Southwest Airlines Case Study: Using Human Resources for Competitive Advantage O’Reilly, C., & Pfeffer, C. (1995). Southwest Airlines: Using Human Resources for Competitive Advantage. Stanford, CA: Graduate School of Business, Stanford University. This posting is about the Stanford University, Graduate School of Business Case study focusing on Southwest Airlines as an example of leveraging human resources into a distinct competitive advantage. Certainly, we’ve all hear lip service paid to the importance of people and probably, most of us, even view it as a cliché and just words without any substance. This is certainly the case more often than not but Southwest Airlines appears to be an example of a company that has done so and proved that a company’s personality and intellectual capital, its people, can indeed be leveraged into a distinct competitive advantage. As anyone familiar with human resource departments can attest, human resource issues are very important to businesses and typically consume a large amount of a company’s time and energy. The question is: how to leverage a company’s intellectual assets (people)? A little background from the case study In 1994, a “Major Showdown in the airline industry” was shaping up involving Southwest, United and Continental Airlines. The other airlines (Southwest’s’ competitors) had been hurt by competition from Southwest and decided to try their hands at competing head-to-head with Southwest in the type of low fare, no frill, air service that Southwest had become known for. It didn’t work out as well for them as it had for Southwest. Continental Lite, could not match the efficiency of Southwest and their CEO was purportedly not particularly people-oriented. United’s “Shuttle” was plagued by unhappy employees and an abundance of intracompany rivalries and conflicts. So where does Southwest’s completive advantage lie? Southwest believes their competitive advantage lies mainly with their people and how they are managed and not so much with their pricing structure. The leverage lies with the people! Among other things that were not so easy for the other airlines to imitate, Southwest encouraged their employees to deliver great customer service and have fun (which often go hand-on-hand). Not to be underestimated is the fact that Southwest’s workforce is very productive. Their turnaround time (arrival at gate to next departure) is about 15 minutes, as compared to an industry average of about 35 minutes. Also Southwest accomplishes this with great efficiency; they use fewer people at gate and a smaller ground crew. Harold Sirkin, an airline specialist with BCG said, “Southwest works because people pull together to do what they need to get a plane turned around. That is part of the Southwest culture. And if it means the pilots need to load bags, they’ll do it.” Southwest averages nearly forty percent fewer employees dedicated to an aircraft than industry average (81 vs. 130), a testament to their productiv.

1. Southwest Airlines Case Study: Using Human Resources for
Competitive Advantage
O’Reilly, C., & Pfeffer, C. (1995). Southwest Airlines: Using
Human Resources for Competitive Advantage. Stanford, CA:
Graduate School of Business, Stanford University.
This posting is about the Stanford University, Graduate School
of Business Case study focusing on Southwest Airlines as an
example of leveraging human resources into a distinct
competitive advantage. Certainly, we’ve all hear lip service
paid to the importance of people and probably, most of us, even
view it as a cliché and just words without any substance. This is
certainly the case more often than not but Southwest Airlines
appears to be an example of a company that has done so and
proved that a company’s personality and intellectual capital, its
people, can indeed be leveraged into a distinct competitive
advantage.
As anyone familiar with human resource departments can attest,
human resource issues are very important to businesses and
typically consume a large amount of a company’s time and
energy. The question is: how to leverage a company’s
intellectual assets (people)?
A little background from the case study
In 1994, a “Major Showdown in the airline industry” was
shaping up involving Southwest, United and Continental
Airlines. The other airlines (Southwest’s’ competitors) had been
hurt by competition from Southwest and decided to try their
hands at competing head-to-head with Southwest in the type of
low fare, no frill, air service that Southwest had become known
for. It didn’t work out as well for them as it had for Southwest.
Continental Lite, could not match the efficiency of Southwest
and their CEO was purportedly not particularly people-oriented.
United’s “Shuttle” was plagued by unhappy employees and an
abundance of intracompany rivalries and conflicts.
So where does Southwest’s completive advantage lie?

2. Southwest believes their competitive advantage lies mainly with
their people and how they are managed and not so much with
their pricing structure. The leverage lies with the people!
Among other things that were not so easy for the other airlines
to imitate, Southwest encouraged their employees to deliver
great customer service and have fun (which often go hand-on-
hand).
Not to be underestimated is the fact that Southwest’s workforce
is very productive. Their turnaround time (arrival at gate to next
departure) is about 15 minutes, as compared to an industry
average of about 35 minutes. Also Southwest accomplishes this
with great efficiency; they use fewer people at gate and a
smaller ground crew. Harold Sirkin, an airline specialist with
BCG said, “Southwest works because people pull together to do
what they need to get a plane turned around. That is part of the
Southwest culture. And if it means the pilots need to load bags,
they’ll do it.” Southwest averages nearly forty percent fewer
employees dedicated to an aircraft than industry average (81 vs.
130), a testament to their productivity. This means they need a
smaller load factor (about 55%) on their planes to break even.
A little evidence of Southwest’s success
When Southwest started, in 1971 with 198 people, Continental
Airlines used every dirty trick in the book, including political,
regulatory, litigious, etc. to make sure that Southwest did not
get off the ground. An example is the Wright amendment
(named after James Wright, then Speaker of the House). This
amendment ostensibly was meant to encourage traffic through
the new Dallas-Fort Worth hub (where Continental flew
through) but effectively made the logistics of airline routes in
and out of Love Field (where Southwest flew through) very
difficult. This appeared to have backfired and made Southwest
“mad” and even more motivated to compete and win; a culture
which appears to continue into their competitive culture that
persists today.
Before Southwest entered the Louisville-Chicago market, 8,000
people daily flew this route, after Southwest entered, 26,000

3. people flew this route daily. Most of the excess used to drive it.
Southwest, with their strategy of low costs, low fares and
frequent flights, was able to effectively create new customers
that didn’t exist before.
For the period 1972-1992, Southwest stock earned the highest
returns of any publicly-trade U.S. stock—a compounded return
of over 21,000%.
Corporate Culture
Southwest’s “Work is important…don’t spoil it with
seriousness” attitude may stem from CEO, Herb Kelleher’s,
personality and relaxed management style. As well, he
“…somehow managed to get union people to identify personally
with his company.” He said “our essential difference is minds,
hearts, spirits, and souls.” In a letter to employees he also
quoted Winston Churchill: “Success is never final.” Kelleher
said “Indeed success must be earned over and over again or it
disappears. I am betting on your minds, your hearts, your souls,
and your spirits to continue our success.”
Southwest’s human resources department is named the “people
department” and stresses the two “C’s”” compassion and
common sense. They tell people to “break the rules” if they
need to.
The “Southwest Spirit” appears to be: creative, not too uptight
(loose), strong on teamwork, positive, a bit non-conformist, a
little outrageous and extroverted.
What lessons can be drawn?
· The leverage that corporate culture and the human resource
can provide for strategic advantage and change cannot and
should not be underestimated. However, it must also be
“articulated, practiced and reinforced.” The employees who are
the face of the company must also be bought in heart and mind,
and actually do and say what the company values.
· It is good practice to put one’s energy in figuring out how to
do better every day and how to achieve continuous improvement
and not to waste too much energy worrying about the
competition.

4. · An intracompany family spirit and atmosphere of trust as well
as meaningful interpersonal connections go a long way to
fostering motivation and a sense of job satisfaction. And have
no doubt, this is directly related to the bottom line.
· Growing too fast can hurt the “family” feel of a company.
QUESTIONS
1. Identify Southwest success and failures over the past decade.
2. How has the Southwest philosophy impacted the world’s
airline industry.
3. Identify some future trends
Calculating Stream Gradient
A stream's gradient is the slope of a stream, or its change in
elevation over a given horizontal distance. More simply, the
gradient is the distance the stream falls vertically from one
point on the landscape to another. To learn more about the
gradient and how to calculate it, watch this Youtube video.
Calculating Gradient
Streams are like lines that flow across the landscape, and a
stream's gradient is the slope of the flowing stream. To
calculate the stream gradient, you simply identify the change in
elevation of a stream and divide this change in elevation by the
measured horizontal distance over which the stream has flowed.
Schematic Stream Examples
Below are two schematic drawings of streams flowing across
two contour lines (changes in elevation) from Point A to Point
B. Calculate the gradients of each of these streams and add the
answer to the attached answer worksheet.Example A
The contour lines are the vertical lines and the stream is the line

5. running between A and B. The contour lines tell you the change
in elevation. Every contour line crossed is one contour interval
of elevation. In this example, the contour interval is 25 m and
two contour lines are crossed.
The horizontal distance is based on the map scale. The map
scale in this example is 1:15000, which means that every 1 cm
on the map is 15,000 cm in real life. In this example, the length
of the line running between A and B on the map is 2 cm.
Answer the following questions on the attached answer
worksheet.
a) What is the change in elevation in meters between Points A
and B?
b) What is the horizontal distance between Points A and B in
kilometers?
c) The stream gradient is the change in elevation divided by the
horizontal distance. What is the stream gradient in m/km?
Example B
In this example the contour interval is 10 m and the map scale is
1:5000. The length of the line running from Point A to Point B
is 2 cm.
Answer the following questions on the attached answer
worksheet.
a) What is the change in elevation in meters between Points A
and B?
b) What is the horizontal distance between Points A and B in
kilometers?
c) The stream gradient is the change in elevation divided by the
horizontal distance. What is the stream gradient in m/km?
Philipp, Mississippi Quadrangle Map
The image below is a section of a contour (elevation) map
entitled the Philipp, Mississippi Quadrangle map. The river
depicted is a section of the Tallahatchie River just north of the
town of Philipp. The distance between the "mile 210" and "mile

6. 215" points following the wide meandering oxbow is 8.25
miles. The distance between these two points following the
Pecan Point Cutoff, which is an artificial cutoff that has
shortened the length of the stream, is 5.05 miles. Using this
information and what you know about stream gradients, answer
the following questions on the attached answer worksheet.
a) How many miles is saved by the cutoff?
b) If the elevation is 119 ft at mile 215 and 116 ft at mile 210,
the gradient between these two points using the oxbow meander
is how many ft/mi?
c) What is the gradient using the Pecan Point Cutoff?
Where do you get your water? Over the course of the next two
days I want you to record every drop of water you drink. Where
does it come from. Be sure to identify the water you drink as
bottled water, tap water, filtered tap water, water fountain
water, etc. Keep a log of all the water you drink (including any
water you may use in cooking) and record that log on the
attached worksheet.
Write a short 2 to 3 paragraph reflective essay answering the
following questions:
1. Based on your past experience, does this consumption pattern
represent your normal water usage? If it does not, what is your
normal water usage pattern?
2. Where do you get most of the water you drink on a daily
basis?
3. Were you suddenly required to cut your water consumption in
half (due to increased cost or limited supply), how would you
cope? In what ways would you have to adjust your behavior to
accommodate this change and would it be difficult for you?
Each paragraph should average 4 to 5 full sentences. I'm

7. looking for a complete, well thought out reflective essay here.
Be thorough and descriptive in your essay and be sure to draw
on the materials covered in the course directly. For full points,
you should not simply write an opinion piece - you must back
up your opinions with facts derived from your readings and
assignments.
Date
Type of Water
Quantity
Type of Water (tap, bottled, etc.)
Use (drinking, cooking, etc.)

12. We are lucky to live in a part of the country where freshwater is
relatively abundant, but this is not the case in much of
American West or in much of the rest of the world. In
California and other parts of the American West, water usage is
highly regulated by state and local governments. Learn more
about California water rights by reading the information on the
following web page:

13. California State Water Resources Control Board
Drawing on the information you just read and what you have
learned about aquifers, access to fresh water, and the
importance of water conservation in arid regions, answer the
following questions:
1. Should the government regulate access to water on private
land? Why or why not? Be sure to draw on your knowledge of
streams and groundwater systems to answer this question.
2. Under what conditions should use of water by individuals be
limited? Given the limited availability of water in some parts
of the country, should Indiana citizens take steps to conserve
our water so that it can be made available to those who live in
the West?
Be sure to cite empirical evidence derived from the website,
your textbook, and the other materials in this course when
stating your case. Back up each of your opinions with sound
reasons derived from the scientific literature.
Monitor your classmates' conversations and post at least two
responses to the comments left by others.
Floodplains always flood. Sometimes this flooding occurs
regularly over short periods of time and sometimes it occurs
very rarely over periods of hundreds of years, but floodplains
always flood. Currently large numbers of people live in flood
prone areas and many businesses and industries line the banks
of streams. For this discussion topic, I want you to think about
some of the examples of major floods that have occurred in your
lifetime (Google this if you can't think of any) and then answer
the following questions:
· Should people live in floodplains and other flood prone zones
(e.g., flood prone areas along the coast)? What are the risks
involved with living in these areas and should tax dollars go to
help victims of floods get back on their feet?
In your responses to your classmates use your knowledge of

14. flood prevention and adjustment strategies to discuss when
living in floodplains may be safe and when it should be
avoided.
Be sure to cite empirical evidence derived from your textbook
and the other materials in this course when stating your case.
Back up each of your opinions with sound reasons derived from
the scientific literature.