Case study analysis and applications

Southwest Airlines' culture continues to serve as the foundation for the company's ability to respond with agility and profitability to drastically changing conditions in the airline industry. Many of their competitors resist change, while Southwest, through the factors mentioned in this analysis, have been able to turn change management into a corporate advantage. The two areas Southwest has successfully transformed the turbulence in the market to their advantage are in operations (Rhoades, 2006), and unique human resources practices that provide freedom to employees to do their jobs while also instilling an intense company spirit of loyalty and performance (Kochan, 2006). What makes the Southwest culture so unique is the ability to translate unique leadership styles and management practices into operational efficiency and profitable growth. These three attributes contribute to the steadily rising Revenue per Employee shown in Appendix a, Table 1: Southwest Airlines Financial Ratio Analysis: 2000 -- 2009.

Assessing the Corporate Culture of Southwest Airlines

Southwest has succeeds in melding the three critical areas of their organization together by strengthening and nurturing a culture of risk-taking on the behalf of customers, and rewarding performance that exceeds expectations (Rhoades, 2006). The intensive hiring process as mentioned in the case is deliberately structured to allow for risk-taking with the goal of exceeding customers' expectations on a regular basis (Hardage, 2006). The intensive selection, training and continual reinforcement processes of the Southwest culture have been shown through internal surveys to contribute to higher levels of customer loyalty over the long-term (Rhoades, 2006).

Southwest bases their corporate culture on thirteen core values (Freiberg, Freiberg, 1996). These include the following: first, permission and encouragement to always seek out low cost yet high value solutions to customers' challenges and problems; aggressively pursue profitability by choosing process performance over staff reductions; family; fun; hard work; individuality; ownership; legendary service; egalitarianism; common sense and good judgment in serving customers; simplicity; and altruism. All of these factors are assessed when a new employee joins the company, and through the on-boarding process, these processes and further promoted through case studies of success stories achieved (Krames, 2003). While much of the analysis of the Southwest culture becomes charismatic in tone, underneath the egalitarian approach to leadership is a fierce, passionate competitive spirit and work ethic that borders on the extreme (Sadri, Lee, 2001). Southwest has been able to overcome many of the airline industry's most challenging periods due to their employees willing to also take ownership for the company's performance and make personal sacrifices to help the company stay profitable and grow. There are many examples of this throughout the company's history, all pointing to the fact that employees who have a strong sense of ownership and wiliness to sacrifice for the greater good. Southwest's ability to translate cultural values into financial performance while embracing, even attacking change, in their industry is what fuels their profitability. Through the worst recession in 40 years, Southwest has been able to generate positive Return on Investment (ROI), Return on Assets (ROA), and Return on Equity (ROE).

Sustaining and Strengthening the Culture Given Strategic Decisions Made