Southwest Airlines

Human Resource System and
Processes
Southwest Airlines
Aman Mishra
Anuj Khurana
Shubhangi Mokashi
Siddharth Anand
Somya Gupta
Riddhi Jain
Group 7
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Backround
Southwest involved in 4 year long legal battle
Write Amendment: prohibited any air carrier to offer direct service

to Love Field from any place beyond Texas and some other states
Effect: Passenger to purchase separate tickets
Southwest theme Love, provided great customer service ,

pursued low fare strategy
To increase market share, purchased Air California and Pacific

Southwest Airlines
From 0 market share again 70 % market share
The Current
Situation(1995)
Concentrates underutilized airports with low cost, point to point

flights
Competition not other airlines but road transportation, for short

travels
Leading carrier ,dominated the markets as passengers increased

two to three times
Profitable for last 21 years
Soutwest stocks earned highest returns
Competitive Advantage
Advantage of companys cost structure
Southwests costs averaged roughly 7.1 cents, while the larger airlines had
costs up to 20 to 30 percent higher.
High productivity of Southwest employees
Southwest pilots spend more time in the air than pilots at other airlines.
Flight attendants and pilots help clean the aircraft or check passengers in
at the gate.
Southwest had an average of 81 employees per aircraft while United and

American had 157 and 152, respectively
It emphasizes customer service
Southwest has won the monthly Triple Crown 24 times
Leadership
CEO: Kelleher
Relaxed management style
Kelleher constantly interacts with customers and Southwest

employees
He routinely visits maintenance facilities in the early

morning hours
Each city is given a budget for parties for the employees

and their families.
People Department
The People Department has a staff of about 100
Deal with approximately 18,000 employees
While in many companies human resources is considered a backwater, the

People Department at Southwest is like the keeper of the flame
Continually feeding back information to employees such as on-time

performance, turnaround times, number of customers boarded etc.
Mission Statement:
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
special culture of Southwest Airlines.
Recruitment
Extraordinarily
Focused
Peer
selective to align with business strategy
on positive attitude and teamwork
Recruiting is emphasized
Recruiter
take opinions from other staff members
interacting with the applicant

Invest
a lot in finding out common characteristics of
effective performers and those possessing good behavior

Ensuring
good experience for rejected candidates
Training
Emphasis on team work and team building in all training programs
Virtually 100% internal training
Need specific trainings for front line leadership
The Climb an effective way to foster change
The Foster-Line Forum Long standing employees reflect on how

company is doing and how it has changed over period of time
Two-Way communication Not only to impart knowledge but also

get feedback from employees
Southwest Work Force
Herb
1 of the 5 lowest paid CEO of
Dallas
Herb gifted with labor relation
talent
Everyone receives raise on their

anniversary of employment
Compensation on seniority basis
Compensation pay for performance

per trip
Average age - 34
Excellent Diversity
South West Spirit
Southwest tries hard to maintain its culture
Themes: Family along with customer service, hard work, equality, cost
consciousness, dedication, fun
Examples reflecting family spirit:
Catastrophe fund of $500,000 in voluntary contributions
During oil crisis, employees raised $130,000 to help defray fuel costs
Monetary help given to a former employee for his medical care
Continual efforts to preserve values that brought Southwest to its current position
Constant sharing of information thus enhancing mutual trust
According to Kelleher - The people dont think the Southwest as a business;

they think of it as a crusade
The Competitive Threat
The industry overall, with few exceptions, had been characterized by

notoriously poor labor relations and authoritarian management, e.g., the
Continental Airlines, the Trans World Airlines, the Eastern Airlines, the American
Airlines etc.
Southwests policies stood out-labor peace, trust, non-adversarial relations,

open sharing of information, and high productivity
Two direct threats:

Both United and Continental had begun low cost airlines-within-an-airline to
challenge Southwest directly. They were not only directly imitating the
Southwest strategy, they were also using their policies and procedures. An old
adage at Southwest was not to provoke their major competitors. Obviously, they
had done more than provoke them; they had challenged them directly.
Continental Lite
Under the CEO Bob Ferguson, Continental Airlines emerged from its second
bankruptcy in April 1993
Continentals plan to split the company into two operations:
short-haul, low fare flights (named Continental Lite or CALite)
first-class service at business class prices
Lower cost structure as compared to Southwest, imitation of Southwests

practices, concentration on East coast market
CALite rolled out in October 1993 received following reactions:
Mixed early results, currently flying with 59% seats filled
Customer miffed as no priority boarding or meal service
Flight attendants concerned about increased workloads
Turnarounds taking over 30 minutes
Pilots also were not satisfied due to their busy schedules
Performance of
Continental Lite
Worst marks of any domestic airline in terms of customer complaints, on-time

performance, and mishandled baggage
Continental lost $38.5 million on revenues of $3.9 billion from April 1993
through the end of 1993
Chief Financial Officer Daniel Garton said that only 20 percent of CALites routes
were losing money and noted that because USAir and Delta responded
aggressively to Continentals fare cuts, profits have been weaker than
expected.1
CALite still relied more heavily on one-stop and connecting passengers than did
Southwest
Problems in the attitude of Ferguson and his people skills, his style described as
harsh and uncommunicative
Wendy Zellner, Why Continentals CEO Fell to Earth

Southwest Airlines

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Human Resource System and

Southwest involved in 4 year long legal battle

Write Amendment: prohibited any air carrier to offer direct service

Effect: Passenger to purchase separate tickets

Southwest theme Love, provided great customer service ,

To increase market share, purchased Air California and Pacific

From 0 market share again 70 % market share

Concentrates underutilized airports with low cost, point to point

Competition not other airlines but road transportation, for short

Leading carrier ,dominated the markets as passengers increased

Profitable for last 21 years

Soutwest stocks earned highest returns

Advantage of companys cost structure

High productivity of Southwest employees

Southwest had an average of 81 employees per aircraft while United and

It emphasizes customer service

Southwest has won the monthly Triple Crown 24 times

Relaxed management style

Kelleher constantly interacts with customers and Southwest

He routinely visits maintenance facilities in the early

Each city is given a budget for parties for the employees

The People Department has a staff of about 100

Deal with approximately 18,000 employees

While in many companies human resources is considered a backwater, the

Continually feeding back information to employees such as on-time

selective to align with business strategy

on positive attitude and teamwork

take opinions from other staff members

interacting with the applicant

a lot in finding out common characteristics of

effective performers and those possessing good behavior

good experience for rejected candidates

Emphasis on team work and team building in all training programs

Virtually 100% internal training

Need specific trainings for front line leadership

The Climb an effective way to foster change

The Foster-Line Forum Long standing employees reflect on how

Two-Way communication Not only to impart knowledge but also

Southwest Work Force

Everyone receives raise on their

Compensation on seniority basis

Compensation pay for performance

South West Spirit

Southwest tries hard to maintain its culture

Examples reflecting family spirit:

Catastrophe fund of $500,000 in voluntary contributions

Monetary help given to a former employee for his medical care

Constant sharing of information thus enhancing mutual trust

According to Kelleher - The people dont think the Southwest as a business;

The Competitive Threat

The industry overall, with few exceptions, had been characterized by

Southwests policies stood out-labor peace, trust, non-adversarial relations,

Two direct threats:

Continentals plan to split the company into two operations:

short-haul, low fare flights (named Continental Lite or CALite)

first-class service at business class prices

Lower cost structure as compared to Southwest, imitation of Southwests

CALite rolled out in October 1993 received following reactions:

Mixed early results, currently flying with 59% seats filled