Professional Documents
Culture Documents
sustainable?
1991-1993
Southwests share in the market had increased from 26% to 45%
Uniteds share fell from 38% to 30%
Continentals share also fell
Southwests success spawned a number of imitators like Kiwi,
Reno, United and Continental.
Major concern
Was southwest getting the most in competitive advantage from its
own people?
Could the competitors imitate Southwests successful HR Practices?
Background
Started flying on June18, 1971 with three Boeing 737 aircrafts
serving Dallas, Houston and San Antonio
Headquartered at Love Field in Dallas
Texas
International
Brainiff
Continental
C
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STRATEGY
Pricing Strategy
Only two fares A regular coach
fare and an off-peak fare
P
R
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F
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T
Competitive Advantage
Cost Structure
Customer
Satisfaction
Customer always
capitalised in
corporate
communications.
Employees
treated as
internal
customers
Employee
productivity
Only 81 employees
per aircraft (others
had 157 and 152)
Served an average
of 2,443 customers
per employee(others
only 795 and 840)
Use of less
congested airports
SUCCESS STORY
Profitable in everyone of the
last 21 years, a record
achieved by no other major US
airline, profitable even in the
1991-92 period when major
players were facing bankruptcy
Earned the highest returns of
any publicly traded U.S. stock
Won the Monthly Triple Crown
24 times
Won the Annual Triple Crown
thrice
1993
1994
Southwest
7.13
7.03
Continental
7.64
7.56
USAir
10.94
10.74
Leadership
Herb Kelleher
Leadership
Colleen Barrett
Leadership
Ann Rhoades
RECRUITMENT Policy
Advertisement Campaigns
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Sou
thw
spi est
ri t
TRAINING
New Hire Celebration
Designed to get new
employees enthused and
excited
Training oriented towards
customer service
The Climb
Two and a half day ropes
and outward bound
course
Attended by intact work
teams
Entire team lives together
cut-off from phones, cars
and contact with other
outside issues.
Each team develops and
action plan to insure that
their new behaviors are
TRAINING
Manager Training
Three and a half day course
on leadership, revenue
management and on how the
business works
100 percent internal
A member of the senior team
always talks openly with the
participants
Other Trainings
Two day training for front line leaders
80 hours of training per year for
supervisors
Courses include usual offering of
communication, time management and
career planning
Customer service and interpersonal
relationships also focused upon.
WORKFORCE
Salaries
Low pay in the beginning, high pay when you get seniority
Employees can bid for shifts and work hours
Pilots and Flight Attendants are paid by the trip
Average wage rate at Southwest ($44,305) lower than that of
American($45,801) and United(54,380)
Southwest employees have the flexibility to work more and earn more
Executive compensation modest
No executive stock option plan until a few years ago
No country club memberships and no company cars
Profit sharing covers all employees who have been with the firm for
over a year
Temporary workers paid salary on a pro-rata basis
Company encourages days on the field so that employees can try front
line jobs
WORKFORCE
Composition and Union
Average age of the workforce is 34 years
23 percent of the employees are minorities (10-12 percent at the
managerial level)
Women widely represented at the highest levels of the company
Low turnover
Never had a layoff or furlough
Proof of ex-employees who can be called in case of emergencies
89 percent unionized with 9 separate unions
The last walkout a decade ago
Trust and
Respect
Dedication
Equality
Family and
Fun
Cost
Consciousness
Kindness
Competitive Threat
Industry characterized by poor labor relations and
authoritarian management
Continental Airlines
Frank Lorenzo led
it to bankruptcy
Trans Airline
Carl Icahn faced
numerous strikes
Eastern Airlines
Ultimately failed
because of the
conflict
American Airlines
Flight attendants
struck in an
attempt to roll out
wages
Continental, USAir
Employee oriented
Management
Continental Lite
Emerged from its second bankruptcy in 1993 under the leadership of CEO
Bob Fergusan
Company was split into two operations
CA Lite low fare
flights for short haul
Uniteds Shuttle
Declaration of war
On July12, United had completed negotiations for an employee buyout
The former CFO replaced by a Chrysler Executive, Gerald Greenwald who
had no previous airline industry experience
Not everyone was sure of the success of the shuttle
Conclusion
SW airlines has gradually grown from a small airline
with 3 aircrafts to a major airline service
Since it is the only airline profitable after the Sep11
incident we recommend a few points:
- Expand their services
- Low pricing strategies
- Upgradation of hardware and software
- Lower operational costs by using cost saving
technology