Southwest Airline Strategy Implementation Executive Summary An analysis of Southwest Airlines strategic controls has been conducted in order to determine if these controls match, and or enhance, the companies design and strategy. The company structure, culture, and human resources have been taken into consideration. What was found, was that Southwest has a strong culture, which ties most of the strategies together. Supervisors and employees work side by side, which promotes trust and understanding. This analysis concluded that the strategies implemented by Southwest Airlines, does indeed fit the company strategy.
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Introduction This analysis is of Southwest Airline’s strategic controls and if those controls coordinate with the organizations current and future strategies. Several factors will be reviewed to see if they are in accordance with the current economical and corporate structures. The structure of the organization, its systems, the employees, and the very culture of Southwest will be reviewed. Once the review is complete, an analysis of whether or not these organizational components fit in with Southwest current strategy.
This report hopes to confirm that the current strategy is in line with company policies and will continue to be so in future endeavors. Strategy Implementation Analysis The first aspect of Southwest that will be analyzed is the organizational design. Southwest is considered a “formal” organization. Wikipedia described a formal organization as , “…a fixed set of rules of intra-organization procedures and structures. As such, it is usually set out in writing, with a language of rules that ostensibly leave little discretion for interpretation” (Wikipedia).
Southwest Airlines follows this principle and therefore can be said to be a formal organization. The company’s structure is such that, like other airlines, it is “centralized”. The corporate headquarters is located in Dallas, Texas where most of the organizational operations are handled. Since the company currently does not have any alliances with other airlines and does not participate in overseas international travel, the structure of the organization is very simple. Herb Kelleher (CEO of Southwest Airlines) describes Southwest as an “upside down pyramid”.
The direct quote from Advance! Business Consulting is as follows, and accurately describes the fundamental structure of Southwest Airlines. The quote reads, “ The organization of Southwest Airlines is best described as an upside-down pyramid – an organization very much in line with the way they want to do business. The upper management is at the bottom and supports the front line employees (>35000), who are the experts. Front line employees play a major role in the yearly business planning and operational budgeting which for a great part is done bottom-up rather than top-down.
This is the fruit of co-founder Herb Kelleher’s unorthodox leadership style, in which management decisions are made by everyone in the organization, not just the head executives. The company does not put much emphasis on structure; instead, employees are encouraged to think freely without constraints such as titles or official mandates” (Advance! ). Even though the company doesn’t put much stock in structure, it still is a formal entity. There is a hierarchal structure from CEO to employees. Herb cannot run the company with every employee making the decisions.
The employees are empowered to make key critical decisions at their respective level, but they still answer to management. This design works well for Southwest Airlines, as employees feel as if they are a part of the team. Southwest should continue to operate under this structure, to maximize employee potential and participation. Organizational wise, Southwest Airlines has continued to be a success. A large part of this success stems from the culture and management of the company. Human resource plays a large role in any organization, as they are responsible for staffing and ensuring the highest quality personnel for particular job.
However, at Southwest Airlines, human resources staffing is decided by other employees as well as managers. Potential employees are interviewed by current employees, and management, to determine if the potential candidate is not only a fit for the Southwest “family” but qualified as for the position as well. The primary concerns for Human Resources at Southwest, is ensuring the company spirit is kept alive. Southwest promotes a culture promotes empowering the employee, making work not only fun but safe. So far this practice has been working quite well.
Southwest is a lean and efficient company, and the staff pull together to get a task or job done in a timely manner. These are the primary concerns of human resources. The cultural factors of the airline ties in deeply with the human resources component of this analysis. This portion will take a look at employee satisfaction, training, and attitudes towards the company. Employee satisfaction is high within the Southwest company. Employees have a high degree of confidence in their supervisors, and work is shared between everyone.
Jody Gitell wrote an analysis on the power of relationships within Southwest Airlines. In her analysis, she also breaks down management functions, employee to management ratios, and employee responses to this ratio. In her analysis she states, “… Southwest’s supervisors provide the bulk of the company’s coaching and counseling. This is possible because at Southwest: * There is one, supervisor for every 10 to 12 frontline people. * The supervisors act as “player coaches” in that they have managerial responsibility but they also perform the same asks as the frontline employees. * Since the supervisors work alongside the employees, they have a high degree of credibility and influence. * Most coaching takes the form of problem solving and providing advice rather than disciplining mistakes. ” (Gitell 2003) These strategies only help to enforce the “family” environment that Southwest tries to instill in its employees. With the cost share benefit available to each employee, everyone has a motivation to see the company succeed. The company’s commitment to its employees and customers can be found everywhere on the website.
The company is dedicated to treating everyone with respect and care that they deserve. The companies culture is focused on maintain and developing is relationships. Knowledge is shared throughout the company, from upper management down to the newest member. All of these factors have helped to make Southwest a successful airline in times of financial hardship. With the acquisition of AirTran, these policies and practices well be shared with those employees that Southwest has absorbed. With these practices, Southwest can continue to be a model for the low-cost airline industry.
Southwest airlines overall strategy, is to provide the best low-fare flights to as many domestic, and now international, locations. The organizational design, culture, human resources, and control systems established by Southwest only help strengthen the company’s vision and strategy. Southwest will face some challenges in the future, with oil and gas prices, a downed economy, and competition. As long as the company sticks to its roots and continues to foster a culture of open communication and respect, the company will continue to come out on top.
