Southwest Airlines Case Study

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Southwest Airlines Case Study

  1. 1. SOUTHWEST AIRLINES Group 7: Curti Leda; Javadinia Azari Morteza; Maatz Bettina‐Sophie; Sandrone Claudia; Vestrucci Margherita; Bandini Arianna; Cominelli Marta
  2. 2. Agenda I. Brief summary of the case II. Discussion of theoretical concepts a) Culture b) Leadership and values c) Recruiting, training, workforce III. Questions & Answers Q1. The organizational culture and the cultural values Q2. The creation of value for employees Q3. Capturing value in the marketplace Q4. Generalizability of the model I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  3. 3. I. Brief summary of the case I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers This is an example text Go ahead and replace it with your own text. Go ahead and replace it with your own textSouthwest Airline was founded in 18 June1971 – In Dallas Texas. Southwest “ The people who work here don’t think of Southwest as a business. They think of it as a crusade.” Herb Kelleher, CEO at SWA, one of the 10 less paid CEO in Dallas Southwest refers to it self as the “LOVE” (LUV) airline
  4. 4. II. Discussion of theoretical concepts I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers a) Culture b) Leadership and values c) Recruiting, training, workforce
  5. 5. a) What is Organizational Culture ? “A pattern of shared basic assumptions invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration" that have worked well enough to be considered valid and therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems” Edgar Schein I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  6. 6. Organizational Culture Organizational Identity • Customer Service • Togetherness • Shared Values Social System Stability • Non confirms stucture • Internal Loyality Sence – Making Device • Equality / Coherence • Transparecy • Emphasize Teamwork Collective Commitment • We Vs I • 2Cs I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  7. 7. Typology of organizational value Meritocractic Endorsed Discouraged Values Values Performance Authority rewards Teamwork Participation Commitment Affiliation Equal or Decentralised Power Equitable I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  8. 8. Southwest Strategy Revolutionary strategy Low costs – Low fares Frequent flight Short – Haul trips No frills On-time performance Southwest's culture, which underlines employees as the airline's "first customers" and passengers as the second, it means employees are considered as an internal customers. I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  9. 9. How SWA treats his employees High context culture • Social trust, agreement by general trust Particularism • Pilots & Flight attendants may earn less per hour but more flexibility to work more hours (payment by trip) • No incentives  avoidance to create envy among employees • Most people take a salary cut to join Southwest ! Collectivism • Use of “we” • 481 couples working for SWA: if they are talking about family they really mean it Specific • More public space, directness, openness, but not separation between work and private life Meritocratic • No nepotism policy; Contract paid on basis of Seniority • Below market wages offered to clericals & management positions I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  10. 10. b) Leadership and values The Leader – Herb Kelleher Characteristics • Friendly CEO • He treats employees as internal customers • He is part of the crew • He believes in individuality expression • He wants employees feel part of the SWA I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  11. 11. «The difference between Southwest and other carriers is the effort Herbert gets out of the people who work for him » TRANSACTIONAL LEADER • Constantly interaction with employees • Relaxed management style • Use contingent rewards to motivate employees • He puts himself on the same level of other employees I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  12. 12. “Work is important … don’t spoil it with seriousness” (H. Kelleher) “There is an unwritten rule that, if you don’t want to stay all night drinking and talking, then you stay the hell away from Herb” (a friend of H. Kelleher) “You don’t have to surrender your individuality to work for Southwest Airlines” (H. Kelleher)
  13. 13. How to foster motivation • Parties and celebrations contest • Culture Committee • Reward System Employee productivity Motivation OpportunityAbility I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  14. 14. The cut-cost policy Take a look at some data… I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers Costs per Available Seat-Mile (1993) Southwest Airlines (cent) United Airlines (cent) Wages & Benefits 2,4 3,5 Fuel & oil 1,1 1,1 Aircraft ownership 0,7 0,8 Aircraft maintenance 0,6 0,3 Commissions on ticket sales 0,5 1 Advertising 0,2 0,2 Food & beverage 0 0,5 Other 1,7 3,1 Total 7,2 10,5
  15. 15. c) Recruiting, training and workforce “You are your culture and your culture is you.” Southwest Airlines Promotion of informal teamwork & help out your colleagues Trainings in order to foster teamwork within the company We-Feeling (big family without obvious envy) Integrating customers into relevant processes I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  16. 16. Organizational Socialisation Theory (3 phases of socialisation) In practice at SWA Anticipatory Socialisation Long application process + selective recruiting policy Encounter All new hired employees get a training to be prepared for their new jobs Change and acquisition Trainings in general as important form of 2-way communication & special trainings (e.g. “The Climb” and “The Front-Line Forum”) Process of learning values, norms & required behavior to be allowed to be part of the organization I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  17. 17. III. Questions & Answers Q1. The organizational culture and the cultural values Q2. The creation of value for employees Q3. Capturing value in the marketplace Q4. Generalizability of the model I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  18. 18. Q1. What are the organizational culture and the key cultural values at Southwest Airline? Key Values Family Equality Dedication Fun Customer Services “ Team Spirit. “ “ We’re all one “ rather than “ We’re us and you are you” “ Sense of pride, Warmth, Friendliness “ I love to come each day (…) “ Let’s us have fun” “ How many airline do you know that send birthday and valentine's day card (…) to customers. “ I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  19. 19. Q2. How does SWA create value for employees? “leadership implies influencing employees to voluntarily pursue organizational goals” Collectivism use of “WE” Decentralized Parties and Culture power contest committee • Performance rewards • Teamwork • Participation • Commitment • Affiliation I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  20. 20. Q3. How does SWA capture value in the market place? Two important components A) CUSTOMER SATISFACTION B) COMPETITIVE ADVANTAGE Reaching customer satisfaction  gaining a relevant position in the marketplace. How is it possible? Thanks to the huge differentiation of SWA in the market, considering competitors. There are continual efforts to preserve the values that brought SWA to its current position [Triple Crown won 24 times] I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  21. 21. A) CUSTOMER SATISFACTION • Simple strategy: Happy staff will be followed by customer satisfaction and then profits • Customers are integrated into internal processes : - Interviews for flight attendants - Feeling of being relevant and important • Effective advertising campaign “make Love, not war” (Lovefield Airport) What does SWA offer to customers? I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  22. 22. B) COMPETITIVE ADVANTAGE “Southwest program is the greatest value because it gives you free travel faster, for much less money, without giving up great service” (Kelleher) The industry of airline characterized by notoriously poor labor relations and authoritarian management. SWA is different:  Trust  Non-adversarial relations  Open sharing of information  High productivity COMPETITIVE ADVANTAGE I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers
  23. 23. Q4. Is Southwest Air’s model generalizable? I. Brief Summary of the case II. Discussion of theoretical concepts III. Questions & Answers LEADERSHIP VALUES RECRUITING & TRAINING LOW COST STRATEGY copied Southwest Airlines budget airline business model.
  24. 24. Thank you for your attention crew … !

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