South West Airlines - Change in Leadership

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South West Airlines - Change in Leadership

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South West Airlines - Change in Leadership

  1. 1. An Airline in Trouble? Presented by: Anuprabha D Binny Singh Prapti Agrawal Shachi Goyal T. Sandhya
  2. 2. Introduction  Southwest Airlines  Change in CEO  Implications of the change
  3. 3. Change In Leadership  In 2001Herb Kelleher stepped down as CEO and President of SW Airlines.  James Parker became the new CEO
  4. 4. Parker v/s Kelleher • KELLEHER oFlamboyant and fun loving attitude oGreat communication and negotiation skills oHigh on extraversion oPromoted shared identity and values in the company oIconic Status oGreat motivational power
  5. 5.  PARKER oReserved oStaid oGood negotiation skills oPoor communication skills oLess motivational power
  6. 6. ANALYSIS Theories Of Leadership • Behavioral model of leadership- Kelleher, a perfect example of the model • Contingency model Casual Variables Group performance Contingency Variables Group atmosphere Task structure Position
  7. 7. Continued… Based On Contingency Model  Kelleher score high on the three variables.  Parker score low on these variables
  8. 8.  Leader – Member Exchange Theory oKelleher did not believed in “in- grouping and out-grouping”. oLess interaction with out-group by Parker
  9. 9.  Contemporary Model 1. Transactional model 2. Charismatic model o Kelleher, a combination of both models o Parker belongs to Transactional model
  10. 10.  Transformational Leadership Model o Kelleher possessed all the three variables o Parker possessed only Intellectual stimulation variable
  11. 11. Recommendation  Gradual change in leadership  Selection of the successor 1-2 years before the retirement of Kelleher
  12. 12. Change in Culture  Kelleher’s time ◦ People oriented ◦ Informal ◦ Nurturing ◦ No distinct level of hierarchy ◦ Flexible ◦ No employee restlessness
  13. 13.  Parker’s time ◦ Lack of communication between management and employees ◦ Formal ◦ Lack of flexibility ◦ Conflict with labor unions on working conditions and pay. ◦ Employee began to disassociate themselves with the culture
  14. 14. Analysis Types of organization culture Clan culture Entrepreneurial culture Bureaucratic culture Market culture Flexible Stable Internal External
  15. 15. Analysis  In Southwest airlines they had Clan Culture  On basis of performance Southwest had a Strong Culture oManagers and employees share common values and methods of doing business.  There was a shift towards Market Culture
  16. 16. Recommendation  Cultural committees should work more actively  Programs to encourage interaction between employees at all levels.  Greater part of senior management in socializing with the employees.
  17. 17. Motivation Under Kelleher • Employees did not mind doing work out of there sphere. • Employees went out of their way to improve customer service • Sense of belongingness in the company
  18. 18. Under Parker  Union unhappy with work and pay  Demanded remuneration for “extra work”  Flight attendants felt secondary to pilots
  19. 19. What Went Wrong?  Motivation and lack of it.  Southwest employees drew motivation from Kelleher.  No Longer Industry Outsiders.
  20. 20. How is Motivation Important  The willingness to exert high levels of effort towards organizational goals conditioned by the effort’s ability to satisfy some individual need.  The Motivation Process NEEDS DRIVE INCENTIVE
  21. 21. Theories Of Motivation  Herzberg’s Theory
  22. 22. Equity Theories  Equity  Inequity Person’s Outcome Person’s Input Other’s Outcome Other's Input Person’s Outcome Person’s Input Other’s Outcome Other's Input Person’s Outcome Person’s Input Other’s Outcome Other's Input
  23. 23. Recommendations  Parker should connect with his subordinates.  Learn from Kelleher( e.g. watch his videos).  Informal meets within the organization- interaction.
  24. 24. Customer relations  Post 9/11 security measures took a toll on first-come-first-serve seating  Refusal to take ticketing enquiries over e-mail
  25. 25. Analysis  First-come-first-serve seating a perceived benefit for the customer.  Lightly staffed airport systems resulted in delays in purchasing tickets. Not accepting email enquiries caused wastage of time.
  26. 26. Recommendations  Incorporating a system to make seating more structured.  Utilizing staff in the best possible way to ensure minimum delays in ticketing.  Accepting email enquiries.
  27. 27. Rising Cost  Rising fuel prices  Early retirement plan accepted by more than thousand employees. Expenditure on recruitment.  Higher labor cost as a proportion of operating cost  Hedging position due to expire in 2005
  28. 28. Analysis  Cost was a big competitive advantage  But it was losing its cost advantage and also the market to other low cost airlines.
  29. 29. Recommendations  Needs to adapt to new costs and strategize its future policies.
  30. 30. Rising Competition  JetBlue and Air Tran- 2 main competitors  Jet blue offered better facilities like more legroom, comfortable leather seats, set back television sets and free internet  Had best record for punctuality and baggage handling  It was a non union airline
  31. 31. Analysis  Because of increase in number of competitors in the airline industry and better services being provided by the other market players SW airlines was losing its market share.
  32. 32. Recommendations  Update itself with market trend and improve on its facilities to retain its old customers and attract new ones  Improve its customer services like baggage handling, boarding on time  Regular feedback from customers
  33. 33. Can Kelly Replace Kelleher?  2004 : Gary Kelly joined as new CEO  Kelly would be compared to Parker not Kelleher  Kelly should learn from Parker’s mistakes.
  34. 34. THANK YOU

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