Southwest Airlines (Luv) Discuss the Assessment

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More specifically, since Southwest invests heavily in both training and the "attitude" of its employees, the fact that all economically motivated employee separations are voluntary buyouts allows the company to protect that investment.

A happy workforce is more productive, which further helps the company manage its costs. Compared to the industry average, Southwest serves more than twice as many customers per employee and gets by with 8% fewer employees per plane. Moreover, the company's all-hands-on-deck approach allows it to turn its planes substantially faster than the competition, getting these extremely expensive assets back into the air where they can generate revenue.

4. Given the strategic decisions in the case, recommend actions that management should take to sustain/strengthen the culture (or implement a change), based on the situation given.

In the face of recent safety-related setbacks to the company's previously unblemished brand, both employee and public confidence in the maintenance system must be rebuilt. More broadly, since culture is the centerpiece of the company's competitive proposition, the most natural resources available to overcome the situation are likely to be cultural in focus. Simultaneous, risks to the culture must be identified and addressed.

A secondary concern is the possibility that the public will identify Southwest as a "fun" or party-oriented low-cost airline with a willingness to cut corners on safety. Such perceptions must be actively challenged through a campaign that demonstrates that while the carrier avoids wasting money on frills, it still provides substantial value for the price of a ticket.

5. Given the strategic decisions in the case, identify three leadership actions that the company would need to be consider to implement the decisions.

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Explain why these are critical to implementing the strategic decision.

1. Broaden the labor force's mandate to report concerns and suggest operational improvements to matters of equipment. Implemented in a sensitive way, this would knit maintenance personnel more closely into the corporate "family" where they might otherwise be scapegoated for the company's problems. It would also transmute the failure of a single area of the business into a teachable moment for all, reinforcing the core engagement with customer service and pride in the brand.

2. Scale back the "fun" orientation of the brand to focus on reliability and value until it is clear that the company's reputation has been repaired. Safety can easily be emphasized by spotlighting the excellence of the maintenance and inspection operations compared to what other carriers are doing; how does Southwest fly such a dependable fleet and still charge such low seat prices? This would give the company's highly capable crews -- and industry-beating track record for on-schedule departures -- a chance to step up as a no-nonsense face of the brand until it becomes appropriate to revive the "fun."

3. Acknowledge that while the corporation operates like a family, families sometimes change and mature in response to external events. Herb Kelleher is gone, no-frills airlines have multiplied, and a new generation of C-suite executives now need to guide Southwest through a dramatically different competitive and economic environment. Encourage employees to "grow up" into new patterns of customer interaction that add just as much value as the old songs and games, but stress empathy instead of "fun." The airline can always have time for fun, but.....

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