Human Resource System and

Processes
Southwest Airlines

Aman Mishra
Anuj Khurana
Shubhangi Mokashi
Siddharth Anand
Somya Gupta
Riddhi Jain

Group 7
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Backround

Southwest involved in 4 year long legal battle

Write Amendment: prohibited any air carrier to offer direct service

to Love Field from any place beyond Texas and some other states

Effect: Passenger to purchase separate tickets

Southwest theme Love, provided great customer service ,

pursued low fare strategy

To increase market share, purchased Air California and Pacific

Southwest Airlines

From 0 market share again 70 % market share

The Current
Situation(1995)

Concentrates underutilized airports with low cost, point to point

flights

Competition not other airlines but road transportation, for short

travels

Leading carrier ,dominated the markets as passengers increased

two to three times

Profitable for last 21 years

Soutwest stocks earned highest returns

Competitive Advantage

Advantage of companys cost structure

Southwests costs averaged roughly 7.1 cents, while the larger airlines had
costs up to 20 to 30 percent higher.

High productivity of Southwest employees

Southwest pilots spend more time in the air than pilots at other airlines.

Flight attendants and pilots help clean the aircraft or check passengers in
at the gate.

Southwest had an average of 81 employees per aircraft while United and

American had 157 and 152, respectively

It emphasizes customer service

Southwest has won the monthly Triple Crown 24 times

Leadership

CEO: Kelleher

Relaxed management style

Kelleher constantly interacts with customers and Southwest

employees

He routinely visits maintenance facilities in the early

morning hours

Each city is given a budget for parties for the employees

and their families.

People Department

The People Department has a staff of about 100

Deal with approximately 18,000 employees

While in many companies human resources is considered a backwater, the

People Department at Southwest is like the keeper of the flame

Continually feeding back information to employees such as on-time

performance, turnaround times, number of customers boarded etc.

Mission Statement:

Recognizing that our people are the competitive advantage, we deliver the
resources and services to prepare our people to be winners, to support the
growth and profitability of the company, while preserving the values and
special culture of Southwest Airlines.

Recruitment
Extraordinarily
Focused
Peer

selective to align with business strategy

on positive attitude and teamwork

Recruiting is emphasized

Recruiter

take opinions from other staff members

interacting with the applicant

Invest

a lot in finding out common characteristics of

effective performers and those possessing good behavior

Ensuring

good experience for rejected candidates

Training

Emphasis on team work and team building in all training programs

Virtually 100% internal training

Need specific trainings for front line leadership

The Climb an effective way to foster change

The Foster-Line Forum Long standing employees reflect on how

company is doing and how it has changed over period of time

Two-Way communication Not only to impart knowledge but also

get feedback from employees

Southwest Work Force

Herb
1 of the 5 lowest paid CEO of
Dallas
Herb gifted with labor relation
talent

Everyone receives raise on their

anniversary of employment

Compensation on seniority basis

Compensation pay for performance

per trip

Average age - 34

Excellent Diversity

South West Spirit

Southwest tries hard to maintain its culture

Themes: Family along with customer service, hard work, equality, cost
consciousness, dedication, fun

Examples reflecting family spirit:

Catastrophe fund of $500,000 in voluntary contributions

During oil crisis, employees raised $130,000 to help defray fuel costs

Monetary help given to a former employee for his medical care

Continual efforts to preserve values that brought Southwest to its current position

Constant sharing of information thus enhancing mutual trust

According to Kelleher - The people dont think the Southwest as a business;

they think of it as a crusade

The Competitive Threat

The industry overall, with few exceptions, had been characterized by

notoriously poor labor relations and authoritarian management, e.g., the
Continental Airlines, the Trans World Airlines, the Eastern Airlines, the American
Airlines etc.

Southwests policies stood out-labor peace, trust, non-adversarial relations,

open sharing of information, and high productivity

Two direct threats:

Both United and Continental had begun low cost airlines-within-an-airline to
challenge Southwest directly. They were not only directly imitating the
Southwest strategy, they were also using their policies and procedures. An old
adage at Southwest was not to provoke their major competitors. Obviously, they
had done more than provoke them; they had challenged them directly.

Continental Lite

Under the CEO Bob Ferguson, Continental Airlines emerged from its second
bankruptcy in April 1993

Continentals plan to split the company into two operations:

short-haul, low fare flights (named Continental Lite or CALite)

first-class service at business class prices

Lower cost structure as compared to Southwest, imitation of Southwests

practices, concentration on East coast market

CALite rolled out in October 1993 received following reactions:

Mixed early results, currently flying with 59% seats filled

Customer miffed as no priority boarding or meal service

Flight attendants concerned about increased workloads

Turnarounds taking over 30 minutes

Pilots also were not satisfied due to their busy schedules

Performance of
Continental Lite

Worst marks of any domestic airline in terms of customer complaints, on-time

performance, and mishandled baggage

Continental lost $38.5 million on revenues of $3.9 billion from April 1993
through the end of 1993

Chief Financial Officer Daniel Garton said that only 20 percent of CALites routes
were losing money and noted that because USAir and Delta responded
aggressively to Continentals fare cuts, profits have been weaker than
expected.1

CALite still relied more heavily on one-stop and connecting passengers than did
Southwest

Problems in the attitude of Ferguson and his people skills, his style described as
harsh and uncommunicative
Wendy Zellner, Why Continentals CEO Fell to Earth