Southwest Airlines is a very successful airlines company that has grown tremendously in the last few years. Like every other company in the airline industry Southwest has had to deal with potential problems, but they have weathered the storm. In this article I will analyze some of the changes that have been made within the organization including new product development, change processes, and some government laws that affected Southwest airlines. I will also identify with some new changes and strategies that Southwest has introduced and determine the effectiveness of these changes in terms of benefiting the organization. It is my hope that through the research that I have developed that my reader will gain a better understanding of Southwest Airlines as one of the leaders in the airline industry; but in addition how their changes have helped or hurt them as an organization.
Southwest Airlines has not chosen to do any down-sizing or right-sizing; they have rather chosen to put my trust in their employees to perform their job duties in an adequate way for the organization to grow in size and in profit. While many other airline companies have chosen and/or been forced to do a lot of down-sizing due to low profit margins, rising fuel costs, and an increase in expenses, Southwest Airlines continues to hire people and has no plans on laying any of their employees in across different departments. With the events that happened in on September 11, 2001 it would have been very normal and understandable for lay-offs to occur, but with the mindset and culture that has been development within the organization and management at Southwest that would never happen. The mindset and culture that the leaders of Southwest have developed has been to place a high level of importance and trust within their workers.
During my research of Southwest Airlines, I found an article from www.thedailybeast.com explaining how loyal they have been to their workers in preventing layoffs when they stated: “On Sept. 12, 2001, there were no commercial flights in the United States. It was uncertain when airlines would be permitted to start flying again—or how many customers would be on them. Airlines faced not only the tragedy of 9/11 but the fact that economy was entering a recession. So almost immediately, all the U.S. airlines, save one, did what so many U.S. corporations are particularly skilled at doing: they began announcing tens of thousands of layoffs. Today the one airline that didn't cut staff, Southwest, still has never had an involuntary layoff in its almost 40-year history. It's now the largest domestic U.S. airline and has a market capitalization bigger than all its domestic competitors combined. As its former head of human resources once told me: "If people are your most important assets, why would you get rid of them?"”
The article on www.thedailybeast.com goes on to say: “For many managers, these actions feel unavoidable. But even if downsizing, right-sizing, or restructuring (choose your euphemism) is an accepted weapon in the modern management arsenal, it's often a big mistake. In fact, there is a growing body of academic research suggesting that firms incur big costs when they cut workers. Some of these costs are obvious, such as the direct costs of severance and outplacement, and some are intuitive, such as the toll on morale and productivity as anxiety ("Will I be next?") infects remaining workers. But some of the drawbacks are surprising. Much of the conventional wisdom about downsizing—like the fact that it automatically drives a company's stock price higher, or increases profitability—turns out to be wrong. There's substantial research into the physical and health effects of downsizing on employees—research that reinforces the seemingly hyperbolic notion that layoffs are literally killing people. There is also empirical evidence showing that labor-market flexibility isn't necessarily so good for countries, either. A recent study of 20 Organization for Economic Cooperation and Development economies over a 20-year period by two Dutch economists found that labor-productivity growth was higher in economies having more highly regulated industrial-relations systems—meaning they had more formal prohibitions against the letting go of workers.”
One change in particular that needs to be made in Southwest Airlines is a more balanced approach of hiring and firing individuals. I think it is wonderful that they offer as much grace to their employees as they do, but this could potentially cause some problems. I am sure that Southwest will not tolerate insubordination or blatant disrespect to its leaders, but I believe there might be occasions where some workers are out of place. What I mean by that is some workers might be better in other departments, others are not contributing anymore to the organization and need to be let go, while other employees might deserve demotions based on their performance. If these critical changes are not being made to the organization that could suffer in the long run with stunted growth by having certain individuals in positions they are qualified to be in.
The changes that have been to the organization like the merger with AirTran, the change in the rewards program, and reducing its winter flying schedule to deal with rising fuel costs all have been a testament to how wise Southwest is as an airline company. The merger with AirTran gave Southwest the opportunity to move up to become one of the top airline companies in the U.S. In addition, the merger gave them a better position in the Atlanta, GA area for more customers to utilize them as an airline. Most reward programs struggle to meet their customer’s needs or don’t offer competitive rewards to draw enough potential customers. Southwest has totally revamped their rewards program to reach individuals that are not initially looking for a flight. It was also an excellent move to cut back on the winter flying schedule to reduce their fuel expenses; a problem that has affected every airline company around the world. Their methods used to grow the company always have their customers in mind, but their employees first.
In another article on www.latimes.com it explains a recent change that was made within the organization of Southwest for their rewards program. The part of this article that I quoted was very long due to the fact that I did not want to leave out any pertinent information that was included in it. Their Rapid Rewards program in additional to their other reward programs will definitely allow for more growth within the organization. It is important for Southwest to continue to revamp their reward program’s structure with the customer in mind instead of merely believing their success in past years will carry them on forward.
The article stated: “In a bid to attract business travelers, Southwest Airlines Co. has rolled out a revamped frequent-flier program. The Dallas airline, known for low-cost domestic flights, unveiled a new Rapid Rewards program Thursday. When the program launches March 1, the long-standing system in which frequent-flier credits were based on the number of trips taken will be replaced with one in which points accrue based on the price and type of fare paid. Unlike under the old program, points will not expire and will be usable for any seat, with no blackout dates. Fliers also will have the option to use Southwest points for international flights, which can be booked through an intermediary, Maritz Travel. The move comes shortly after Southwest announced plans in September to acquire AirTran Airways for $1.4 billion. Airline industry experts said the changes would most likely benefit business travelers, who tend to book at the last minute and pay higher fares. But Jay Sorensen, president of airline consultant IdeaWorks, said all customers will appreciate that their points won't expire. Southwest would not disclose the number of participants in its current Rapid Rewards program. Southwest Chief Executive Gary Kelly projected that the revamp would eventually add hundreds of millions of dollars in revenue annually.”
There are many changes that Southwest has made throughout the years in order to gain more exposure from different groups of individuals. They have also continued to try different methods of gaining a broader customer base by their programs. It is important for Southwest to come up with these strategies for customer retention and the opportunity for new customers to see how great of an airline company they really are. On their website, www.southwest.com in their section “What’s new they offer customers an opportunity to ear rapid reward points in two specific areas which are on all hotels and through shopping at their favorite online retailers: “Earn Rapid Rewards Points On All Hotels: Book any hotel on southwest.com by January 15, 2012 and earn 150 Rapid Rewards Points for stays completed by December 9, 2012. Earn up to 750 points when you book with partner hotels. Choose from more than 40,000 hotels and enjoy great rates, plus $0 cancellation fees. Introducing Rapid Rewards Shopping: Shop at your favorite online retailers--and we have hundreds of them--to earn points toward your next flight! With Rapid Rewards Shopping, we make it easy to Buy, Earn, & Fly!”
Southwest Airlines has done an excellent job to diagnosis their organization with the help of management by reviewing some of the overall dynamics of the company. In the book “Implementing Organizational Change”, the author said this about how to diagnosis an organization’s dynamics: “As an alternative to initiating change by announcing a solution, leaders can instead begin with diagnosis. Diagnosis is the process of learning about the dynamics of an organization’s functioning. It is meant to engage employees in the process of identifying both the current state and the desired future state of the organization. Employees collect data and engage in a dialogue concerning the meaning of the data. The diagnostic process provides a roadmap for change; mutual engagement in diagnosis helps build motivation on the part of employees to alter their behaviors.”