Organizational Strategy at Southwest Airlines

Business Strategy – BAD 4013 – SUMMER 1999 Case Study Southwest Airlines I. Strategic Profile and Case Analysis Purpose 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. Twenty-seven years ago, Rolling King, owner of floundering commuter airline, and Herb Kelleher, King’s lawyer, got together and decided to start a different kind of airline that would provide a short-haul, low-fair, high-frequency, point-to-point service in the United States. The company began service on June 18, 1971 with flights between Dallas, Houston, and San Antonio (“The Golden Triangle” as Herb called it). Southwest Airlines is the fourth

Southwest Airlines is dedicated to incorporating all servant leadership principles throughout their organization. Accordingly, their mission statement is clear and concise it evidently exemplifies all principles and acknowledges a servant-led organization. Their mission statement embraces their commitment to serve the highest quality of customer service through a sense of warmth, friendliness, individual pride, and company spirit (Southwest, 2014). Therefore, through Southwest’s’ mission statement it makes it explicitly apparent that they seek to listen and commit to the growth of their people. Southwest empathizes with their employees because they are dedicated to providing

Southwest Airlines’ strong organizational culture is reflected in its mission as shown in its website: “dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.” Southwest is a company that not only excels in customer service and profitability but also in employee development. Its organizational commitment is not reduce to the organization; it is actually expand it to an ongoing relationship with the employees where they have the opportunity to express their ideas,

Since its conception in 1971 by founders Rollin King and Herb Kelleher, Southwest Airlines has stood by their mission statement. The simplistic belief of "If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline (Southwest Airlines, 2009)” has served Southwest in becoming a major competitor in the airline industry. It is now the fourth largest

Since its creation in 1967, Southwest Airlines has established itself as a serious contender in the airline industry. The company grew from a small Texan company to a multimillion dollar airline giant over the past 50 years. Over the years, Southwest has seen continued growth and profit, and continues to outperform other airlines. “Sustained rapid growth has seen Southwest overtake rivals such as American and United to become the USA's top carrier of domestic passengers" stated Southwest Chief Executive Officer Gary Kelly.(Mutzabaugh, 2017). The company's success, however, can be attributed to many things, especially its organizational culture.

The type of corporate culture Southwest Airlines (Southwest) exhibits is a high-performance culture. According to Thompson et al. (2016) one of the traits of high-performance company is a “can-do” spirit (p. 351). Southwest’s can-do spirit derived from the company’s legal, regulatory, and competitive struggles during its formation, which was led by Herb Kelleher and supported by employees who were driven to assist the airline to succeed despite these oppositions and this attitude has endured within the company (Thompson & Gamble, 2014, p. C-344). This is supported by Colleen Barret’s, Southwest’s former president, comment that “The warrior mentality, the very fight to survive, is what created our culture” (Thompson & Gamble, 2014, p.C-344). This warrior mentality or “Warrior Spirit” is one of the elements of the company’s “Living the Southwest Way” which implores employees to work hard, desire to be the best, be courageous, display a sense of urgency, preserve, and innovate (Thompson & Gamble, 2014, p. C-366).

When evaluating the strengths of the Southwest brand, customer loyalty, organizational culture, and financial stability are among the company’s greatest assets. Together, these strengths have shaped the Southwest brand into what it is today, a pleasant customer experience and a generous employer, that has generated brand intimacy. As a result, the uniquely derived emotional connection that consumers and employees have developed for Southwest has allowed them to be financially secure, thus, allowing them to focus on adapting to the demands of the continually shifting external environment. This is opposed to other airlines who have been forced by financial restrictions to reduce value added amenities and luxuries to consumers and employees. Consequently, individualized customer service, generous employee treatment, and value added amenities, along with various other known strengths of Southwest have become hallmarks of the Southwest brand, and greatly expected by consumers. Therefore, they are essential components in the successful expansion of the Southwest brand by way of a cruise line.

Leadership at Southwest has influenced the success of the company immensely. The company sets a tone of having fun and being casual while still fulfilling obligations and accomplishing tasks. Southwest airlines encouraged employees to implement honor in order to put their customers at ease, attempting to make traveling an enjoyable experience.This attitude is critical to their continued success. The company has implemented Ten Organizational Relationships in order to generate extraordinary employee performance. The summation of all relationships combined is greater than the individual parts, as each part reinforces one another.

Competitors in the air travel business have to overcome several hurdles to maintain a market share and even more to increase it. Southwest Airlines has become a leader, with regards to ticketed seats, with the simple strategy: low-cost and no-frills combined with a crew that is well groomed in customer satisfaction. Southwest’s business strategy focuses on their record turnaround times at the gate, customer satisfaction, and employee satisfaction. Along with this focus, their frugal spending habits have built a highly profitable airline.

Their first core value is keeping their employees happy. Because only employees with nice attitude can provide best service to customers and keep company benefit. According to this, Southwest Airlines’ practice is their operating structure. The organization of Southwest Airlines is more likely as an upside-down pyramid. The upper management is at the bottom and supports the front line employees. Front line employees are given great attention by the management and play a major role in the yearly business planning and operational budgeting. The company does not stress much on structure. Instead, employees are encouraged to think freely without constraints such as titles or official mandates. This whole structure is created by the co-founder Herb Kellehe and employees will feel respected and valued when management decisions are made by everyone in the organization, not just the head executives.

Southwest Airlines lives by their mission and vision statements. The mission statement is “dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.” Furthermore, the purpose and vision of Southwest is “to connect People to what’s important in their lives through friendly, reliable, and low-cost air travel” (About Southwest, n.d.). This airline goes above and beyond for its customers. For example, when a family was at the airport for the husband to be deployed, Southwest employees allowed the family to go through security with him, and then let the children board the plane before it took off, so they could give their dad one last hug (Southwest Airlines, 2013). Herb Kelleher, the co-founder and former CEO of Southwest Airlines, created the Southwest culture. He incorporated the core principles of management by planning the vision for the company and organizing jobs that allow the airline to meet its goals of exceptional customer service. He led by example and is quoted as saying “If you put your employees first, and you take care of them, then they will take good care of your customers, then your customers will come back…” In addition, when he asked his pilots to take a five-year pay freeze, he also took one (Gzfraud, 2010). Management within Southwest maintains control by utilizing strategic human resources which tie the company’s people into the mission. Employees strive to live up to the mission and vision of Southwest Airlines.

low labor cost for the company. The continued access to and availability of talents has a

“Southwest is one of the most admired companies in the country, respected in an industry that's better known for delayed flights and bad customer service than a great corporate culture.” (Business Insider) Southwest Airlines is known by many to have a long history or service in the airline industry. In many ways its rise to success is nothing less than astonishing. The company has been innovative in both its methods of marketing and its ability to manage its workforce effectively. Many consider Southwest a pioneer in the forms of creativity and innovation that is has used to strike the global economy. It’s also a well-considered company in the topic of Company Culture.

Southwest Airlines was founded and incorporated in 1971 in the State of Texas by Herb Kelleher and Rollin King. These two men identified a target market of potential customers serving the Dallas, Houston and San Antonia regions who would normally drive rather than fly to locations that was less than 500 miles (Smith, 2004). Therefore, Southwest first home office was in Love Field, Texas, which was befitting as the organization’s name on the New York Stock Exchange is LUV, emphasizing their “love” for their employees and customers as a core behavior of the organizational culture (Klein, 2012). After forty-six years in business starting with 4 planes, the airline has now accumulated a fleet of 723 Boeing 737 aircrafts, serving 101 locations, in 40 states, including Puerto Rico, and internationally, Mexico, Jamaica, the Bahamas, Aruba, Dominican Republic, Costa Rico, Belize and Cuba (S&P Capital IQ, 2017). Moreover, this airline of almost 56,000 employees, is considered one of the worlds most successful airlines, generated close to 21 billion in revenue for 2016, and has been dethroned from the largest passenger carrier airline in the world to the fourth, due to industry mergers

Southwest makes the difference in the airline industry through making its workforce always satisfied, low pricing, phenomenal customer service, the airline is known for its high employee productivity and simple rules. “.... Perhaps Southwest’s outstanding performance has been achieved through high levels of coordination among its frontline employee groups. Well coordinated organizations have a competitive advantage through their ability to achieve a higher quality at lower cost by achieving faster cycle times and by providing a more coherent interface to customers…” (The Southwest Airlines way, 2005, p.16)