 76% of incoming CEOs at the world’s largest 2,500 public companies were promoted from within their firms. Interestingly, 70% of chief exec changes in the study were planned – as opposed to forced turnovers or the result of mergers.
At its most effective, an internal promotion to CEO reflects a firm’s willingness to actively develop the talent its disposal in an ambitious, nurturing environment. Fast-food chain Chipotle is a prime example of this ethos. Mainly based in the US but with several UK outlets too, the company has moulded its entire business to support promoting managers from within as a means of creating more motivated employees.
Last year, almost 86% of Chipotle’s salaried managers and 96% of its hourly managers stemmed from internal promotions. Its restaurateur scheme allows hourly crew members to become managers earning over six-figures a year. Staff are also incentivised to help nurture their colleagues by receiving an extra £5,000 to £7,000 each time they train a crew member to become a general manager.
However, there are numerous examples of how such a system isn’t always the answer to developing successful leaders of a large company. Current basketball mogul Steve Ballmer is a prime example. Having worked at Microsoft since 1980, Ballmer was hired as CEO to replace Bill Gates. For all his experience and skills, though, he was unable to grow Microsoft into the emerging digital and technological industries of the past decade. Most notably, Ballmer underestimated the rise of smartphones and tablets, instead focusing too heavily on the PC market.
For more thoughts on nurturing people, read about the management style of Unilever’s Paul Polman.