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Richard Branson: People Power -- the Engine of Any Business

The Virgin Group's founder shares how he created a winning company culture.

Good people are crucial to business success. Finding them, managing them, inspiring them and then holding onto them are among the most important challenges a good business leader faces. How you deal with these matters often determines the long- term success and growth of your business.

What is a company but a collection of people? Take an airline -- the 747 it flies is the same as a rival’s 747. The interiors are usually pretty similar, and there is often only a slight difference in the entertainment and food. What sets one airline apart from its peers are its crew and their attitude toward passengers. Our Virgin airline crews are smiling, cheerful and pleased to help, which leaves our passengers wanting to fly with us again.

It is no surprise that Virgin America, which flies within the United States, constantly sweeps the travel awards for service and quality. Its planes are new, with great interiors and entertainment; but above all, the great service of its crews is what wins so many plaudits.

People are your key assets. On the front lines of business, they can make or break a company. A true sense of pride in the business makes all the difference, as I constantly remind our managers and other budding entrepreneurs.

Your people need to be led well. A good leader must know the team, its strengths and weaknesses; socializing and listening to the team is key. One main reason people leave a job is that they are not listened to. They feel frustrated. It is rarely just about money.

Be aware that a bad leader can destroy a business very quickly. In small businesses this is easily apparent. On my island of Necker in the Caribbean, we had a general manager who tried to change the way things were done. He discouraged the staff from drinking with our guests. This soured the atmosphere fast. We had to step in to replace the manager and restore staff morale and the sense of management’s trust in them, which had been broken.

We’ve also started some of our most successful businesses after a pitch from one of our people. Virgin Blue, for instance, our Australian airline, was the brainchild of Brett Godfrey, who had been working for Virgin in Brussels.

He came to me with his business plan on a beer mat -- outlining the start-up of a low-cost carrier in Australia to take on Qantas and Ansett in their domestic market. In the last 10 years Brett has expanded Blue and its sister airlines to the United States, New Zealand, Thailand and, soon, South Africa.

In other cases, we backed an outside team when we were sufficiently impressed by them to give them brand support and the space to go build the new business themselves. Virgin Active, our health club chain, is a good example. Matthew Bucknall and Frank Reed came to me with the idea of a family-friendly health and fitness club in 1999. They had set up and sold a chain in the United Kingdom in the 1990s and wanted to do it again with the Virgin brand on the door.

We liked the idea and the management team. We backed the rollout in the U.K., and within two years were offered the opportunity to rescue a chain in South Africa. The Active team jumped at the chance, and we have not looked back since. We have more than 90 clubs in South Africa and another 100 in the U.K., Italy, Spain and Portugal.

Trust is a key facet of any business, but how you deal with being let down once can also contribute to success. Are you willing to give people a second chance?

When I was running Virgin Records, a member of the talent-scouting team was stealing and selling boxes of records to local secondhand shops. Tipped off, I called him out on it. He admitted everything. Rather than fire him, I gave him a severe warning and a second chance. Everyone messes up sometimes, I told him, and I said I expected him to learn from his mistake and get back to doing what he did best -- finding artists. He went on to discover Culture Club, one of our biggest selling artists of the 1980s.

We all slip up at some stage in our careers. I did. When I was just a teenager, I fell foul of the customs and excise people as I was trying to bring records into the U.K. I was given a fine, a second chance and have tried to make the most of it ever since. I think this has made me much more accepting and forgiving of people’s mistakes.

So many companies compare themselves to family units that the word is sorely overused in modern business. However, I really believe that Virgin’s sense of family spirit and belonging has kept it going over 40 years.

When the business was smaller, we had legendary parties at my house near Oxford, England. We set up a fairground with tents full of entertainment for the staff. As we grew, the party turned into two parties and, pretty soon, there were weekend parties just to make sure everyone was invited. By the end they were weeklong parties, and at that point the neighbors stepped in and we had to stop.

But we had established the culture -- one built around people. People are the lifeblood of any company; they need to be looked after and celebrated every now and then.

The author is an Entrepreneur contributor. The opinions expressed are those of the writer.

Richard Branson is the founder of Virgin Group, which consists of more than 400 companies around the world including Virgin Atlantic, Virgin America and Virgin Mobile. He is the author of six books including his latest, Like a Virgin: Secrets They Won't Teach You at Business School (Portfolio Trade, 2012).
 
Questions from readers will be answered by Richard Branson in future columns. Please include your name and country when you send your question to BransonQuestions@Entrepreneur.com.
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