‘Exemplars of New Organisation in Action’
Child, J. Organisation: Contemporary Principles and Practice (2005), Blackwell Publishing pages 395-398.
What special organisation features do these companies have that make them different? Evaluate the effectiveness of these features in helping the companies concerned to achieve better performance. What evidence is there to support this?
Semco and Southwest are recognized as exceptionally successful organizations managed through democratic participative and functional management as the basis of their organizational strategy. The most distinctive organizational characteristic shared by Semco and Southwest is the practice of unorthodox business organizational culture. Organizational culture is defined as actions and attitudes of individuals and groups toward one another and towards the organization as a whole, and its effect on the organization's functioning and performance. It is the careful selection of tailor-made organizational culture features suitable to the organization and its people that ensure a win-win situation for the organization, its people and valuable customers. Southwest was established in 1967 by Rolling King and Herb Kelleher as an intrastate airline. It is now the fourth largest major airliner in USA and is trading on the New York Stock Exchange. The organization religiously reminded themselves that "airplanes don't make money on the ground." Flights have to be maximised with the least number of fleets to profit. They even researched a NASCAR pit crew to gather the best turn-around strategy. Above all, Southwest banked on its human capital as the most valuable asset. The practice of Southwest’s organization culture as put by Dan Oswald, ‘oozes out from every employee’. This has rendered its success copy-proof as not everyone has the same outlook and priorities for organizational values.
The backbone of the Southwest unconventional organizational culture that sustained its continuous growth rests on the following main features:
Southwest’s impressive organizational culture begins at recruitment stage. Their policy is to hire people who are talented and most importantly, cheerful. Southwest banks on the power of relationship between its passengers and employees to create more passengers. Reputable employees makes reputable organization. For three years, Southwest was named on Fortune's "100 Best Companies to Work For" list.
Southwest puts its employees at the top of the priority list. This gives the employees a sense of belonging, thus, job security. Keeping employees, satisfied, excited and happy about their job is the core factor that kept happy passengers coming back, besides the low cost fares. In 1974, Southwest implemented its first profit sharing plan in the U.S. airline and this policy has never changed since. Following the September 11, 2001 terrorist attacks, the whole airline industry in the US faced incredible losses. To counter this, flights were cut by 20% and 16% lay-offs were materialized within weeks. but Southwest held on to its no lay-offs promise. This promise is only made possible through the past organizational culture practices that resulted in strong sustainability, especially, financially.
Southwest CEO Gary Kelly, noted that they are always building a “supportive, active and fun” culture. The importance of this culture is evident in the creation of its Local Culture Committees and a Corporate Culture Committee .The success of this culture is evident since Southwest has received the least customer complaints since 1987. In 2005, the Department of Transportation's "Air Travel Consumer Report." ranked Southwest first in customer satisfaction.
In 1982, Ricardo Semler, age 24, took over Semler and Co from his father, the founder of the company. At 20 years old, Ricardo graduated as one of the youngest MBA graduate from Harvard. Ricardo literally revolutionalized the company through his strategy: The Semco...
Please join StudyMode to read the full document