Assignment 2: Diversification Strategies
“The Secret of Southwest Airlines’ Success”
BUS 508, Contemporary Business
Determine how Southwest Airlines’ corporate culture differs from other airlines:
From the time Herb Kelleher co-founded Southwest Airlines in 1971 his goal was to establish a company that cared about its employees, who would in turn care about and service the needs of their customers with pride. Southwest has created a fun-loving work environment that rewards and appreciates unique personalities and how they can enhance the customer service experience of their patrons. This is refreshing in today’s market and the main difference between Southwest and other ...view middle of the document...
As mentioned earlier, Southwest’s culture is two-fold. We have discussed the external customer service, but we must not forget about the attention given to internal customer satisfaction. Southwest employees are some of the happiest employees in Corporate America. Their retention level is higher than any other airline because they treat their people right. They allow them to become involved in the process rather than just take orders. Southwest does business in unconventional ways that allow employees to have fun on the job which makes for a stress free work environment. There is also great job flexibility. The expectation is that each person’s job includes helping their colleagues complete their tasks when necessary. Southwest believes that providing greater job flexibility improves labor productivity and a competitive advantage. An article in the Sacramento Business Journal points out that while Kelleher's, Southwest Founder and CEO, principles of fostering goodwill were all taught in kindergarten (i.e., treat people like you'd like to be treated), few companies have adopted them. Suffocating, bureaucratic corporate workplaces are still all too common. (Larson, 1997)
Analyze three (3) ways that Southwest’s unique culture has benefited the airline and its employees:
The three areas in which I think the unique culture have benefited Southwest and its employees are continuous profitability, employees have a progressive and fair work environment, and employees get to enjoy work. Southwest does a lot of little things to cut overhead so that they can maintain their low prices. For example, they only fly one model of airplane, the Boeing 737. This cuts down in repair costs and technician training costs to learn new technology. The fact that everyone works together also allows Southwest to keep overhead down versus hirer unnecessary staff to do small jobs that can be covered through cross utilization. All of these small cost saving measures and loyalty to their goal of being the low-fare provider leads to continuous profits.
Employees benefit from the stable work environment provided by Southwest as a company. Southwest does not utilize performance measurements in the traditional way used by most companies, which maintains metrics by functional accountability. Southwest believes functional accountability leads to finger pointing between departments. Southwest utilizes team metrics rather than functional. Southwest’s philosophy is share goals and shared knowledge. (Smith, 2004). Way before it was common the Southwest CEO gave his employees a sense of ownership through profit-sharing plans and stock options.
The laid back, unorthodox way of doing business at Southwest makes most employees proud to be a part of the team and go the extra mile in the name of the company. You never know what you may see or hear on a Southwest flight and this makes it fun for the passengers and the crew. The fun element of the...