The problem faced by Southwest is one of those “good” problems to have. The only reason they are having a problem is because they are so good at what they do. Other airlines want desperately to imitate what they are doing operationally so that they can achieve the same profits they are enjoying. The competition itself really isn’t the most pressing issue for Southwest. It really comes down to two things: 1) can Southwest sustain its family culture as it grows and 2) how can it convince the outside world (the investment community) of that it can sustain it?
From the competition front, I think believe that Southwest is absolutely fine. Even if United and Continental can “cherry pick” some of the frequent flyers, Southwest has nothing to worry about in the long run. The reason why I believe that the competition won’t be troublesome for long is because of the following:
- Neither Continental nor United have the employee focus necessary to pull off the team and family spirit, mutual respect and overall trust so evident at Southwest.
- Neither Continental nor United have the Union relationship to ensure that each key area of employee service will work together. Thus, there can be no “enforceable” system that ensures that the pilots and flight attendants pitch in in other areas necessary. That said, there will always be some dedicated employees that will go above and beyond because they are so committed to the organization.
- The other airlines don’t pay by the flight. By paying by the flight, Southwest is encouraging their flight attendants and pilots to be more flexible with their schedules so that they can increase their monthly pay (by taking more flights—which should be shorter than that of their competitors).
- While not stated, I am certain that neither Continental nor United provides the amount of training and cross training that Southwest provides.
- Both organizations are focused solely on operating efficiency, not necessarily on satisfying either the employee or the customer.
- This “short haul” focus is almost a paradigm shift for Continental—and one they forgot to tell their best customers (frequent flyers) about according to the story. It’s never good to surprise the customer, unless it means you are giving them a benefit they didn’t expect to receive—clearly not the case here.
Here are some questions I would have for Ann Rhoads: While logic would dictate that your people are your competitive advantage, why are you so convinced that you need to transform the People Department? It would seem me that, based on the data presented, you are doing everything right. What makes you think changes are needed? Because the outside world is worried that you are too good?
There is one thing that I think that Southwest should be worried about but they haven’t discussed… that’s that they are very touchy feely folks. Should they accidently let the wrong person into “the club”, they could have a lawsuit on their hands.
So after all of this, what do I think that southwest should do? Ask the employees and ask the customers. They need to understand exactly why customers are using Southwest rather than the competitors. They also need to model their customers so that they truly understand who these customers are and how loyal they are to Southwest. If they are concerned at all that they are getting too big for their britches, they should have more employee focus groups—basically do more of what they are doing, not shake things up.
Now, in relation to the second article, I think they should be worried about what happens when Herb leaves. Will his culture leave with him? That will be their ultimate challenge.