Southwest Airlines (a)

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This case is just a description of the situation without any details on possible questions or further actions.

Southwest Airlines (A)

Stanford Graduate School of Business Case Study HR-1A (1995)

A Summary

This case is about Ann Rhoades, vice president of people for Southwest Airlines (LUV). She is preparing for a meeting with the top executives of the airlines to discuss the airline’s competitive position in the light of United’s and Continental’s recent engagement in the low fare market after their huge losses over the last 12 months, whilst LUV could nearly double its share. On the agenda is an overview of the current position in the light of new competition and the resulting threats and opportunities.
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Attitude and fit and the importance of culture are more valued than skill. One person submitted her resume on the icing of a large sheet of cake and got the job! Highly skilled applicants had been frequently turned down if their attitude was not right.
To increase the skills, training is an important part of LUV. In 1993, 6.500 people went through LUV’s University for People. Virtually all training is internal and every rank of employee must participate. Training is designed for individuals as well as whole teams.
LUV’s workforce belongs to 89 % to 9 separate unions, but the last walk-out (by the machinists) was over a decade ago. On average, LUV employees earn less per hour, but they have the flexibility to work more hours to make up for this difference. Even the CEO has been ranked amongst the lowest paid in the industry. However, every employee (> 1 year) is covered by a profit sharing scheme and 80 % - 90 % own stock in the company. The work force is very young (34 years), with 23 % belonging to a minority. 10 % - 12 % at managerial level are women.
During the economic down-turn, many airlines had to lay off people. LUV however did not have to follow suit as it uses few temporary or part-time employees and can draw on a pool of ex-employees (e. g., retirees) in case of emergencies.
At LUV, there is a family spirit which can be seen in many ways. Employees raised $ 500.000 in voluntary contribution to be used by employees in need; they even raised $

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