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SOUTHWEST AIRLINES: USING HUMAN RESOURCES FOR COMPETITIVE ADVANTAGE

By Group 6

HISTORY
Originally incorporated to serve three cities in Texas as Air Southwest on March 15, 1967, by Rollin King and Herb Kelleher In early 1971, the name was changed to Southwest Airlines, and the first flight was on June 18, 1971. New laws were established to prevent southwest from functioning but Southwest took it as a challenge, to motivate itself Advertising campaigns (make love, not war) All aircrafts have a small heart emblazoned on their sides

JUST PLANE SMART!!!


Low cost fare strategy Fuel efficient 737s has 200 of them Low frills - Avoided offering meal service instead served frills, crackers or other light snacks On-time flights High Frequency service Fly to airports that are underutilized and close-in to a metropolitan area Emphasized on short-haul trips & shorter turnaround time. Average flight time of 65mins. Introduced self-ticketing machines Introduced Peer recruiting and involved customers in recruitment process Spent 11hours in the air. Industry average = 8hours 10.5flights/gate, while Industry average = 4.5flights/gate

THE OBJECTIVE
BUSINESS STRATEGY

PEOPLE STRATEGY

To have a Sustainable Competitive Advantage Low cost and high frequency FUN Image through communication, look and feel of the airlines Focus on Customer Delight through Excellent Services
STRATEGIC FIT (BUSINESS & PEOPLE)

People Source of inimitable competitive advantage Culture of High Performance and Speed Employer Branding through Ads and company culture Focus on Attitude while hiring

SEVEN SECRETS OF SOUTH WEST


AIRLINES
1.

2.
3. 4. 5. 6. 7.

One Plane Fits All Point to- Point Flying Simple In-Flight Service No Frills, No Fees Strong Management A Relatively Happy Workforce Aggressive Fuel Hedging

PERFORMANCE MEASUREMENT BALANCED SCORE CARD

COMPETITIVE ADVANTAGE
Highly visible advantage was cost structure Sees itself as competing not so much with other airlines as with surface transportation Remarkable productivity from workforce Efficient turnaround time of 15mins, while competitors average was 35mins Average of 81 employees per aircraft, as opposed to 157 and 152 of United and American respectively. Use of single type of aircraft helped save on maintenance and training costs. Treated employees as internal customers. Made southwest comfortable and fun place to work.

LEADERSHIP AT SOUTHWEST
oHerb Kelleher CEO and Co-founder
Practiced Servant Leadership gets involved even if minor problems, helps in cleaning out the planes Talks to people at all levels (direct contact) Created Enthusiasm A Party and celebration culture Rolling Parties Philosophy followed-Fun is a stimulant to people. They enjoy more and work more productively. Work is important dont spoil it with seriousness

oColleen Barrett responsible for communications, marketing, PR, HR, Government Affairs and scheduling
Follows the relaxed management style Claims - The Company is only as good as its people and reinforces that theme Well never jump on an employee for leaning too far toward the customer, but we come down on them hard for not using common sense

LEADERSHIP - EXAMPLES
IBM

HERO HONDA

As one employee puts it It's a fun place to work because of the energy that surrounds you and the level of responsibility you are given There job of a leader is to know viscerally how valuable every contributor is They make sure the real players are taken care of and given the best assignments Technical leaders there not only communicate well with one another; they also explain their work effectively to non technical people, including senior executives.

Brijmohan Lall Munjal, the chairman of Hero Honda knows the names of all his employees He refers all his employees by their first name. He refers all his dealers on first name basis. This also gives the employees a sense of belongingness to the organization.

LEADERSHIP - EXAMPLES
MICROSOFT
o o

Bill Gates was the face of Microsoft With proper planning, the transition from Gates to Ballmer was a painless process Tool for creating timely opportunity with the advantage of innovation and change

THE PEOPLE DEPARTMENT

NO CORPORATE HANDBOOK i.e. No rule book Department employees People with marketing background All members have line experience Mission Statement displayed on a large poster and each member of the department signs it: 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 the culture of southwest airlines

The Culture Committee A committee of 65 employees from all levels and regions Meets 4 times a year - preserve and enhance the Southwest Spirit 2 Cs Compassion and Common sense break the rules if they need to but maintain the culture Hiring and Firing for Attitude only Continually provides feedback to employees like on-time performance, turnaround time, number of customers boarded etc. This feedback keeps people focused and make them aware of how their actions affect costs

THE SOUTHWEST SPIRIT

Brand PositioningA Cool Place to work for Informal Atmosphere Casual dressing style AD Champaign on the theme of Make Love, Not War with the new logo Employees treated as Internal Customers Separate Mission statement for the People Department FAMILY The most dominant theme in the culture Catastrophe Fund voluntarily contributed by employees for an employee who needs help Mutual respect Kindness Human Spirit The family feel Literally !

A sense of ownership a team responsible to get the plane ready and manage everything on time PSYCOLOGICAL CONTRACT Pilots load bags if necessary No formal teams Informal culture and employees help each other Employees routinely volunteer to help customers by going out of their way Flexible Working Hours Payment by the Trip DIVERSITY : conservative hiring and growth policy Seeking Diversity Young workforce - average age 34 years A pool of ex employees - Called whenever an emergency

RECRUITING

Recruitment Focus Person Organization FIT Attitude and Team Spirit The Recruitment Ads Employer Branding Required Competency assessment done after consulting and systematically interviewing top performers More time devoted to people than paperwork Wants people who are flexible, adaptable, can loosen up to match SWAs spirit Sometimes even involve the external customer Stringent procedure - An application, phone screening, Group interview, 3 additional interviews (HR + Line), a consensus assessment and a vote. Hire For Attitude, Train for skills

Peer Recruitment and Customer Recruitment Pilots take interviews of pilots and help in background check Applicants interact with the employees and the employees give feedback Encourage Creative spirit Applicants given crayons to describe their lifes story looking for people who can draw beyond the lines Employee Referral scheme available Free Space available Pass given to employees whose referred candidate is selected The rejected candidates (very high in number 95000) are rejected politely as they are potential customers All rejected candidates are called

RECRUITMENT - EXAMPLES
BRITISH AIRWAYS

INFOSYS

1. 2. 3. 4.

Implemented I-Grasp, an electronic recruitment system in 2005 Project aims:Its connected with various recruitment agencies Searches for the best Job-Fit candidate Integration of all separate parts of the recruitment process With I-Grasp they can select a tailor made form at the touch of a button.

Premier IT company Believes in selecting employees with right attitude Recruits not only IT graduates but also: Engineering graduate of any stream B.Sc. Graduates BCA Graduates

RECRUITMENT - EXAMPLES
GOOGLE

Lake Wobegon Strategy - only hire candidates who are above the mean of your current employees. Enables it to maintain skill levels while roughly doubling in size each year. For example, They took a billboard on a major highway in Palo Alto and instead of placing a traditional ad, they posted a maths problem, which once solved directed you to a URL which directed you to a page with an even harder problem is part of a recruitment campaign. Thus, the focus is on recruiting the right kind of people (exceptional talent).

TRAINING

Training at South west is internalized. Their training style is practical, relevant and inspires positive change.
Seen as a mode of two way communication - Inculcating values of the company and taking feedback Hired employees undergo training at Southwests university

Training like the CLIMB-an outbound program, the Front Line Forum etc are focused towards giving the employees a sense of belonging and a way of getting internal customer feedback as well
Succession planning and career development Training emphasizes on good humor

Orientation called New Hiring Celebration


All employees acquainted with history, principles, values, mission and culture. Teamwork most important. Flight Attendants 4 week training in customer service Managers 3.5 day training on leadership, pricing, revenue management

Role plays

and Celebrity skits

1. 2. 3. 4. 5. 6.

Quality training can be provided in the following areas: People management, Personal Development Project Management Working with other Cultures Sales , Customer Service Marketing Technology & Business

TRAINING - EXAMPLES
RANBAXY

LG

Each of the Management Trainee, irrespective of their discipline, gets an opportunity to work and get exposed in sales, R&D and manufacturing. They also work on live business projects in their own area of specialization. Projects are also undertaken in cross-functional area to build a holistic understanding of business. To prepare the trainees for global challenges each has to undertake an extensive ten-week assignment away from their home country. A committee specially constituted for their development evaluates the work of the management trainees. The committee members coach and mentor them during the training period and prepare them for the challenges of a regular job

Training at LG hinges on two aspects evaluating a candidate before and after a training session to gauge improvement, and the trainees feedback of the trainer. Performance mapping of employees is done. All bonuses and performance rewards given by the company depend on how close the employee has reached the target There is also a six sigma training initiative in place where it has 12 black belts and 35 green belts among shop floor level workers, as of now. LG is currently integrating 35 key vendors and all 12 original equipment makers (OEMs) to its training modules by training them with various HR tools like TDR, MI 5S and six-sigma.

THE SOUTHWEST WORKFORCE


The company is 89% unionized Has 9 separate unions, but only 1 six day work out by machinists in a decade Employees can bid for shift in work hours Employees receive raise on the anniversary of their employment. Low pay at the beginning, high pay with seniority. Culture informal team work and employees routinely help each other out.

THE COMPETITIVE THREAT


Continental Airlines launched low fare, short haul flights to gain profits, imitating many of Southwest practices including use of humor by flight attendants United Airlines announced its low fare airline The Shuttle to share the market Southwest captured Problems of Southwest include: If competitive threat could damage Southwest How to manage leadership How to avoid overconfidence among employees

SOLUTIONS
Enabling smooth transition of leadership and implementing succession planning With 14000 employees reinforce Southwest culture by using activities like:

Building relationships Involving people in decisions Communicating the Big Picture Using rewards Conducting surveys

Employing HR strategies that are unique, inimitable and sustainable Recruiting more employees for better services at the airport

Southwest Airlines At Present


Southwest is the largest airline in the world by number of passengers carried per year (as of 2009) Southwest maintains the third-largest passenger fleet of aircraft among all of the world's commercial airlines As of May 3, 2009, Southwest operates approximately 3,510 flights daily Southwest Airlines has carried more passengers than any other U.S. airline since August 2006 for combined domestic and international passengers according to the U.S. Department of Transportation's Bureau of Transportation Statistics. Southwest Airlines is one of the worlds most profitable airlines, posting a profit for the 37th consecutive year in January 2010. Southwest's successful business model involves flying multiple short, quick trips into the secondary (more efficient and less costly) airports of major markets, and using only one aircraft type, the Boeing 737

EXAMPLES
GTE (General Telephone & Electronics Corporation) used performance appraisals as one of the most important for realistic assessment of its strengths, weaknesses, and future requirements. PEOPLE Express Airline used compensation practices to gain a cost/efficiency competitive advantage. Hewlett-Packard Company use compensation to drive their search for innovative products and services. McDonald's uses training to ensure a competitive advantage through cost/efficiency. It uses its intensive training program at Hamburger University to ensure its franchisees efficiency. Deloitte members are taught team work through song. Deloitte promotes team-building, bonding and creativity through singing. They believe that It's a fast way of bringing together individuals, energising them and making them more productive

EXAMPLES
Ford Motor Company started a program of more worker involvement and cooperative labour relations with the United Auto Workers which resulted in higher product quality than its competitors. Careful selection for ensuring a better fit between company and employee is a critical HRM practice at Goldman Sachs. Interviews are done by partners to ensure the "fit. IBM was able to differentiate itself from competitors by providing programming training for customers' employees. Electrolux, has initiated a management strategy, codenamed Operation Juggernaut, to synergize the strengths of its disparate employee structure and optimize productivity levels. The strategy is targeted at executives and senior employees and is aimed at

innovations at work and promoting excellence.

THANK YOU FOR FLYING WITH US !!!

THANK YOU!
Presented By Abhinav Jain Chhavi Gupta Piyush Aren Ranjay Bera Swetha Sri M. V Kavya

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