Southwest Airline Case Study (HR-1A and HR-1B): Using Human Resources for Competitive Advantage

Graduate School of Business at Stanford University conducted a study to see where Southwest Airlines competitive advantage was in the Aviation industry in mid-’90s.

They found that there were several factors that contributed to Southwest Airlines success in the industry.  Factors such as great leadership, brought by Herb Kelleher who has been named one of the best all-time CEOs by Forbes, or other factors such as a great business model, that offered cheap airfare for short and long distance fares.

But what they found played the biggest role in Southwest success  and competitive advantage was its people and the “southwest spirit”.  Southwest dedication to its “People Department” showed to be almost too good to be true.   The foundation for Southwest’s business model is their customers and they consider their employees as one of their customers because they believe that a happy employee can better respond to customers and thus make customers happy.

Southwest employees are not the highest paid in the industry but what Southwest has built is almost like a cult.  A place that its employees are happy to be and happy to perform what they are asked of.  There is a family vibe in Southwest where a individuals help other individuals without being asked to do so.  For example, it’s not uncommon to see a pilot help clean the airplane at southwest.  Another amazing achievement at Southwest is that everybody seems to know what the company goals are and everybody is dedicated to move towards one goal-which is make the customers happy.

This kind of team work, dedication and team spirit has also created a sense of competition at Southwest that you see in sports and not in companies.  Southwest employees are driven to do better than their competition in satisfying their customers.  They will go out of their way (and are allowed to go out of their way) to work with a customer to make them happy.

As I read through the first part of the case study (HR-1A) I felt everything made sense.  I didn’t even think that it was too good to be true but when I started the second part I got a vibe that the second study was going to dispute the first part.  But to my relief, the second part further proved that Southwest competitive advantage is the culture at Southwest airline.

To me, maintaining this level of commitment to employees in a company as large as southwest is absolutely ridiculous.  It is common sense that happy employees are better motivated at work but I don’t think for a second that this is an easy task especially in this big of scale. Also, in my opinion, Southwest’s business strategies still play a very important role in their success.  If employees don’t see that their company is moving towards success, there is not much a Human Resources department could do to motivate these employees.

In conclusion, the questions that come to my mind are: How do you maintain this level of  family-like environment as the company grows?  How do you regain the team spirit attitude in a company where team spirit has long died?  Is Southwest approach to success too laid back?  Are the problems with today’s companies greed and wall-street involvement and expectation that forces companies to focus on only dollar amount and not long-haul success?

~ by aliahmadian on February 18, 2010.