Southwest Airlines : HR Strategy
By: Erin Galloway
Overview
One aspect of our topic includes the broad understanding of an organizational
strategy. A strategic HR role means that
HR professionals are proactive in addressing business realities and focusing on
future business needs. Also, from the text Human
Resource Management an organization’s strategy is the way they are going to
compete successfully and thereby survive and grow (Mathis & Jackson, 2010).
I felt it would be great to start out with an example of how effective HR management
takes part in a successful business. Therefore, I picked to look into the
strategy of Southwest Airlines and how they have been able to stay profitable
after September 11, 2001, which caused a decline in the demand of flying.
Article Explanation/Connection to text
The article that I read was about Southwest Airlines
explaining the strategy it uses to keep the competitive advantage over other
competitors. Southwest Airlines uses 500 Boeing 737’s, which they consider
themselves low-cost carriers and has been able to be one of the few airlines to
consistently be profitable. Since Southwest Airlines has a conservative fiscal
management, which means they try to avoid deficit spending and thoroughly weigh
all aspects of business ventures. Southwest Airlines keeps using the 737’s
airplanes, unlike many other airlines that are investing in newer and faster
models. Therefore, it seems that the strategic plan of Southwest Airlines is to
stick with what is working and do not spend on unnecessary upgrades when the
older model planes are still functional. This is relevant to organizational
performance because with using the same airplanes they keep costs low and
consistent. An aspect of keeping the same airplanes is that you will not need
to retrain employees to use different models, therefore keeping costs down.
Plus with Southwest not spending money on innovations of new models, this
allows them to keep a steady profit and costs consistent. Southwest Airlines is
built on a simple business model, with operating the same type of 737 planes at
a high frequency to smaller airports (Casey, 2011). Therefore, the strategic
strategy of Southwest Airlines is to use the simple business model and have point-
to -point rather than hub-and-spoke service. This means they have more direct
flights with 73% of their customers flying on non-stop routes to their
destinations (Casey, 2011). Another, part of Southwest’s strategic plan is to
acquire smaller airlines like the acquisition of its smaller rival AirTran in
May 2011. This acquisition allows Southwest to expand its organization into the
New York, Boston market, as well as Atlanta. The article states that the
acquisition has been approved by both board committees but still needs the
approval of Shareholders (Casey, 2011). From the text we have read that HR
needs to be part of the deal from the beginning performing due diligence and
after the acquisition is completed. As well as HR recognizing cultural differences
and establishing a new culture that incorporates the best of both
organizations. It seems that Southwest Airlines has created a very effective HR
management team, which keeps them one of the few consistently profitable
airlines in the nation.
Take Away Points
What I take away from this article is that HR is a very
powerful branch of a business and when they perform effectively the business
will keep growing and surviving. You see that HR is involved in creating an
efficient strategy that reflects the organization’s mission. HR is not only
part of acquisitions in a business but also has a great deal of input on the organizations
that are not being acquired. Students can use this information to help
understand the development of a business and can help with a more in-depth
understanding of how a business HR really works. This article helps students
understand the chain of command in the business world and who really has a big
influence on majority decisions made by an organization. People that are in the workforce can learn from Southwest strategy because simple seems to be the most effective in the way the economy is today. Therefore, people in
the workforce can emulate Southwest strategy by cutting unnecessary spending and reducing non-value added activities.
Works Cited
Casey, K. (2011, April 05). Southwest airlines company. The
New York Times. Retrieved from
http://topics.nytimes.com/top/news/business/companies/southwest_airlines_company/index.html?scp=3&sq=organizational
culture in HR&st=cse
Mathis, R. L., & Jackson, J. H. (2010). Human resource
management. (13 ed.). Mason, OH: South-Western Cengage Learning.
Erin,
ReplyDeleteI completely agree with HR is a very powerful branch of a business. Often times they are underrated because they are mostly behind the scenes and I feel like they don't get enough credit for what they do. Southwest Airlines is a great example for your topic. They do a great job by saving on costs especially on flying with the older airplane models such as the 737 rather than keeping up with the other airlines with the newer models. Another major reason that you haven't mentioned in your research is that Southwest Airlines had a nice fuel hedge fund deal that saved them huge on fuel costs while every other airline company was paying twice as much on fuel (Southwest was paying about $51 a barrel in 2008). That benefitted them greatly because they didn't have to increase their pricing and did not have a bunch of fees, keeping their customers very happy.
Source: http://articles.latimes.com/2008/may/30/business/fi-southwest30
A clear explanation is given about HR strategy.Excellent one, importance of HR strategy will be understood by everyone seeing this post
ReplyDeleteHR performs major role in the company growth.
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