Hofstede on Southwest Airlines - Assignment Example

 Hofstede on Southwest Airlines Table of Contents Table of Contents 1 List of Figures 1 Introduction 2 Southwest Airlines: Company Overview 2 Organisational Culture: Some Definitions 3 Hofstede’s Cultural Dimensions Theory: Concept and Components 6 Why Hofstede? 7 Analysis: Hofstede’s Lens on Southwest Culture 8 Conclusion 12 References 13 List of Figures Figure 1: Onion Diagram: Culture at Different Levels 7 Figure 2: General Behavioural Model (GBM) 8 Introduction Since the early 1980s, organisational culture has received significant academic and media attention. Several organisational behaviour and management scholars (Dartey-Baah, 2013; Nongo & Ikyanyon, 2012; Shahza et al., 2012), as well as business news media sources (Bailey, 2008; Nisen, 2013; Solomon, 2012), have argued that organisational culture is critical to organisational effectiveness and competitiveness. Organisational culture is shown to affect employee attitudes and behaviours (Jaskyte, 2010), as well as employee outcomes of commitment (Nongo & Ikyanyon, 2012), well-being (Mauno, 2010) and job satisfaction (Melnyk et al., 2010). This report analyses Southwest Airlines’ practices of fun and love. Southwest is known for its “fun” culture, where love for one another and for customers is openly discussed and exhibited (Bailey, 2008; Nisen, 2013; Solomon, 2012). Southwest founder, Herb Kelleher, emphasises the importance of organisational culture in hiring, training, and developing employees who are willing to abide by the fun and love-centred culture of the company on a daily basis (Nisen, 2013, par.4). This report examines Southwest’s fun and love cultural practices, using Hofstede’s cultural dimensions framework as the analytical lens. Southwest Airlines: Company Overview Rolling King and Herb Kelleher established Southwest Airlines (NYSE: LUV) in 1967. Southwest started operating in 1971, serving intrastate Texas cities, Dallas, Houston and San Antonio. The company achieved break even in two years because of its low-cost model and organisational culture. For the past forty years, Southwest has remained profitable, while other airlines declared losses or bankruptcy. Southwest (2013) boasts that it “continues to differentiate itself from other carriers with exemplary Customer Service delivered by nearly 46,000 Employees to more than 100 million Customers annually.” The company emphasises on LUV as its primary motivation in serving its customers. On May 2, 2011, Southwest acquired AirTran Holdings, Inc., and it currently manages AirTran Airways as a wholly-owned subsidiary. Southwest has several notable achievements. It is America’s biggest carrier in terms of originating domestic passengers boarded and, with AirTran added, it has the largest fleet of Boeing aircraft in the globe, as it serves a total of 97 routes in 41 states, the District of Columbia, the Commonwealth of Puerto Rico, and six nearby countries (Southwest, 2013). Southwest, furthermore, has “lower unit costs (adjusted for stage length), on average, than virtually all major domestic airlines and consistently has one of the best overall Customer Service records” (Southwest, 2013). The company is also consistently one of the most admired companies that employees want to work for. Moreover, Southwest is doing financially well, despite the lasting effects of the 2008 financial crisis. In 2012, Southwest gave $422 million to shareholders through buying back $400 million of common stock (around 46 million shares) and providing $22 million in dividends (Southwest, 2013). Southwest promotes corporate social responsibility. It is committed to “the triple bottom line of Performance, People, and Planet” (Southwest, 2013). Because of its successful organisational culture and continued profitability, Southwest is one of the most studied organisations in the airline industry. Organisational Culture: Some Definitions Organisational culture has diverse definitions because of different beliefs on cultures and their nature, purposes, and components. Schein (2010) believed that culture is a concept, and therefore, it is an “abstraction” (p.14). He defined culture through an anthropological perspective, where it has the following features: 1) Observable regular ways of interaction, such as language, customs, and rituals; 2) Groups norms that refer to implicit and explicit group values and standards; 3) Aspired values and principles; 4) Formal philosophy; 5) Rules; 6) Climate, including physical layout and acceptable interactions; 7) Embedded skills; 8) Habits of thinking; 9) Shared meanings; 10) “Root metaphors”; and 11) Formal rituals and events (Schein, 2010, pp.15-16). These concepts and forces relate to or describe culture. Furthermore, Schein (2010) argued that there are three levels of culture, where levels pertain to what is visible to observers. These levels are: 1) Artefacts- They refer to what people can see and feel, such as language, emotional displays, myths and stories, and observed rituals and customs; 2) “Espoused beliefs and values”- They pertain to ideals, goals, values, ideologies, and rationalisations; and 3) “Basic underlying assumptions”- They include unconscious beliefs and values that drive feelings, perceptions, and behaviours (Schein, 2010, p.24). This definition answers more what organisational culture has, which are artefacts, basic assumptions, and promoted values and beliefs, versus what an organisational culture is. Hofstede (2001) presented a similar anthropological definition of culture, although he distilled it as a mental process. He defined culture as “the collective programming of the mind that distinguishes the members of one group or category of people from another” (p.393). See Figure 1 for the “Onion Diagram” of culture. It is a shortened definition of Kluckholm’s (1951) definition of culture, where he states that culture has “patterned ways of thinking, feeling, and reacting, acquired and transmitted mainly by symbols, constituting distinctive achievements of human groups...” (p.86, as cited in Hofstede, 2001, p.9). Hofstede (2001) described organisational culture as a construct without consensus definition among scholars. He argued that many scholars would agree that organisational cultures are “holistic, historically influenced, related to anthropological concepts, socially constructed, soft, and relatively stable, [in other words] difficult to change” (Hofstede, 2001, p.393). His definition mixes perspectives on what organisational culture has and what it is. Figure 1: Onion Diagram: Culture at Different Levels Source: Hofstede (2001, p.11) Wu (2008) proposed a rethink of organisational culture. He offered a general behavioural model (GBM) that has the following components. See Figure 2: GBM. This model offers two definitions of organisational cultures: “organizational cultures are individual choices aggregated into critical masses of people and over time” (Wu, 2008: 2538) and “organizational cultures consist of interactions among critical masses of people with different preferences and past choices that have the capacity to wield critical influences upon each other, both in the short and long terms, within and beyond the confines of organizations and resource constraints” (Wu, 2008: 2540). The first definition emphasises choices, while the second focuses on people and their interactions. These definitions are different from Hofstede’s and Schein’s because the former consider long and short-term changes to culture through differences in choices and group interactions. All these definitions emphasise, nonetheless, that organisational cultures can have lasting effects on people’s attitudes, behaviours, and outcomes, and have soft components. Figure 2: General Behavioural Model (GBM) Source: Wu (2008, p.2536) Hofstede’s Cultural Dimensions Theory: Concept and Components Hofstede’s cultural typology is possibly the most widely discussed and studied cultural lens, when it comes to describing and predicting cross-cultural differences in reward and performance studies (Flynn and Saladin, 2006; Javidan and Carl, 2004). Hofstede determined four dimensions of national culture, specifically masculinity versus femininity, individualism versus collectivism, power distance, and uncertainty avoidance, that are all considered important in illustrating cross-national differences in reward–performance values, preferences, and behaviours (Chiang & Birtch, 2012, p.543). The first dimension is masculinity versus femininity. Masculine societies value assertiveness, achievement, and material success, while feminine societies prioritise welfare, relationships, caring, compassion, and quality of life more, as well as “soft work culture” and social orientation (Chiang & Birtch, 2012, p.544). The second cultural dimension is individualism versus collectivism. Individualists prefer financial over non-financial outcomes, short-term and transactional changes, and individual ability and contributions, while collectivists are relationship-based in terms of exchange and values (Chiang & Birtch, 2012, p.545). The third dimension is power distance (PD) orientation. PD signifies power gaps, conservatism, and preserving the status quo (Chiang & Birtch, 2012, p.547). High PD cultures have superiors that possess higher financial privilege and higher status than the usual egalitarian status in low PD cultures (Chiang & Birtch, 2012, p.547). High PD cultures emphasise centralisation, and structured and closely managed task performance, and they are not significantly concerned with relationship- and people-oriented performance (Chiang & Birtch, 2012, p.547). Low PD cultures promote self-reliance and move away from extreme supervision; individuals feel more accountable for their roles and responsibilities and are willing to give and to receive feedback, as well as open to discussions and negotiations (Chiang & Birtch, 2012, p.548). The final cultural dimension is uncertainty avoidance. Uncertainty avoidance (UA) pertains to the level where rules and procedures are used to reduce the uncertainty of future events (Hofstede as cited in Chiang & Birtch, 2012, p.548). Strong UA cultures are more risk averse than weak UA cultures. Weak UA organisations promote freedom and breaking norms, while strong UA firms discourage freedom and creativity (Chiang & Birtch, 2012, p.549). These dimensions have proven to be relevant in determining incentive preferences and differences in work values, attitudes, and behaviours (Chiang & Birtch, 2012, p.543). Hofstede’s cultural dimensions theory has limitations, nevertheless. These limitations pertain to the methodological and sampling weaknesses of the original basis of his theory. For instance, his sampling included IBM employees, and these employees cannot represent all cultures and industries. Furthermore, his unit of analysis is the nation. The nation cannot represent sub-cultures that are cultural groups on their own. Moreover, the original data is gathered from the 1960s to 1970s. This sampling might be outdated given the widespread social changes happening now. Why Hofstede? Hofstede’s theory is chosen because it would be interesting to explore his cultural dimensions on Southwest. His framework can provide a different, comprehensive perspective because it does more than identifying artefacts, promoted beliefs and values, and underlying assumptions, as Schein does. Schein’s model is also limited to cultural groups, without considering institutional and national systems and forces (Weber & Glynn, 2006, p.1640). Hofstede explores different aspects of organisational culture that includes what it is and what it has. Furthermore, Hofstede’s cultural dimensions already match that of Harrison and Stokes (1992) four cultural orientations: 1) power orientation; 2) role orientation; (3) task orientation and 4) person orientation (as cited in Schein, 2010, p.166). Power orientation cultures can be described as having high power distance because of deference to powerful leaders. Role orientation culture can be argued as having high risk avoidance because of submission to rules. Achievement orientation culture can be related to masculine cultures because of the need for competitiveness and achievement of the latter. Person orientation can be described as having high feminine and collectivistic values because of existence of mutual trust across organisational levels. Moreover, Hofstede’s theory, despite methodological and sampling weaknesses, has been tested by recent studies to be valid and reliable (Chiang & Birtch, 2012; Dartey-Baah, 2013). It offers a viable and nuanced lens for analysing Southwest’s organisational culture. Analysis: Hofstede’s Lens on Southwest Culture Using Hofstede’s analysis, Southwest Airlines is analysed as having a feminine culture, but without necessarily sacrificing masculine elements, low power distance, weak uncertainty avoidance, and it hires, trains, and rewards people with collectivistic attitudes and practices. These dimensions are important to the fun and love climate of the organisation that employees and customers alike feel and experience. First, Southwest has a feminine culture because it emphasises welfare, relationships, caring, compassion, and quality of life. Muduli and Kaura (2011) analysed the strategies of Southwest and they noted the company’s fun-centred culture: “There was emphasis on fun for employees and travellers. Ground and in-flight employees were encouraged to be creative in the way they delivered required announcements to the passengers” (p.116). Southwest is feminine in culture because employees believe in their role in making customers happy through providing reliable and consistent high-quality customer service. Furthermore, employees feel that they are treasured and respected in the company and have good relationships with one another and with their supervisors and executives. Quick (1992) highlighted the role of Herb Kelleher in promoting a culture that values the happiness and welfare of employees, even over customers. He believed that happy employees do their jobs well, so they produce happy customers too. In this regard, Southwest has a feminine culture with soft human resource management features. A weakness of this culture is that some employees may not be competitive in terms of productivity, and indeed, the company has lower productivity per person compared to other airliners. These employees may not take their work seriously, if they focus too much on the fun side of their work. Southwest, nevertheless, does not overlook its masculine side. It is competitive through its low-cost business model. Quick (1992), Bailey (2008), Nisen (2013), and Solomon (2012) underlined the impact of its cost-leadership strategy on Southwest’s competitiveness. An article summarises some of the competitive features of Southwest: Frequent trips, direct flights rather than Hub and Spoke system, not assigning any seat to passengers, family work culture, flying only Boeing 737 jets, choosing un-congested airports, selling tickets through internet made the process quick, efficient and convenient for customers. (Muduli & Kaura, 2011, p.117). The operations model contributes to the efficiency of the company. The management is also distinctive for its strategies in handling the long-term welfare of the company. Bailey (2008) commended Kelly’s strategic thinking: Mr. Kelly’s financial acumen is all well and good. A fuel-cost hedging plan he devised in 1999 has saved Southwest $3 billion. And at current oil prices, it will save an additional $2.4 billion over the next few years. That essentially is what kept the company out of deep trouble in recent years. Through efficient operations, financial and operations management strategies, and strong focus on employees and customers, Southwest has managed to deliver profitable results to stakeholders for the past four decades, while preventing layoffs, whereas other airliners have terminated hundreds of employees. Hence, Southwest uses effective business strategies that align its HRM strategies with organisational strategies. Aside from balanced femininity and masculinity, Southwest displays low power distance. The company is known for promoting self-reliance and autonomous activities that make work fun because it is empowering. Employees practice joint-decision making in solving problems, such as saving fuel and choosing fun gimmicks for their customers (Muduli & Kaura, 2011, p.116). Southwest managers and executives, in addition, do not practice authoritarianism. Instead, like Herb, they espouse fun and family values, wherein they have regular amusing and recreational activities. For instance, CEO Gary C. Kelly once dressed as Edna Turnblad, the colourful mother character from the musical “Hairspray” (Bailey, 2008). Instead of being a strict humourless CEO, Kelly continues Herb’s funny-man torch as an organisational leader and manager. Southwest has weak uncertainty avoidance too. Managers encourage employees to solve problems on their own, even if this can result to risks. As a result, employees go the extra mile for their customers, even to the point of paying a ticket for a distraught customer who needed to immediately go to another state because his son was killed (Muduli & Kaura, 2011, p.116). This example shows that Southwest employees take risks and have freedom to perform their jobs the best they see fit. Bailey (2008) added: The premise behind all this is that a little fun translates into a lot of productivity. Southwest, after pay cuts at other airlines, has the industry’s highest wages. But because of efficient work habits, measured in how much it spends to fly a passenger a given distance, its costs are the lowest among big airlines. Employees are not afraid to do what they feel is right, if customers will be happy as a result. The happier they are with their autonomy and relations with peers and superiors, the happier they are in serving customers. Finally, Southwest hires, trains, and rewards people with collectivistic attitudes and practices. These people value relationships and team spirit. One article explains how Southwest ensures that it has people with the right Southwest mindset: Southwest Airlines looks for the people who can think in terms of we rather than me. One way the company assesses these service inclinations is by interviewing potential flight attendants in groups to see how they interact with each other. (Muduli & Kaura, 2011, p.116). These people know how to and love dealing with other people. Another example comes from Kelleher: The People Department (name given to Human resource Department by Southwest) went to Herb Kelleher, one day and said, ‘We have interviewed 34 people for this ramp agent’s position, and we are getting a little worried about the time and effort an cost that is going into it’. And he said if you have to interview 154 people to get the right person, do it.” (Muduli & Kaura, 2011, p.117). Southwest management believes in selecting the best people that fit its culture. This way, these people are prepared to live by this culture, since it is already part of their personalities. At the same time, Southwest employees do not mind job flexibility. Pilots are willing to help other employees to ensure a timely flight. This is one of the reasons why Southwest trips are frequently on time. Moreover, Southwest rewards creativity and innovation. It has yearly awards for people who promote the Southwest culture. Hence, Southwest has an organisational culture that ensures fun and love are present, not only between customers and employees, but between employees and co-workers and between employees and managers through its diverse fun and family-oriented cultural practices. Conclusion Southwest has an admirable organisational culture that can be defined as high-feminine, high-collectivism, low-uncertainty-avoidance, and low-power distance. These aspects of its culture reflect fun and loving sentiments and interactions that are part of the work climate and environment in Southwest. From the CEO to first-rank employees, they strive to live by their code, a code of teamwork, innovation, fun, and family values. In order to continuously promote these values, especially in current profit-oriented times, Southwest is recommended to conduct the following actions: 1) Regularly assess cultural climate and determine and reinforce the relationship between culture and organisational strategy (Jaskyte, 2010; Katzenbach, Steffen, & Kronley, 2012); 2) Determine cultural problems or dysfunctions and to properly address them; 3) Continuously find ways of celebrating and rewarding fun and family-loving employees; and 4) Report cultural milestones to all stakeholders, so that they are aware of the dynamics and financial and non-financial effects of Southwest’s organisational culture. These recommendations should result to greater creativity in enhancing fun and loving practices in the company, so that LUV will continuously provide lasting rewarding employment for its workers, consistent financial performance for shareholders, and satisfying and enjoyable experiences for customers. References Bailey, J. (2008, February 13). Southwest. Way Southwest. The New York Times. Retrieved from http://www.nytimes.com/2008/02/13/business/13southwest.html?pagewanted=all&_r=0 Chiang, F.F.T., & Birtch, T.A. (2012). The performance implications of financial and non-financial rewards: An Asian Nordic comparison. Journal of Management Studies, 49(3), 538-570. Dartey-Baah, K. (2013). The cultural approach to the management of the international human resource: An analysis of Hofstede's cultural dimensions. International Journal of Business Administration, 4(2), 39-45. Flynn, B. B., & Saladin, B. (2006). Relevance of Baldridge constructs in an international context: a study of national culture. Journal of Operations Management, 24, 583–603. Jackson, W.T., & Jackson, M.J. (2009). Southwest Airlines: The next fight begins. Journal of the International Academy for Case Studies, 15(8), 59-70. Jaskyte, K. (2010). An exploratory examination of correlates of organizational culture. Administration in Social Work, 34(5), 423-441. Javidan, M., & Carl, D. E. (2004). East meets west: A cross-cultural comparison of charismatic leadership among Canadian and Iranian executives. Journal of Management Studies, 41, 665–91. Hofstede, G. (2001). Culture's consequences: Comparing values, behaviors, institutions and organizations across nations (2nd ed.). Thousand Oaks, CA: SAGE. Katzenbach, J.R., Steffen, I., & Kronley, C. (2012). Cultural change that sticks. Harvard Business Review, 90(7/8), 110-117. Mauno, S. (2010). Effects of work-family culture on employee well-being: Exploring moderator effects in a longitudinal sample. European Journal of Work and Organizational Psychology, 19(6), 675-695. Melnyk, B.M., Fineout-Overholt, E., Giggleman, M., & Cruz, R. (2010). Correlates among cognitive beliefs, EBP implementation, organizational culture, cohesion and job satisfaction in evidence-based practice mentors from a community hospital system. Nursing Outlook, 58(6), 301-308. Muduli, A., & Kaura, V. (2011). Southwest Airlines success: A case study analysis. BVIMR Management Edge, 4(2), 115-118. Nisen, M. (2013, January 16). Southwest's founder explains why there's no secret behind its great culture. Business Insider. Retrieved from http://www.businessinsider.com/southwests-founder-discusses-its-culture-2013-1 Nongo, E.S., & Ikyanyon, D.N. (2012). The influence of corporate culture on employee commitment to the organization. International Journal of Business & Management, 7(22), 21-28. Quick, J.C. (1992). Crafting an organizational culture: Herb's hand at Southwest Airlines. Organizational Dynamics, 21(2), 45-56. Schein, E.H. (2010). Organizational culture and leadership (4th ed.). San Francisco, CA: John Wiley & Sons. Shahzad, F., Luqman, R.A., Khan, A.R., & Shabbir, L. (2012). Impact of organizational culture on organizational performance: An overview. Interdisciplinary Journal of Contemporary Research in Business, 3(9), 975-985. Solomon, S. (2012, April 3). What you can learn from Southwest Airlines’ culture. The Washington Post. Retrieved from http://articles.washingtonpost.com/2012-04-03/business/35453344_1_culture-core-values-customers Southwest Airlines Co. (2013). Company profile. Retrieved from http://southwest.investorroom.com/?int=GFOOTER-ABOUT-INVESTOR Weber, K., & Glynn, M.A. (2006). Making sense with institutions: Context, thought and action in Karl Weick’s theory. Organization Studies, 27(11), 1639–1660. Wu, J.W. (2008). A general behavior model and new definitions of organizational cultures. Journal of Socio-Economics, 37(6), 2535-2545. Read More