Case Study of Irish Ferries

INTRODUCTION

Irish Ferries was founded in 1972 and initially began operations between Rosslare and Le Havre. In 1992, the company took over the British and Irish Steampacket Company Limited, a nationalised company, which traded under the trade name B&I Line and operated between Dublin and Holyhead. Irish Ferries is Ireland 's leading ferry company transporting passengers and freight between Ireland, Great Britain and Continental Europe. They are a division of Irish Continental Group.

Irish Ferries' reputation has been tarnished in the recent past, due to internal disputes between management and trade unions, which was finally resolved in December 2005. An acceptable settlement was formulated on both sides, following intensive talks.

A bitter industrial dispute at Irish Ferries ensued after management proposed to replace 543 employed seafarers with eastern European agency crew, and to reflag its vessels to Cyprus in the process. This resulted in a standoff, starting on 27 November 2005, whereby, local representatives and members from SIPTU, Ireland's largest union, responded by mobilising and applying industrial pressure. This was ultimately provoked by management decisions to bring agency crews aboard Irish Ferries. This resulted in its fleet being confined to Welsh and Irish ports for almost three weeks.

This report will be divided into four sections: an overview of the organisation, a company analysis, an industry analysis and finally our recommendations for growth and implementation options for Irish Ferries.

SECTION 1: IRISH FERRIES OVERVIEW

Governance Structure

Irish Continental Group, who operates through a decentralized management structure and leaves its companies to manage them independently, owns Irish Ferries. The board of directors governs Irish Ferries. Company decisions and negotiations take the following format:

Board of Directors

The Board consists of 3 executive and 3 non-executive Directors and the roles of Chairman and Managing Director are separate. The Board has nominated John Mc Guckian as the Senior Independent non-executive Director. Other such directors are Peter Crowley and Bernard Sommers. Each director is subject to re-election every 3 years.

Board Procedures

The Board holds regular meetings and there is a contract between meetings as required in order to progress the Group's business. The Board holds the responsibility of covering key areas such as approval of financial statements, budgets, acquisitions or disposals and dividends. It is responsible for the progression of the business.

The company secretary ensures that Board procedures are followed and rules and regulations are complied with. Directors are constantly kept up to date on the latest corporate governance guidance and best practice.

Board Committees

There are two board committees with formal terms of reference: the Audit Committee and the Remuneration Committee. They comprise the three non-executive Directors. All the non-executive Directors are considered by the Board to be independent of management and free of any relationships, which could interfere with the exercise of their independent judgement.

Management Style

Irish Ferries operates through a decentralised management structure. Each business unit has its own management team with the expertise appropriate to its field of business. This enables it to remain responsive to the needs of its customer base. A small headquarters team providing strategic input along with Finance and IT support complements this. Irish Ferries' Health and Safety Manager is responsible for ensuring that health and safety issues are identified, monitored and reviewed. The company claims that it fosters a positive working environment through communication and support. It achieves this through: annual road shows, staff communications systems e.g. Notice boards, e-mail and intranet. Staff opinion surveys are conducted to gain an understanding of the organisational climate and devise action plans with which to improve business performance. Regular consultation and information meetings take place and positive employment policies that provide equal opportunities for existing and potential employees have been drawn up. The employee handbook provides details of terms and conditions of employment, together with information on the company's policies and procedures. An Employee Assistance Programme (EAP) is also provided to employees, which offers an independent and confidential advisory service. In light of the information obtained from our various sources it appears that Irish Ferries employ a democratic style of management. However, recently exposed scandals may hint otherwise. It appears that Irish Ferries does not have any genuine clear-cut style of management, but sits between bureaucratic and autocratic management styles.

How does this reflect on corporate culture?

The company's competitive advantage can, however, not be enforced without the support and backing of a loyal and empowered workforce. Although the management style at Irish Ferries appears to provide a solid framework for its employees, it is lacking in the area surrounding its value system, in the sense that employees have been marginalized and undervalued. This proved to be a lethal error on behalf of management and has tarnished a potentially open corporate culture. Given recent strikes, redundancies and lay-offs, it is safe to say that the corporate culture within Irish Ferries is not at its best. A favorable management style needs to be established. However, it should ideally coincide with the ideological values of all employees in order to prevent a conflict of interest i.e. the board of Directors at Irish Ferries needs to cut costs in order to become a low cost ferry service able to compete against its strongest competitors. However, the ferry company's crew will not simply sit back and allow their wage slips get lighter and watch their jobs fall from under their feet, so that the company can achieve its goal. This highlights that the corporate culture reflected by Irish Ferries'