Winning Americas Airline Industry through Successful People - Case Study Example

Winning America’s Airline Industry through Successful People Introduction Southwest Airlines, since its foundation, exercised the power of endorsement to ‘inform’ and ‘attract’ its target customers about the quality customer service and low fares of the company (Lauer, 2010). This has been carried with the application of exceptional promotions loaded with wits and optimistic model of marketing. Southwest Airlines began in 1972 its first marketing operation with a television ad showing a good-looking female flight attendant (Box & Byus, 2009). Southwest Airlines joined the airlines industry with an aggressive pricing strategy with the intention of gaining the biggest achievable capacity at the lowest feasible cost (ibid, p. 21). However, the company does not only boast a highly competitive pricing strategy, but also a premium people management approach that provided the company enduring success. Competitive Advantage through People Management Southwest’s most powerful organizational competency—the ‘secret ingredient’ that makes it so distinctive—is its ability to build and sustained high performance relationships among managers, employees, unions, and suppliers. These relationships are characterized by shared goals, shared knowledge, and mutual respect (Gittell, 2005, 52). To operate, airlines require physical resources, such as airplanes, airstrip, pilots, cabin crew, etc. These physical resources can be accessed by numerous companies in the marketplace; hence it is hard to develop them as a sustainable competitive advantage. Even availability of unprocessed or capital resources, before a great entry barrier, is more attainable due to the growth of international markets (Lovelock & Wright, 2002). However, it is the intangible assets that sustainable competitive advantage rests. Accrued experience or knowledge throughout the years, or referred to as corporate culture, is very hard to imitate (Parker, 2007). Companies like Apple, Coca-Cola, and General Electric rise from a venture of time and effort. These are springs of competitive advantage. The task is to determine the factors that strengthen this competitive advantage and the way toward sustainability (Parker, 2007). In fact, it is not the resources, regardless of how inimitable or intangible they are, that best generate competitive advantage; the solution toward sustainable competitive advantage is the way these resources are used (Gittell, 2005). Simply, the failure or success of a company relies on how the people within it utilize these resources. Basically, the competitive advantage of a company is its people. The quality of management, the manner in which an organization is managed, resulted in the booming of Southwest Airlines. It is constantly mentioned in books and journals that people management is the most vital resource of an organization. Making sure that people have the motivation, capacity, and knowledge to accomplish the task assigned to them is the mission of the management of Southwest Airlines (Gittell, 2005). This implies that human resources activities, appropriately viewed, cannot be relegated to managerial jobs, but can and should achieve a strategic importance (Parker, 2007). It is through people management that an organization will attain a poorer or greater level of strategy execution, and a poorer or greater profit level. If the general management of an organization is incapable of giving the appropriate strategic importance to the management of people, the organization will fail to position itself as one of the most successful companies in its industry. It will only be another company, with inferior or superior profitability, depending on the period’s economic condition and irrespective of the strength of its management (Parker, 2007). To effectively allocate the appropriate strategic importance to the management of people, company elites should be informed of the financial effect that various types of human resources management can inflict on the company (Smith, 2004). Southwest Airlines is an excellent case in point in joint or shared problem-solving and people management even prior to the use of facilitating technology. Aside from the competitive people management approach of Southwest Airlines, even with having to cope unexpectedly with being the ‘most highly unionized airline in a highly unionized industry’ (Belobaba, Odoni, & Barnhart, 2009, 277), with majority of other airlines having weak conflict management strategy and employee relation, the company also succeeds with their corporate culture. The company boasts zero layoffs for three decades (Smith, 2004). Southwest Airlines underwent an extensive development in what indicators to employ in assessing the performance of employees and the management. They discovered in their initial efforts the mechanism frequently to be inefficient: people used up more time assessing and blaming than resolving issues (Belobaba et al., 2009). Establishing these ‘customer solution-based function-spanning’ (Lovelock & Wright, 2002, 81) objectives serves an important function in encouraging people to carry out problem solving tasks collectively and concentrate collaboratively on the problems instead of independent work. Consequently, people actually start to realize how hard each other’s tasks are and the issues concerned and accordingly put extra effort to collaborative work. Only afterwards that employee performance can be placed in the appropriate context (Lovelock & Wright, 2002). If not, people can easily believe that they are being assessed independently which can lead to their improvement of their own area to the detriment of the entire process alongside producing a slight motivation to conceal difficulties (Parker, 2007) instead of productively determining the problems. Developing Southwest Airlines’s Competitive Advantage According to the mission and vision of Southwest Airlines, “We are committed to provide our employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest customer” (Parker, 2007, 226). It is the ‘people’ that make the company the most successful low cost carrier in America (Belobaba et al., 2009). The people of Southwest Airlines and Herb Keller have implemented a productive principle of family organization; the company’s rate of employee turnover is the lowest in the airline industry (Smith, 2004). As stated by Herb Kelleher, the origin of the corporate culture of Southwest Airlines was formed in 1971, the initial period of the company’s operation (ibid, p. 2). The company was experiencing problems in its cash flow in its initial operation. The management and Kelleher confronted the problem of either employee layoffs or airplane selling to save resources in order for the company to fulfill their temporary debts (Box & Byus, 2009). Kelleher convened the company’s ground service employees and informed them of the financial difficulties. He assigned a task to the ground service employees, which is to lessen the ‘turnaround time at the airport gate from 55 to 15 minutes, (Dempsey, 1999, 454)’ thus, boosting the profitability of the airplanes. The ground service employees accepted the task and completed the task. Kelleher accomplished his task in the mission by not discharging employees. Throughout the initial decade of operation, the company was mainly in a survival mission (Dempsey, 1999). The focus on the management of people began in the 1980s (Box & Byus, 2009). Southwest Airlines, according to Herb Kelleher, began putting emphasis on people as individuals and recognizing them as important resources of the company. The management and Kelleher stress a laid-back tolerant corporate approach that grants Southwest people broad operational freedom (Belobaba et al., 2009). The corporate culture of Southwest Airlines, which puts emphasis on employees as the ‘first customers’ of the company, has been vital to its success (Smith, 2004, 2). The company aims to provide a pleasurable and quality experience to all customers. Some of the gimmicks are (Smith, 2004, 2): ‘(1) the flight attendants are liable to say anything over the telecom; (2) The flight attendants often run humorous contests with the passengers, including offering a free-round trip anywhere Southwest flies to the first passenger providing socks with holes.’ After Kelleher was informed that tasks on the graveyard shift could not take part in the outside activities of the company, Southwest conducted a daybreak barbecue where some pilots and Kelleher worked as cooks for the picnic. The company’s corporate culture has changed over time from a setting that was unique and founded on America’s Southwestern portion to a culture of collective objectives, mutual respect, and common knowledge for a company with roughly 30,000 employees (Smith, 2004, 2). Ingenuity is stressed as well particularly when it concerns finding reprieve in tense and demanding tasks. At Southwest’s corporate workplaces, personnel have been permitted to carry out tasks in sleeping gears for a day (Smith, 2004). Relaxing sofas are placed all over the corporate offices for unplanned assemblies (ibid, p. 2). Job descriptions, in numerous organizations, directly delineate responsibilities between offices and personnel (Parker, 2007). The expectation of the company is that each employee’s task involves supporting coworkers in their job whenever required. By giving better job flexibility, the company supposes that it enhances employee performance and gains them a competitive advantage (Parker, 2007). Many American companies have adopted organized ‘quality management plans’ and they were unsuccessful for they were ‘plans of the month’ (Smith, 2004, 4). This occurrence supports the fact that intangible resources, like human resources, are inimitable, and thus a great source of sustainable competitive advantage. Conclusions Putting into effect quality service all over an organization is not the outcome of an organized plan, but necessitates a modification in the manner regular tasks is carried out. The process of quality people management is perfectly integrated into the regular culture or operations of Southwest Airlines. The company’s management successfully established the factors for productive employee performance. Hence, quality is deep-rooted. In general, Southwest Airlines is quite successful in incorporating the value of quality in its entire business plan and its regular operations. References Belobaba, P., Odoni, A. & Barnhart, C. (2009). The Global Airline Industry. UK: Wiley. Box, T. & Byus, K. (2009). “Southwest Airlines 2007,” Journal of the International Academy for Case Studies, 15(1), 21+ Dempsey, P. (1999). Airport Planning & Development Handbook: A Global Survey. New York: McGraw-Hill Professional. Doganis, R. (2001). The Airline Business in the Twenty-First Century. London: Routledge. Gittell, J.H. (2005). The Southwest Airlines Way: Using the Power of Relationships to Achieve High Performance. New York: McGraw Hill. Lauer, C. (2010). Southwest Airlines. Santa Barbara, California: Greenwood. Lovelock, C.H. & Wright, L. (2002). Principles of service marketing and management. New York: Prentice Hall. Parker, J. (2007). Do the Right Thing: How Dedicated Employees Create Loyal Customers and Large Profits. Upper Saddle, New Jersey: Pearson Prentice Hall. Smith, G. (2004). “An evaluation of the corporate culture of Southwest Airlines,” Measuring Business Excellence, 8(4), 26-33. Read More