Delta Airlines: A Machine Bureaucracy
Delta is perhaps one of my favorite airlines. Part of what has attracted me to this carrier has been its history of success over the decades. Curious about how Delta has been able to survive when other carriers have failed, including TWA, Eastern and Pan Am,I thought it might be interesting to look at Delta Airlines through the eyes of Henry Mintzberg, a business theorist who envisioned some companies as “machine bureaucracies”.
For those who may not know, a Machine Bureaucracy is a term coined by Mintzberg back in the 1980’s to describe an organization involved with a highly specialized work. Characteristically, machine bureaucracies also tend to have very routine tasks connected to the what they produce, create or "do".
These types of organizations usually have very formal operating rules with a centralized power structure – meaning power flows from the top. “Machine Bureaucracy” type companies also have elaborate administrative structures that flow between management and front line staff.
Given the size and reach of Delta Airlines, I figured this would be a great company to use as an example of the ultimate machine bureaucracy.
I’ve also included some suggestions for the future that Delta might want to consider, contextualized using Mintzberg’s structural model.
Delta Airlines: Background
Delta Airlines Inc., operating as Delta Airlines is one of the largest passenger airline in the United States according to most of the current data.
Delta is a publicly traded company that is listed on the New York Stock Exchange under the symbol DAL.
The airline operates an extensive domestic and international network, serving nearly all continents with the exception of Antarctica.
In 2012, the company posted an annual profit of over one billion dollars.
Delta Early Beginnings
Starting off as an aerial crop dusting business that was jointly owned by B.R Coad and Collet Woolman, the company began operations May 30, 1924 as Huff Deland Dusters in Macon, Georgia. In 1928, Woolman purchased all of the shares of the company and renamed the organization Delta Air Service.
The company renaming was in large part inspired by the geologic flood plain known as the Mississippi Delta, a distinctive northwest section of the state of Mississippi that lies between the Mississippi and Yazoo rivers.
In 1929, Woolman bought three small aircraft and began scheduled passenger service from cities in Louisiana and Mississippi to Dallas, Texas.
During this short period of time, Delta technically could be classified as a simple structure, using Mintzberg’s Organizational Structure Model. This was because Delta had only a handful of employees, in which Woolman himself supervised while also operating the tiny company.
Here, we see Woolman acting as the strategic apex and the small group of employees as the organization’s operating core. This time period for Delta as a “simple structure” would be short lived because over the next several decades, Delta would grow to become one of the largest passenger airlines on the planet.
Delta Transforms from a Simple Structure to a Machine Bureaucracy
As a result of the Air Mail Act of 1934, Woolman secured government mail contracts for Delta, transforming the company from tiny tri-state carrier to a larger, southern based airline.
It was during this period that Delta began to characteristically transform from a simple structure to an expanding machine bureaucracy, using Mintzberg’s structural configuration model.
Essentially, Delta was forced to adopt a new model as the company was growing too big for one or two people to operate. This transformation was in large part fueled by lucrative government mail contracts.
Growth during the 1940’s
During the 1940’s, Delta was an early beneficiary of the Civil Aeronautics act of 1938, which in turn created the Civil Aeronautics Board (CAB), a governmental agency that granted approval to air carriers to fly to and from A given destination The CAB favored Delta due to its safety record, which was starkly different from other airlines of the era such as United Airlines and TWA.
The awarding of these lucrative mail contracts to Delta during these yearly years was an important growth factor for the company.
Due to rapid expansion and the need for centralized control over the company by management, Delta moved its corporate headquarters to Atlanta, Georgia in 1941. During this decade, the company also began to upgrade its fleet to larger planes and added flight attendants.
Growth from the 1950-2000s
During the next five decades, Delta Airlines rapidly grew to become one of the largest airlines in the United States and one of the biggest passenger carriers in the world. Some highlights of the company’s growth include:
- The purchase of Chicago and Southern Air in 1953;
- Adding jet airliners to its fleet during the 1960’s;
- The introduction of European service in the 1970’s;
- Launch of a frequent flyer program in the 1980’s;
- Take-over of Pan American Airways European routes in the 1990’s and;
- A merger in 2008 with Northwest Airlines, making Delta the largest air carrier in the world.
Machine Bureaucracy Influencing Delta’s Business Operations Today
As stated, Delta’s current structure should be considered a machine bureaucracy using the criterion offered by Mintzberg. T
he company has nearly 80, 000.00 employees worldwide with its strategic apex (world headquarters) based in Atlanta, Georgia
Delta’s machine bureaucracy characteristics
This international airline fits the mold of a machine bureaucracy in that important decisions regarding operations, staffing and finances are made entirely at the strategic apex while day to day operations are controlled by managers.
Characteristic of a machine bureaucracy, there exist a number of standardized procedures for different employee groups, such as the pilots, the flight attendants and ground support staff.
The management structure at Delta is vertical in nature as is the case in most all machine bureaucracies. Communication channels are also vertical in nature, meaning information flows from the top of the strategic apex down to its operating core.
Benefits of a machine bureaucracy at Delta
In many ways, Delta benefits from having a very structured environment with strong strategic apex. Some of these benefits include:
- Strong executive team, comprised of professionals with years of experience in the airline industry;
- A size advantage, dominating the marketplace, particularly in the southern part of the United States, the Midwestern region and along the entire east coast corridor.
- Reduced labor costs as Delta’s leadership has been mostly successful in keeping different workgroups from organizing;
- A modern, fuel efficient fleet compared to other U.S. based carriers and;
- A strong customer base primarily linked to Delta through its frequent flyer program.
There are other strengths connected to Delta’s machine bureaucracy, including its very strong domestic and international network, with major hubs in New York, Cincinnati, Salt Lake City, Minneapolis, Detroit and of course Atlanta, its worldwide headquarters. International hubs include Amsterdam and Tokyo, giving the company a European and Asian base of operations.
Delta’s sheer size, with a fleet of nearly 700 aircraft flying to 318 destinations in 59 countries across six continents certainly gives this organization advantages over its competitors, such as American Airlines, United Airlines and to a lesser degree, Southwest Airlines.
Important decisions being made at its strategic apex and communicated downward can in some ways be an advantage, as Delta has a structured process for imparting information to employees vertically. The top down structure at Delta also helps the company maintain clear lines of reporting, with information flowing vertically.
Negative consequences of machine bureaucracy at Delta
The machine bureaucracy at Delta does not come without some negative consequences. Paradoxically, just as the structured environment at the company that has helped Delta also causes harm.
Some of the negatives connected to the machine bureaucracy at Delta include:
- An inability to act quickly regarding changes in the marketplace impacting air travel;
- High staff turnover at the front-line worker level, causing the company to be in a near constant hiring mode
- Tension between station managers and headquarters;
- Cultural differences due to the company’s global presence;
- A perceived disconnect between executives and lower level workers and;
- Ongoing problems with workgroups who have reported feeling financially exploited by management in pursuit of profit.
Delta’s sheer size presents problems for the carrier as it is particularly difficult to manage such a large organization with such a large employee base, scattered across six continents.
Suggestions for Delta’s Future
The airline industry is highly competitive and highly volatile. Attempting to work towards a long term growth model for the future, Delta merged with Northwest Airlines in 2008. While the end result was one less airline to contend with [Northwest folded into Delta] it also created a much larger “mega-carrier”, which hardens the bureaucratic model. It is important to note that Delta is a profitable company in its current form, posting a quarterly profit of eighty-million dollars for the first quarter of 2013.
At this moment, things appear to be “working” at Delta. However, because of the volatility of the airline industry, primarily due to a fluctuating fuel prices, coupled with recent mergers of carriers such as American Airlines and U.S. Air, the current operating model and structure is not a guarantee of future success. What follows are two practical suggestions for Delta in order for the airline to stay on a glide scope of profitability, stability and growth.
Suggestions for Delta
Grow the future. Delta should continue to look for opportunities to grow, primarily through acquisitions and mergers. The number of available airlines to acquire however is relatively small as there are only a handful of carriers left in the United States. One company to consider is Alaska Airlines, a regional airline that operates primarily along the western coast of the United States and Alaska. Delta has a relatively small presence on the west coast when compared to United Airlines and American Airlines.
Re-think communications. Delta has serious problems with its employee groups, particularly the flight attendants and ground support workers who may want to unionize. Many of the Delta employees in cities such as Minneapolis and Detroit are former Northwest Airlines employees, who were represented by collective bargaining units pre-merger. One of the main complaints against Delta by workers, which also happens to be fueling unionization efforts, is a “top down” communication style employed by the company. One option for Delta to consider is a more open communication style, allowing the free flow of information up and down the company’s current vertical structure.
There is some evidence this approach is effective, as witnessed by the turn around at Continental Airlines [now merged with United Airlines]. At Continental, the company’s chief executive at the time, Gordon Bethune, made drastic changes to how employees communicated with one another and helped to take an airline that was failing to success.
Is Delta Too Big
Delta Airlines has grown from a tiny crop dusting carrier in the southern United States to a globally competitive, profitable airline. Starting off as a simple structure, the company quickly transformed into a machine bureaucracy. The company has much strength, fueled by its competitive route structure, both domestically and internationally. Delta’s sheer size and dominance in the southern and eastern regions of the United States alone makes it difficult for smaller carriers and start-ups to gain entry.
Delta’s positives can also act as negatives. The company’s largeness makes communications with employee groups challenging. Additionally, front line employees have reported a “disconnect” between how workers are understood and treated by the management team.
Delta’s machine bureaucracy appears to have served it well since the 1940’s. The company however, needs to remain vigilant against problems with labor while also assessing its response to ongoing consolidation in the airline industry. Delta must continue to find ways to grow.
© 2014 John M