Southwest Airlines' Organizational Culture

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Case Details:

Case Code : HROB021
Case Length : 15 Pages
Period : 1971 - 2001
Pub Date : 2003
Teaching Note : Available
Organization : South west Airlines
Industry : Aviation
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

Shaping Southwest's Organizational Culture Contd...

Thriving Under Pressure

Post-September11, 2001, when most airlines in the US went in for massive layoffs, Southwest avoided laying off any employee (Refer Exhibit VII.) Even before the September 11 crisis hit, Kelleher had explained his philosophy regarding layoffs in an interview to Fortune magazine. He said, "Nothing kills your company's culture like layoffs. Nobody has ever been furloughed [at Southwest], and that is unprecedented in the airline industry. It's been a huge strength of ours. It's certainly helped us negotiate our union contracts. One of the union leaders….came in to negotiate one time, and he said, "We know we don't need to talk with you about job security." We could have furloughed at various times and been more profitable, but I always thought that was shortsighted.

Human Resource and Organization Behavior | Case Study in Management, Operations, Strategies, Human Resource and Organization Behavior, Case Studies

You want to show your people that you value them and you're not going to hurt them just to get a little more money in the short term. Not furloughing people breeds loyalty. It breeds a sense of security. It breeds a sense of trust. So in bad times you take care of them, and in good times they're thinking, perhaps, "We've never lost our jobs. That's a pretty good reason to stick around."...

Replicating the Southwest Model

Southwest was the only airline to remain profitable in every quarter since the September 11 attack. (Refer Exhibit VIII for financial position of Southwest.) Although its stock price dropped 25% since September 11, it was still worth more than all the others big airlines combined. Its balance sheet looked strong with a 43% debt-to-equity ratio and it had a cash of $1.8 billion with an additional $575 million in untapped credit lines. The company left no stone unturned to boost employee loyalty and morale...


Exhibit I: Market Capitalization Of Southwest Relative To Airline Industry*
Exhibit II: Mission Statement
Exhibit III: Principle Values
Exhibit IV: Corporate Philosophy
Exhibit V: Percentage Of Employees Represented By Unions In U.S. Major.Airlines
Exhibit VI: Labor Conflict Index*
Exhibit VII: Employee Layoffs After September 11, 2001*
Exhibit VII: Southwest Airlines Financials


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