Southwest Airlines: an Industry Giant

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From 1972 to 2002, Southwest Airlines stock returned more for their shareholders than any other stock in the same time period (Collins, 2006, Hospital Strategy IV: Southwest Airlines and thinking outside the box). Many companies have begun to take notice of the Southwest model; a model that allows Southwest to thrive while many of its contemporaries are faced with financial difficulties. The success of Southwest Airlines can be attributed to their structure. This structure has made it possible for Southwest Airlines founders Rollin King and Herb Kelleher to create a culture that was unique and ahead of its time: a people first culture. This culture is supported by Southwest's human resource practices. Every aspect is dependant upon each other. Southwest Airlines successfully employs the mechanistic model. There is a limited information system in place and information usually flows from the top to the bottom. Robbins (2005) states that there are six key elements that need to be addressed when designing an organization's structure. According to Southwest.com (2007), Southwest Airlines employs over 33,000 people. The size of the company means that the work specialization will be relatively high. Each employee will have specific tasks that they are responsible for. These tasks include flying, administration needs being taken care of, creating advertising campaigns, repairing equipment and many more tasks. The employees are departmentalized by their job function in order to achieve the most effective method of utilizing their employees. Southwest Airlines has a clear and defined chain of command. The concept of authority is used by Southwest Airlines. There are certain rights that are inherent to certain positions and certain orders are to be followed by these positions. This helps to establish the chain of command. The rights that are inherent to these positions are used to establish a unity of command. Robbins states that the principle of unity of command "helps preserve the concept of an unbroken line of authority." Each employee has one superior who is directly over them. This eliminates confusion about how to handle certain situations and makes for an effective chain of command. The recent trend in businesses has been to employ a wider span of control. Throughout the history of Southwest Airlines, they have been known to think outside the box and buck certain trends. This is the case when it comes to the span of control. Southwest Airlines employs a narrow span of control. Woods & Zemke (1999) states that Southwest Airlines has ten supervisors for every hundred frontline employees. This means that each supervisor is responsible for ten frontline employees. This narrow span of control allows the Southwest Airlines supervisors to ensure that the value of customer and employee satisfaction is allowed to flourish. The next element that defines an organization's structure is centralization or decentralization. This element is defined by the amount of input that lower level employees have on formal decisions. Southwest Airlines runs a decentralized organization. Although there are certain decisions that come from the top down and do not involve lower level managers; there are some operational decisions that Southwest Airlines allows the lower level employees to make. Southwest allows all of their employees, regardless of their position or stature in the company, to make decisions without input from higher levels of management when it involves customer service. The Southwest mantra is to keep customers happy and the only restrictions are that they follow safety regulations and the request is not outlandish. Southwest Airlines has moved decision making down to the front lines. This shift in decision making has caused Southwest Airlines to reduce the emphasis on a formal organizational structure. This low formalization gives employees the freedom to make decisions at their own discretion. Southwest Airlines operates a...
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