Roads to Resilience

Enabling ‘Relationships and Networks’

Resilient relationships and networks are based on shared purpose and values, as well as the existence of a no-blame culture. The presence of good communication within a flat organisational structure will help avoid the risk information ‘glass ceiling’ and ‘glass walls’. Leadership that is fully engaged with the achievement of increased resilience is necessary to deliver a customer- focused experience. Managers need to consider how each of the business enablers of resilience, people and culture ; business structure ; strategy, tactics and operations ; and leadership and governance can be utilised in creating effective relationships and networks . A common purpose emerges when individuals have a clear understanding of how their roles and responsibilities relate to those of others and contribute to the achievement of the organisation’s key goals. It facilitates co-operation between stakeholders with different knowledge, expertise and perspectives, which is crucial for information sharing and for generating situational awareness. As the organisations investigated show, when a common purpose exists, risk management and internal audit are perceived as integral parts of the business that support the achievement of the goals of the organisation. When a common purpose is missing, functional or divisional silos can emerge and undermine a collaborative and customer-oriented perspective. This is referred to in this report as ‘glass walls’ and results in unco-ordinated management of risks, reduced resilience and board risk blindness. Silo mentality ultimately affects product and service delivery and consequently customer perceptions, with the resulting damage to brand and reputation. The importance of the relationship with customers cannot be over-emphasised, especially as social media can spread bad news almost instantaneously. Virgin Atlantic has a very clear purpose and delivering it requires employees in all areas of the business to have ‘innovation’, ‘caring for others’ and ‘peace of mind’ as their core values. To ensure people understand and live the Virgin Atlantic brand in the same way, everyone joining the organisation, from early career starters all the way up to new board members, goes through a two-day ‘Virgin Induction Programme’ (VIP). During this programme, “ we talk about our brand, our values, the history of Virgin Atlantic, where it comes from, where the business is today and where it is going ” (Chief Operating Officer, Virgin Atlantic). Following this initial introduction, senior managers People and culture

take people through each of the Virgin values in more detail. The purpose of these sessions is not only to help people understand what the values mean on a personal level, but also to understand how their roles relate to those of others throughout the business. This includes understanding the impact their actions could have on operational performance and reputation. Virgin Atlantic has also found that relationships with contractors are crucial, as contractors’ actions have strong impacts on customer service levels and the perception of the brand. To establish the highest level of co-operation with its contractors, business partners then become an integrated part of the achievement of increased resilience. “ When you share the same values and work in partnership with your service providers, the approach to resolving a service delivery issue is much more collaborative because it is also to their benefit to rectify the situation quickly ” (General Manager Corporate Safety and Security, Virgin Atlantic). Strong relationships are nurtured when there is a no-blame culture. IHG focuses on solving issues, not on apportioning blame. At the same time, the organisation ensures appropriate accountability and constantly critiques itself. For example, the board goes beyond minimum corporate governance requirements and “reviews itself annually, a third party comes in and does their research with each of us and we get feedback in terms of our ability to speak up and whether or not we’re talking about the right things, have the right views” (Regional President the Americas and IHG Board Member). Levels of individual knowledge are also continuously assessed and an introductory training course about risk management is standard practice for all non- executive directors who join the IHG board. Creating a no-blame culture is essential if employees are to take responsibility for managing risks and be open about mistakes. An example of the degree of openness that Virgin Atlantic has achieved is shown in a taxiing accident. In May 2011, a Virgin Atlantic aeroplane landed at Tobago and whilst it was taxiing to the terminal, the pilot saw a large hole in the taxi-way. Fortunately, he could steer to avoid the hole. Two weeks later, however, the undercarriage of another Virgin Atlantic jet got stuck in the same hole and there was severe disruption, including moving the passengers to the terminal and having the aircraft extracted and repaired.

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Section 4: Resilience Principle No 3: ‘Relationships and Networks’