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Southwest Airlines

Southwest Airlines. SWA. Southwest Performance. Employees per aircraft much lower than industry SWA: 94, United & American: 160 Industry: 135 Passengers served per employee SWA: 2,443 Industry: 840 Customer service Triple Crown winner On-time performance Fewest lost bags

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Southwest Airlines

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  1. Southwest Airlines

  2. SWA Southwest Performance • Employees per aircraft much lower than industry • SWA: 94, United & American: 160 • Industry: 135 • Passengers served per employee • SWA: 2,443 • Industry: 840 • Customer service • Triple Crown winner • On-time performance • Fewest lost bags • Fewest customer complaints

  3. Southwest Performance • Fewer employees at the gate • One agent, ground crew of 6 (SWA) • Three agents, ground crew of 12 (Avg.) • Quicker aircraft turnaround time • 25 minutes (SWA)

  4. Southwest Airlines What is the secret of Southwest Airlines unbelievable level of performance? • Southwest Video

  5. The Southwest Culture • SWA values • Work should be fun…it can be play…enjoy it • Work is important…don’t spoil it with seriousness • People are important…each one makes a difference

  6. Southwest Airlines Culture • “They can imitate the airplanes. They can imitate the ticket counters and all the other hardware…..But they can’t duplicate the people of Southwest and their attitudes.” • Herb Kelleher

  7. The Culture • One of FORTUNE ‘s Most Admired Companies • FORTUNE has ranked Southwest Airlines in the “Best Companies to Work For” • 2005, American Customer Satisfaction Index (ACSI) recognized Southwest Airlines as leading the industry in customer satisfaction • Business Week “Top 25 Most Innovative Companies”

  8. “How do we hire the right people?” Traditionally staffing has focused on the match between an applicants skills and experience and the job requirements. Job Requirements Rewards Match Person KSA’s Motivation

  9. Most Companies Job Requirements Rewards HR Outcomes Performance Extra Effort Retention Satisfaction Commitment Match Impact Person KSA’s Motivation Hire for the Job

  10. Job Requirements Rewards SWA Organization Task Flexibility Values/Culture HR Outcomes Performance Extra Effort Retention Satisfaction Commitment Career Progression Match Impact Person KSA’s Motivation ATTITUDE Hire for the Organization

  11. Culture Starts at the Top • It used to be a business conundrum: “Who comes first? The employees, customers, or shareholders?” That’s never been an issue to me. The employees come first. If they’re happy, satisfied, dedicated, and energetic, they’ll take real good care of the customers. When the customers are happy, they come back. And that makes the shareholders happy.” • Herb Kelleher (1996)

  12. Strong vision and articulation Self-sacrificing, risk-taking Charismatic Leaders Unconventional, novel behavior High expectations Build self-esteem in followers Self-confident, dynamic

  13. Herb Kelleher • Founder of SWA • Zany, crazy approach to management – e.g. arm wrestling to settle business matters • Work should be fun – sing, dance, play but get the job done….

  14. Colleen Barrett • Began as a secretary at Southwest Airlines and eventually became SWA President • Known for • Humanistic • Idealistic • Sense of Humor • Commitment to Customer • Servant Leadership “We look for folks who are eager, who are “quick on their feet” with “outside the box” thinking and who have caring, friendly natures.”

  15. Tribute to Herb and Colleen • About Herb and Colleen

  16. Gary Kelly • Current president, CEO and chairman of the board • Long history in SWA culture working with Herb and Colleen Leadership is..."Effectively supporting your team of Employees."

  17. Southwest Key Challenges • Fuel hedging a key strategic advantage but becoming more difficult each year • SWA fuel hedging for future: • 2007 95% hedged at $50/barrel • 2008 65% hedged at $49/barrel • 2009 50% hedged at $51/barrel • 2010 25% hedged at $63/barrel • 2011 15% hedged at $64/barrel • 2012 15% hedged at $63/barrel • “Even with $511 million in favorable cash settlements from derivative contracts in the second quarter 2008, our economic fuel costs increased 35.2 percent to $2.19 per gallon.” - Gary Kelly

  18. SWA-Frontier Airlines • Failed acquisitionWhy?? • Could it have worked?

  19. What are the SWA and Frontier Cultures? Flexible Processes CLAN Build interpersonal Relationships; cohesion; morale ADHOCRACY Entrepreneurial; innovative; Adaptable; risk-taking External Positioning Internal Maintenance HIERARCHY Stability; efficiency; Rules & regulations; Policy development MARKET Competitive; achievement-oriented; Goal-focused Control-orientedProcesses

  20. SWA Performance • SWA vs. S&P 500 over 10 years

  21. SWA Recent Performance • Past 3 months

  22. SWA Future • What has been SWA’s competitive advantage? • Can they keep this competitive advantage in the future? • What does their future hold?

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