Professional Documents
Culture Documents
Delix Thomas
Devesh Sharma
Ekta Sanghvi
Eeshani Nautiyal
Geostany Jose
Gia D’Cunha
About Southwest Airlines
• Originally incorporated to serve three cities in
Texas as Air Southwest on March 15, 1967, by
Rollin King and Herbert Kelleher.
• Commenced service on June 18, 1971 with 3
Boeing 737 aircrafts serving 3 cities – Dallas,
Houston, and San Antonio.
• Changed its name to Southwest Airlines.
• Its first flights were from Love Field in Dallas to
Houston and San Antonio.
Known for…
• The first and most successful low cost airline.
• The only major US air carrier that was consistently profitable
for 35 years.
• Short hops with no-frills service and a simple fare structure.
• U.S. leader in number of passengers carried annually.
• #1 in Business Week’s list “Customer Service Champs”
• Named by Fortune as the best company to work for in
America and the most admired airline company in the USA.
Vision
To have a conservative increase
growth, capitalize and cutback
schedules of other airlines. To continue
expanding conservatively in long-haul
success.
Vision Statement
To provide the most affordable,
reliable, and comfortable air
transportation in the world.
New Vision Statement
Our vision is to expand our locations both
domestic and overseas by being the
largest and most profitable airline
company to achieve both short and long-
haul carriers efficiently and with low cost.
Also to be an airline carrier that has the
most productive workforce to
guarantee the best flight possible for
each and every passenger.
Mission
• 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 give ordinary people the opportunity
to fly.
• To the employees –
We are committed to provide our Employees with equal
opportunity for learning and personal growth. Creativity
and innovation are encouraged for improving the
effectiveness of Southwest Airlines. Above all, Employees
will be provided the same concern, respect, and caring
attitude within the organization that they are expected to
share externally with every Southwest Customer.
Mission Statement
The mission of Southwest Airlines is to provide
excellent customer service and timely air travel at
an affordable price for markets in the United States.
We commit ourselves to the highest standards of
integrity in doing what is best for our passengers,
the airline industry, our employees and our
stockholders. By using the latest technology in
engine maintenance, we ensure safety,
efficiency, and keep fuel emissions below
governmental regulations. Through this mission,
we at Southwest ensure high company spirit and
long term financial prosperity.
The Southwest Effect
• The success and profitability of Southwest's business
model led to a common trend being named after the
company.
• The key concept is that when a low-fare carrier (or
any aggressive and innovative company) enters a
market, the market itself changes, and usually grows
dramatically.
• For example, when fares drop by 50% from their
historical averages, the number of new customers in
that market may not just double, but actually
quadruple, or more.
• Has been a major inspiration to other low-cost airlines,
and its business model has been repeated many times
around the world.
Goals and Objectives
• Ensure highest quality customer service in
the air or on the ground.
• Ready to help customers under any
circumstances.
• Are there to ensure that you make it from
point A to point B safely.
• To stay the most successful with low-fare,
high frequency point-to-point carrier.
The “Right” People or the “Right” Organization?
A Values-Based Organization View of Strategy
Use These to Build Core •What can we do for the customer better
Capabilities than our competitors?
Invent a Strategy That is Consistent • Given our capabilities, how can we deliver
with the Values and Uses the value (EVA) to customers in a way our
Talents & Capabilities of People/ competitors cannot easily imitate?
Organization to Compete in
New and Unusual Ways
• Senior management “manages” the values
and culture of the firm.
Senior Management’s Role
Southwest Culture
• Has been developed from the very
beginning – the firm having faced
many difficulties.
• To work hard
• To have the desire to be the best
• To be courageous, to persevere and to innovate
• To display a sense of urgency
• Adhere to the Basic Principles
• To treat others with respect
• To put others first
• Be egalitarian
• To demonstrate proactive customer service
• To embrace the SWA Family
• The Fun-LUVing Attitude:
Job
Requirements HR Outcomes
Rewards
Career Progression Performance
er utl u C/ s e ul a V Extra Effort
Match Retention
Impact Satisfaction
Person Commitment
KSA’s
Motivation
ATTITUDE
SOUTHWEST
SOUTHWEST AIRLINES
AIRLINES
EMPLOYEE
EMPLOYEE PROFILE
PROFILE
Customer Focused
Team Player
Self Motivated
Takes Initiative
Open and Flexible to Change
Sense of Humor
Takes Pride in Work
Recruitment & Selection
•Innovative Recruitment Ads – “You can have a job if you
measure up”, “it helps to be outgoing”.
•Recruitment processes focused more on attitude than on
skills.
•Team spirit was considered a must skill.
•Panel included customers too.
•Peer Hiring
•People oriented applicants with extroversion and good
sense of humour.
• The interview process is based on
examining how people have handled
various situations in their experience and
how they would address current situations.
• From these in depth interviews, the true
character of the person emerges, and the
selection team can determine the degree
of fit with the organization.
• Every hiring decision is a commitment to
the person and a statement about the
company’s culture.
Typical Ten Step Targeted Recruitment and Selection Process
1 Job Fair
Orientation/Application/Testing
2
Screening Interviews
3
4 Assessment Center (COBRA & Team Decision Exercise)
5
Final Interviews
6 Background/Reference Check
7 Pre-Employment Orientation
Job Preview/Offer
8
Med/Drug/Prework
9
Confirm Job
10
Offer
Southwest Can Choose the
Best
• Southwest received 199,200 resumes and hired 3,350 new
Employees in 2008.
• Southwest has 1,328 married couples. In other words, 2,656
Southwest Employees have spouses who also work for the
Company.
• Progressive on diversity recruitment
– Southwest Airlines was included in Hispanic Business
Magazine’s Top 60 Diversity Elite for 2007.
– Most admired companies among women
– Fortune’s “Best Companies” list
– Southwest Airlines ranked no.1 for being the Friendliest
Airlines in 2008 Times.com survey.
Training
• The purpose is not to train people to just do their jobs, but to
“color outside the lines” and to use their initiative to fill the
gaps in functions, departments, and operations to better serve
the customer.
• In the training process, the culture of involvement, action, and
customer service is reinforced.
• Leadership and various other training programs. Emphasis on
management style based on coaching and encouraging.
• Southwest uses an engaging business game for
business acumen training to their managers.
• Courses for new recruits and employees.
• Financial literacy programs have been implemented to
Southwest employees to ensure that all employees, at all
levels, understand not only the company’s business and
financial objectives but also how their individual jobs impact
the bottom line.
Promotions
• Supervisory positions are filled
internally.
• Training provided to employees for
managerial positions over six month
period.
• At the end of six month
period,procedure for 360 degree
feedback and analysis by people
department.
Compensation
• The wages and salaries of the employees are
covered by union contracts.
• For most people this means that pay is
related to seniority. This is important because
Southwest values retention and long-term
commitment to the organization.
• Pay levels are either consistent with or
slightly below the wages for various markets.
• In fact, starting rates are low relative to the
market, but they progress more rapidly than
others to desired market levels. This keeps
the salary costs in line with the low-cost
provider philosophy of the company.
• Pilots and flight attendants are paid by the “trip”.
• Southwest makes limited use of team or unit-based
incentive programs.
• There are limited variable pay programs, the most
inclusive being corporate wide profit-sharing
program.
• This program was started in 1973 and encourages
everyone to keep costs as low as possible.
• The retirement plans offer a variety of investment
options, including Southwest stock. The employees
currently hold between 9% and 10% of the
company.
• The CEO is compensated at below the median of the
market for executives in companies of similar size.
• Other senior managers are paid slightly higher
relative to the market, but they retain a smaller
portion of the company’s stock.
• The philosophy is to underpay the executives for
cash compensation but let them share in creating
greater value for the shareholders by building a
stronger, more competitive airline.
• The stock options are not discounted, and
executives have the same opportunities for stock
purchases as other employees. The emphasis is on
long-term growth and development of the
corporation.
Awards and Recognition
• There are a wide variety of both corporate and local-
unit based recognition programs.
• Example: “Heroes of the Heart” is a way to recognize
teams of individuals whose behind-the scenes work
make a major impact on customer service.
• They may be groups from maintenance, service, or
support roles. They are selected through an
extensive nomination and review process.
• They are honoured by having the group’s name
painted on an airplane for one year.
• The award ceremony is one of the major events of
the company, and many people share in the
excitement of the presentation.
• There are numerous programs to recognize and
reward individuals, teams, and entire departments for
their contributions-
5. Net income increased 83 percent to $402 million in fiscal year 2003 0.08 4 0.32
Weaknesses
1. No international flights 0.09 1 0.09
2. No segmented seating 0.03 2 0.06
3. Dependent on a single producer 0.05 2 0.10
4. Lack of exposure towards online booking agencies 0.05 2 0.10
5. Four out of five employees are members of the union 0.02 1 0.02
Opportunities
5. New technology opens the door for new products/services 0.04 3 0.12
Threats
4. Demand for air travel has dropped sharply since September 11 0.10 2 0.32
7. Increased restrictions to limit noise (including restrictions on types of aircraft 0.03 2 0.06
used and limits on a number of operations)
• Y axis
• Financial strength +4.5 +1 worst
to + 6 best Y axis: 5 + (-3) = 2
• Environmental stability -2.25 -1 best
to –6 worst
• X axis
• Industry strength +4.5 1 worst to 6
best X axis: 3 + (-2) = 1
• Competitive advantage -1.5 -1 best to -6 worst
3, 2.25
IE Matrix
• Segment Revenue EFE
IFE
• Passenger $5.4 B 3.34
3.32
• Freight $1.1 M 3.20
3.80
Strong Average Weak
High I II III
3.0 to 3.99
Grow and
Freight
Southwest
build
3.04
Medium IV V VI
1.0 to 1.99
Harvest and
Divest
Frequent,
Short,
reliable
direct routes
departures between midsize
Only
cities &
Boeing 737
aircraft
secondary
15-minute Low (base) airports
Limited gate turn- pay for all
specialization arounds employees
of tasks
Very low Limited use
prices of travel
Flexible agents
Employee High aircraft
union
contracts stock utilization
ownership
SOME OF THE IMPORTANT FACTS….
• Morris Air
Southwest Airlines purchased Morris Air and absorbed the
capital and routes into its inventory and service.
• Muse Air
Southwest acquired competitor Muse Air in 1985, which
operated McDonnell Douglas MD-80s
• ATA Airlines
Towards the end of November 2008, Southwest
announced it was buying the operating
certificate and the remaining assets of ATA
Airlines.
Failed Acquisitions
(In billions)
(in millions)
2008 2007 2006 2005 2004