Successful Airlines - Case Study Example

SERVICE PROFIT CHAIN- SOUTHWEST AIRLINES SERVICE PROFIT CHAIN- SOUTHWEST AIRLINES The service profit chain was created by Harvard researchers in the 90s and basically aimed at establishing relationship between internal growth and quality and how it’s ultimately translates into delivery of superior customer value. The theory relates several variables like profitability, customer loyalty, and employee satisfaction, loyalty, and productivity and strategically linking them on the basis of the value that they are aimed at delivering (L. Heskett & O. Jones et al., 2008). The service profit chain establishes that profitability and growth is a result of customer loyalty and repeated sales. Customer loyalty is generated when the employees are satisfied enough to feel in sync with the organizations’ goals and philosophy delivering the best value they can. Productive and satisfied employees are a result of favorable organizational policies and internal quality management. Thus, it is important to maintain employee satisfaction through means that enable and stimulate them to give their best to their work and ultimately the customer. The positive relation between favorable organizational environment and policies with the growth and productivity of the business is the gist of the service chain model. Relating employee commitment to customer satisfaction is what drives southwest airlines to become one of the most successful airlines in the world. Southwest airlines are leading American airlines that offer affordable and convenient air travel for frequent travelers. Its headquarters are located in Dallas US, and the immense success of the airlines is contributed to its excellent customer service, ease of travelling process and quality travel image. This paper will shed light on two key aspects of the service chain model, employee satisfaction and customer satisfaction. This will give a clearer view regarding how the focus upon these two translates into the success of the airlines today. EMPLOYEE SATISFACTION The company realizes that the employees and customers are the driving force of the business and since one influences the other, they make it their priority to keep the HR practices the best in the business world. looking at the mission statement of southwest airlines one can decipher the level of importance it gives to its people: “The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. To instill these attributes of ‘warmth, pride and company spirit’, the company takes a number of steps to make sure that they are motivated and given an ideal work environment so that their satisfaction can be translated towards the ultimate consumers. In the publication ‘southwest cares’, the CEO expressed their aims for their employees by saying that the company is committed towards providing their employees with a stable work environment that gives them equal opportunity to grow and learn (Southwest Airlines, 2014). They are encourages to be innovative so that it improves the effectiveness of the airlines and most importantly, each employee is treated with the same respect and care that the ultimate customers are expected to be treated with. In another speech the CEO also disclosed the company’s view that employees are the first customers. A southwest airline offers affordable and convenient air travel for frequent travellers. Since it is low cost, it does not offer as many services on board as any other airlines would. This brings us to the question that how to they manage to be so successful even without it. This is because they have focused on the intangible aspects like employee pride, customer service enhancement that require nothing more than extremely satisfied employees. Its human psychology to look and act happy when one is satisfied. Acting upon that, southwest does seemingly minor acts that make the employees feel like an important part of the organization. Some examples include sending cards to its 34000 employees on their birthdays, employment anniversaries, Christmas etc. they hold informal contests for fun like chili cook-off, Halloween costume competition etc. (Nelson, 2014). Being dedicated towards greening and the use of environment friendly practices within the organization also makes the employees feel like they are a part of a good cause. Apart from competitive pay scales, southwest also offer the employees basic benefits packages to its permanent and temporary employees. Apart from being low-cost, southwest brands itself as being employee driven. Applying motivation tactics to retain employees and enabling them to be innovative and swift in their productivity level. For example, the airline co-ordination team is in sync with the organizational goal of quick off-loading of passengers and boarding of new ones having reached a new place. This helps save the company’s resources as well as keeps the customers happy by being prompt. The team works enthusiastically to keep within the time allocation of 20 minutes for the off-loading of the entire plane’s passengers so that new ones can be boarded. If the employees are not satisfied, their level of enthusiasm is also bound to be low, making them inefficient at work. The organization applies the McGregor’s’ theory of employee Y for its employees and manages them to keep them happy and dedicated so that they are able to give their 100% to their work. Leadership is one of the key drivers of such motivation. The top level management of the company is dedicated towards Keeping in touch with the employees and the customers and often goes onboard flights to interact with them. Rated as one the best places to work in the United States, southwest airlines has the high employee satisfaction levels cultivated by the management. Treating employees like a part of one big family enables them to be at ease at their jobs and dedicate themselves. The headquarters of southwest airlines are filled with pictures that show every level of the management mingling in get-togethers for a charitable cause or just an organizations event. This decentralized culture that makes every level of the hierarchy feel as valued as the other, is very effective in generating employee satisfaction. CUSTOMER SERVICE: Rollin King and Herb Kelleher, the two founders of southwest airlines had a simple strategy when they started off with the idea of low cost airlines. They believed: “If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline”. (Advancebusinessconsulting.com, 2014) This belief of the founders became a part of the overall business strategy of southwest airlines for the future times to come. Being a low cost airline, the airlines has been doing exceptionally well throughout the most testing of times too. This is attributed to the strong emphasis on customer service and creation of customer value. Whether it is pleasant staff, flight punctuality, check-in procedure, baggage allowance and collection or boarding time, southwest airlines surpasses all other airlines in the provision of ease and time saving. Where other airlines are busy charging extra for every extra bag, southwest allows two free bags per person. Baggage collection at destination is made swift because the airlines realize the need of their customers to be quick and prompt in every process. Proactive representatives are ever ready to answer any customer query or question and they are trained to say what the customers would like to hear. Trying to understand their viewpoint and not being hesitant to apologize on the airline behalf have earned great reviews for the southwest airlines. The employees are also given the authority to make certain acceptable changes or exceptions in the name of customer service. For example, a soldier who was being deployed someplace for 6 months was allowed to have his family sit with him at the bearding area giving them some more time to spend together. Having no class division in the airline allows the whole boarding process to be swift as well saving customer time. Customer loyalty is essential for return on investment. Customer loyalty is generated when the customer is offered a value that he would like to be associated with repeatedly. Offering bonus miles, pleasant staff and superior customer service are the attributes that generate sustainable customer loyalty for southwest airlines. CONCLUSION The focus on employee satisfaction is evident from the many examples given. The current success of the airlines is greatly attributed to the employee dedication towards customer service and their work. Being made to feel like an important part of the organization incentivizes good performance and the employees make the organization’s values their own. Southwest airlines is successful due to the amount of footfall that is able to generate for its flights thus, it means that the customers do derive a superior value from this airlines that others do not offer. To top off low-fares and quality air travel with superior customer value has enabled southwest airlines to be one of the best faring businesses in the airline industry. REFERENCES: L. Heskett, J. L. H., O. Jones, T., W. Loveman, G., Sasser, Jr., W. E. & A. Schlesinger, L. (2008). Putting the Service-Profit Chain to Work. [online] Retrieved from: http://hbr.org/2008/07/putting-the-service-profit-chain-to-work/ar/1 [Accessed: 4 Apr 2014]. Nelson, B. (2014). Motivation Matters: Southwest Employees LUV Their Jobs | Corporate Meetings content from MeetingsNet. [online] Retrieved from: http://meetingsnet.com/corporate-meetings/motivation-matters-southwest-employees-luv-their-jobs [Accessed: 4 Apr 2014]. Southwest Airlines. (2014). [online] Retrieved from: http://www.southwest.com/assets/pdfs/corporate-commitments/southwestcares.pdf [Accessed: 4 Apr 2014]. Advancebusinessconsulting.com. (2014). The Rise of Southwest Airlines. [online] Retrieved from: http://www.advancebusinessconsulting.com/advance!/strategic-alignment/strategic-alignment-business-cases/the-rise-of-southwest-airlines.aspx [Accessed: 4 Apr 2014]. Read More