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.