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The airline industry has altered the way in which people live and conduct business. This industry allows us to shorten travel time and make it possible for us to visit and or conduct business in places that were considered remote. The airline industry is a competitive market and thrives on providing the best possible service to its passengers. Operating in a very competitive space is good for the airline industry, and its good for consumers (Spicer, 2018). According to Spicer enabling multiple players in the industry allows for everything from a new aircraft, to new technology and amenities to improve our nation’s airports.
Southwest Airlines Co. was founded on March 15, 1967, and is a major United States airline headquartered in Dallas, Texas and is the world's largest low-cost carrier. As of today, Southwest airlines have scheduled flights to 99 destinations in 40 states which includes Puerto Rico, Mexico, Central America, and the Caribbean. Southwest Airlines' mission statement is 'dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride and company spirit” (Company Overview, n.d).
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The main objectives of Southwest’s business strategy include focusing on providing low fares, making a commitment to its employees and customers, and aggressive marketing. The vision of Southwest Airlines is to become the worlds’ most loved, most flown, and profitable airline (Company Overview, n.d.).
The company offers ancillary services such as early bird check-in, transportation of pets and unaccompanied minors. Southwest Airlines bundles its fares into three categories: Wanna Get Away, Anytime, and Business Select.
In addition, Southwest has a rapid rewards program which enables members to earn points for every dollar spent on Southwest fares (Southwest Airlines Co (LUV, n.d). Holders of Southwest’s co-branded Chase Visa credit card can redeem their points for items other than travel as well. As far as shareholders go, Southwest Airlines is committed to returning value. According to the company website, they have returned more than $2.3 billion to shareholders by the repurchase of common stock and the payment of dividends (Company Overview, n.d). Dahl (2017), published an article about Southwest's strong workplace culture and engaged workforce. In his article, he mentions that Southwest has shared profits with its people who own about ten percent of the company's shares. Southwest's secret to success is having one of the most motivated productive workforces in the world.
According to Ghete (2014), Southwest Airlines reviews their employee's performances by benchmarking. Benchmarking for Southwest is a strategy in which they use other companies with the same job descriptions to compare their work process. All these benchmarks are stapled by time. For example, they used NSCAR as a means of analyzing how quickly the pit crew can perform a pit stop this was the benchmark in which they used to create the process of loading and unloading the luggage. The company prides itself of time management and luggage handling since those are the two things that are a constant struggle for airlines. This is the method the company uses in every department of the corporation. Performance PH (2018), states there are five metrics to analyze employee performance. They are as follows:
These metrics are what helps to create a good measurement tool for employee performance. By combining the strategy of Southwest airlines of benchmarking to compare themselves to other companies' quality of service and work and using these helpful metrics to create a measurement of what the company is looking for in workers. Then a perfect performance tool would be for each direct supervisor to be given the benchmark in which to uphold in their department and that supervisor can then grade each worker based on their areas of performance. A simple graded scale measuring from inadequate to excellent will be a great jump start to use in analysis. This is a common quarterly analysis of employees works reviewed.
What is motivation? Motivation is the psychological processes that arouse and direct goal-directed behavior” (Kreitner & Kinicki, pg 241). Southwest Airlines has been able to uphold a low employee turnover and a high employee job satisfaction because it has created a positive, employee-focused culture. A highly motivated person works harder at a job while an unmotivated person does not. One of the responsibilities of a manager is to create a work environment that has conditions that motivate its employees making them want to strive for excellence.
For a person/employee to feel motivated they need to feel that their needs both physiological and psychological are being met. These are things such as existence needs which is one's desire for physical well-being; relatedness needs the desire for good interpersonal relationships; and growth needs: which is one's desire for personal growth and development. These are important when looking to motivate people as it provides them a sense of achievement by giving them challenging/stimulating workplaces allows them to feel responsible, allows them a sense of recognition while providing opportunities for advancement. With this one feels a sense of satisfaction allowing them to stay committed to their work, and gives them the ability to share the values and desires of the company. Examples of how to motivate one's employees would be to set goals that are designed to motivate and guide people towards a goal: set specific goals, challenges, goal acceptance/commitment you do not want to force coals as people become resistant.; clarify goal priorities make sure there is a clear understanding of the expectations and what the accomplishments are and or will be. Provide feedback and acknowledgment when goals are accomplished and reward the goal accomplishments, rewarding them for doing what they set out to do.
Southwest airlines motivate its employees by creating a system of rewards known as 'Kick Tails.' Kick tails is a program that both recognizes and provides an incentive to its employees. This is designed to encourage employees to appreciate one another' (Murphy, 2018). The Kick tails allow for employees to be entered into a lottery where they can win prizes and gifts and profit sharing. A program like this shows appreciation to its employees making them feel as though they are part of a family. The spirit of Southwest is very positive and uplifting, allowing their employees to enjoy their work. A happy employee intern results in happy customers.
Incentive compensation in an organization will provide security for a business due to the employees feeling appreciated, recognized, and content with the generosity of the firm. Southwest Airlines falls under that category; they are one of the most successful airlines and are one of the best companies to work for in the United States (Gittell, 2003). For Southwest Airlines to remain in the top of their industry, they must continue to be competitive and achieve success with their employees. Furthermore, if Southwest Airlines plans to accomplish these goals, they need to implement an employee recognition or reward system program. Employee recognition goes a long way it is vital to acknowledge the employee's success and maintain a positive culture at the workplace. According to Abduljawad (2011) 'Rewarding employees is becoming the norm in most successful organizations in the USA and worldwide. A recognized employee is a loyal employee, and a loyal employee is a dedicated employee' (para. 5).
Southwest Airlines provides the following benefits for their employees: Medical coverage, vision coverage, dental coverage, flexible spending accounts, Health Savings Account (HSA), short-term disability, long-term disability, primary life insurance, Accidental Death & Dismemberment (AD&D), and other available benefits ('Southwest Airlines', 2018). Also, Southwest provides a great benefits plan, including a generous dollar-for-dollar match in the 401(k) plan, Profit Sharing Plan, and Employee Stock Purchase Plan (Southwest Airlines, 2018). Other incentives that Southwest provides are earning $500 for taking care of their health, time off, and Clear Skies-Employee Assistance Program (EAP). Also, their employees can travel worldwide with a recognition platform call SWAG (Southwest Airlines Gratitude) points program. According to 'Southwest Airlines'(2018), “Our employees can earn SWAG points through some of our recognition and incentive programs and turn them into further rewards like Guest Passes for friends and family, Rapid Rewards® points, merchandise, gift cards, or event tickets. Employees have free unlimited travel privileges for themselves and eligible dependents on Southwest Airlines. And, with pass agreements with other airlines and discounts with rental car companies, hotels, theme parks, and more, Employees can choose their own adventure” (1-2). Hence, these forms of incentives will motivate employees to remain at their firm and remain competitive with other businesses in their market.
Moral hazard is the lack of incentive to guard against risk where one is protected from its consequences by insurance. However, it also occurs when someone increases their exposure to risk, especially when a person takes more risks because someone else bears the cost of the risks. Southwest airlines rely on its customers, which means the airline constantly chose a strategic plan to best attract a majority of customers willing to travel by air. When this happens, sometimes companies make the mistake of moral hazards. The risk of the occurrence of moral hazard is the emergence of adverse selection where this can affect the sustainability of an organization or company (Keane and Stavrunova, 2014). Southwest can reduce the possibility of moral hazard by double control and compensating in accordance with the achievement of performance. Southwest often use performance pay and managerial control to address the problem of moral hazard to employment relationships and firms. According to Foster and Rosenzweig (2014), the result indicates that managerial control is a viable alternative to performance pay at mitigating moral hazard which depends on the level and quality of an optimal incentive contract.
Working in Southwest Airlines Company. (2021, Sep 13). Retrieved from https://studymoose.com/working-in-southwest-airlines-company-essay
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