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Managing diversity in organization - South West Airlines

October 15, 2007

Managing diversity in organization - South West Airlines

Southwest Airlines Co. is the nation’s low-fare, high customer satisfaction airline. They primarily serve short-haul city pairs, providing single-class air transportation, which targets the business commuter as well as leisure travelers. The company, incorporated in Texas, commenced customer service on June 18, 1971, with three Boeing 737 aircraft serving three Texas cities, Dallas, Houston, and San Antonio. At yearend 2002, Southwest operated 375 Boeing 737 aircraft and provided service to 59 airports in 30 states throughout the United States. Southwest has one of the lowest operating cost structures in the domestic airline industry and consistently offers the lowest and simplest fares. Southwest also has one of the best overall customer service records. At Southwest Airlines, there was no loss of pay for employees from layoffs, furloughs, or unpaid leaves due to the events of September 11. Because Southwest had the strongest balance sheet and the highest credit rating in the US airline industry, the company was able to avoid the severe cash flow problems experienced by its competitors. There are two main factors contributing to Southwest’s success: the leadership of CEO Herb Kelleher, and the airline’s business strategy. Because Kelleher has created a culture at Southwest where employees feel part of an extended family, labor relations have not been a problem at Southwest even though 90% of employees are unionized.

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Southwest's persistent focal point on high-performance relationships and its people management practices has been the key to its unparalleled achievement in the airline industry. At most companies, hiring, training and employee benefits are handled by a department called either human resources or personnel. At Southwest Airlines, it is called the people department. The designation "people department" speaks volumes about Southwest's commitment to a caring and sharing relationship with its employees that runs through the company. That commitment was demonstrated dramatically by Southwest's decision to forgo layoffs after the Sept. 11, 2001, terrorist attacks.  Southwest confirmed caring by avoiding layoffs altogether, and by couching its decision in terms of 'taking care of our people". That response, of course, was in sharp contrast to that of the other major airlines. Some of them resorted to legal loopholes in union contracts to justify layoffs and eliminate unprofitable routes. Those unions of the various classes of airline workers accused those airlines of trying to take advantage of the crisis rather than just trying to get through it. She then gives American Airlines' response: "The reason for using these provisions is for the reason that of the dire financial condition of the industry. Southwest maintained a steady presence in the wake of the attacks, refusing to lay off its employees. "Indeed, Southwest instead saw these difficult times as an opportunity to increase its presence and expand the availability of its product to the flying public."

Southwest Airlines' "most distinctive organizational competency is its ability to build and sustain relationships, characterized by shared goals, shared knowledge and mutual respect. Southwest has the highest supervisor-to-employee ratio in the airline industry _ one supervisor for every 10 to 12 frontline employees. Southwest supervisors, she points out, take part in frontline work on a regular basis, filling in on breaks and other contingencies. Working alongside with cutting edge employees is contributing to building shared goals with them, and to developing the trustworthiness and acquaintance needed for effective coaching. As a Company, Southwest Airlines Co. values diversity and seeks to create an environment that encourages it, both in the workplace and among our supplier base. Supplier Diversity Program was designed to enable Southwest to extend opportunities to qualified Small, Disadvantaged, HUBZone, Minority, Women, Veteran and Service Disabled Veteran-Owned Businesses (Diverse Businesses). It is the goal of this program to assist Diverse Businesses in their development as competitive suppliers of products and services. Southwest Airlines embraces and celebrates its unique open seating heritage, announcing today that Customers will continue to choose their favorite seat while onboard the aircraft. The airline does plan to make changes to its boarding; however, saying goodbye to the perceived “cattle call” and eliminating the need for Customers to “camp-out” in their boarding line at the gate.

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Harris, Pat Lopes; Undercurrent of unrest stirring Southwest Airlines.(Knight Ridder Newspapers) Knight Ridder/Tribune News Service; Mar 2, 2001.

PR Newswire; Southwest Airlines Announces More Flights for Philadelphia; Aggressive Expansion Planned This Summer.  Mar 25, 2004.

Rosenspan, Alan; Airline soars to new heights.(Southwest Airlines)(Cover Story) Direct Marketing; Dec 1, 1998.

Crownover, Catherine; Southwest Airlines to Begin Service to Jacksonville, Fla., in January.(Originated from The Florida Times-Union, Jacksonville) Knight Ridder/Tribune Business News; Nov 4, 1996.

Bloomberg News; Southwest to resume flights to S.F. Deseret News (Salt Lake City); Feb 12, 2007;


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