Page 4: Accountability
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 specialised 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.
The functional organisation 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 organisational 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 organising by function is that people become compartmentalised. 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.