Posted: May 24th, 2022
SW Airline Case Study
There are several Human Resources systems at place within Southwest Airlines that allow the company to maintain competitive advantage over its rivals. These systems work efficiently primarily thanks to the unique corporate culture nurtured by SW’s founder Herb Kelleher and his supporters. SW promotes values such as teamwork, dedication, cost-consciousness, hard work, respect, optimism, humor, care, and workforce dynamics. The management put in place numerous motivational programs that are continuously revised and improved. HR systems at SW are employee- and union-friendly, whereas many of its rivals have been trying to minimize or completely eliminate unions. The systems also encourage productivity, allowing, for instance, the pilots to fly longer hours and also cut costs overall. The system that allows comparative advantage at SW starts with its leadership. Kelleher treats the employees as if they are his equals and friends, staying up with mechanics until early morning or joining parties with them. Kelleher has turned this attitude into company culture, making sure that others in leadership positions follow suit. The positive, family-like attitude is emphasized everywhere at SW. For instance, the Human Resources has been renamed “The People Department.” Just like some managers are adopting the term “coaching” instead of “managing” (because the latter is associated with control), at SW employees are not called “resources” (thus classifying them alongside non-human resources) but “people.” The HR theory today emphasizes that people are more comfortable and exhibit greater motivation when they feel that they are not being controlled or treated as “things.” This is certainly an advantage since SW’s many rivals treat employees in authoritarian fashion. SW also put a recruitment system that allows additional advantage. Those recruited to SW join the company because they believe in SW spirit and principles rather than for money alone. Some employees gave up offers with higher wages from rival airline companies and took jobs at SW. Those who do not believe in SW principles are not recruited even if the have top quality qualifications such a pilot whose application was rejected for being rude to a receptionist.
2. SW, in my opinion, sets a positive example for a number of reasons. It is a company that is both employee- and customer-oriented and at the same time is commercially successful. Although a relative late-comer to the industry, SW today is the largest commercial airline company in the U.S. SW is built upon the most effective and efficient HR principles. For example, SW’s organizational development is fully consistent with Edgar Huse’s suggestion that an organization should be “competent by increasing both its effectiveness and its efficiently, with heavy emphasis on reducing the conflict, actual or potential, between organizational requirements and human wants and/or needs” (PP “Organizational Development”). And SW is not only union-friendly, but also set up a “catastrophe fund” funded by voluntary donations to help employees who may be in urgent need and the budget to finance parties and celebrations. These policies are all in place to avoid any conflict with human needs and wants, encouraging instead the employees to feel themselves at home in a family. In treating its employees, SW meets the human workforce needs identified by Maslow, successfully use McGregor’s theory Y and eliminate his theory X, and maintain Herzberg’s extrinsic and intrinsic factors positively. SW also provides exemplary customer service, encouraging its employees to help the customers voluntarily. And while SW offers excellent services to both employees and customers, the company still manages to offer reduced fare, simplified fare, and additional services (such as Wi-Fi on board which they began to introduce in 2010 and plan to finish by 2012). The fact that SW sets a positive example can be seen by the way the company influenced the HR systems in the industry. Also, the fact that Continental and United tried to challenge SW by copying its strategies is the testament to SW’s exemplary success.
3. Different parts of SW’s HR systems work fairly smoothly, avoiding significant conflicts with each other. That is primarily due to the spirit of teamwork the company instills on human workforce. Another reason for success in this regard is the maintenance of certain rules and principles followed by everyone: the CEO, Vice-Presidents, pilots, flight attendants, and receptionists. For example, flight attendants do not necessarily wait until people from a specific department come in and clean up the plane seats; they do the task on their own if they have to. Pilots start carrying bags if they see there is a need for that. They do not as, a general rule, avoid responsibility, which allows different parts of HR systems work together. SW also ensures teamwork that avoids conflicts between different parts by encouraging cross-departmental collaboration and training. For example, pilots participate in the recruitment process, helping to hire other pilots. SW developed a dynamic training program to ensure smooth HR management across different systems. New flight attendants go through classes where they are introduced to company history, mission, values, and its strong emphasis on teamwork, team building, and good humor. There is a program called “The Climb” that allows different employees to live as a team, with no phone or cars or outside contact, and develop new work ethic that will be incorporated into the work setting. There is also a program called “The Front-Line Program” that lets experienced employees reflect on company goals and promises and see if there is anything that needs to be done. All these programs help the HR systems at SW function together.
4. One of the weaknesses at SW in managing its workforce is relative lack of talent management. Talent management is defined as “a set of integrated organizational processes designed to attract, manage, train, develop, motivate and retain key people” (PP, “Generic TM Definitions”). SW has a comparative advantage is recruiting and training the overall workforce, but it has not put in place organizational processes that attract key people. One of the major concerns within the company and among observers in the 1990s was that Kelleher would soon retire. The concern was motivated by the fact that it was hard to see any person in management who could effectively replace Kelleher. The innovativeness of people like Steve Jobs and Bill Gates were crucial to the success of Apple and Microsoft. SW needs to build programs that attract key people who can keep the company successful because the reliance on one sole leader is a major weakness to any company. Another weakness, which is more of a challenge than a real weakness, is the company’s continuous enlargement. Initially, the company spirit in treating the workforce was developed with a small company in mind. The workforce has been growing and it is a challenge to continuously revise and improve existing HR systems to make sure that the company’s key values that ensured success in the past is not compromised by the growing workforce.
5. In the Off-Site meeting, Ann should raise two main issues: how to main the existing comparative advantage SW possesses and what to do to ensure the company’s steady success. For example, Ann may propose the means of reducing non-fuel (labor and maintenance) costs since growing number of airliners are challenging SW’s main competitive advantage: low prices. The company may use positive management-employee relationship to discuss labor-related costs, by negotiating it with both employees and unions — and do it very carefully lest company’s positive relationship with employees and unions is compromised. Ann should also raise questions about the importance of maintaining positive management-employee and employee-customer relationships because of the growing workforce. The unique advantage of SW in dealing with employees should not be compromised. Ann should stress this point because SW needs to enlarge to become more competitive vis-a-vis its rivals and also due to company’s successful performance. SW’s rivals cannot change overnight and copy SW’s strategies effectively for a long time. Meanwhile, Ann should propose strategies that would prevent the mistakes of SW’s rivals in managing human workforce.
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