Southwest Airlines - Essay Example

Southwest Airlines has an outstanding corporate culture that encourages all its employees to render extra services to make flying with them a satisfactory experience. DiscussionThe founder of Southwest Airlines, Mr. Herb Kelleher, attributes the airline’s success to its unique culture that is intangible and hard to imitate by its competitors. It is this spirit of competitiveness that has propelled the airline forward to continuous profits over the years. In this regard, the airline adopts the total rewards style of management that recognizes employee performance (Jenses, McMullen & Stark, 2007, p. 61). The management uses incentive plans so that it gets employee buy-in and total commitment to its corporate objectives.

The purpose of the program is to attract and retain top talent. Southwest Airlines has one of the longest hiring policies that last up to about six weeks through a series of tests and interviews to make sure that prospective employees fit into its fun culture termed as “LUV” as hiring managers to emphasize work attitudes more than work skills. Once hired, employees are expected to help keep costs down so the airline will remain profitable despite its low fares. A reason why Southwest is profitable is that its employees are very productive, using a ratio of passengers per employee (Southwest: 2,400:1, United: 1,175:1 & Continental: 1,125:1).

All employees of Southwest Airlines are eligible for its incentive plan which is profit-sharing. In fact, the firm implemented the first-ever profit-sharing plan in the entire US airline industry back in 1973, and today, employees own about 8% of total company stock (Southwest.com). At least 25% of the employee’s share in profits has to be re-invested in the company’s stock. An employee qualifies for the plan one month after starting regular employment and vests to all employees who had rendered at least 501 hours of service.

Plan accumulation starts every first day of January each year. The incentive plan is actually composed of two parts which are an employee stock option plan (ESOP) and a money-purchase contribution plan. ConclusionThe humanistic era in psychology recognized the limitations of Freudian theories on human motivation which was considered to be so reductionist and mechanistic. The current view of employee relationships is one that is holistic and has a more inclusive view of human nature. It emphasizes the uniqueness of an individual’s psychological health through personal growth, the realization of one’s potentials, and self-actualization (Capshew, 1999, p. 235). The aim of the incentive plan at Southwest Airlines is to give employees not only their tangible reward but also intangible psychological rewards such as high levels of employee engagement and more importantly, high degrees of satisfaction that motivate employees to do more.

It improves the overall morale, helps to attract key talent, and inspires key people to remain with the company.