It is one of the most challenging function in which managers need to motivate their people to give their best. This paper talks about one outstanding company in an industry that is awash in red ink. The name of this…
During the period 2001-2005 which was considered the worst period for airlines it still made money on each and every year. A key to its success is keeping its planes full by capturing enough flying passengers. However, there is one other key aspect of its success that is rarely talked about and that is its incentive plan for its employees. Southwest Airlines has an outstanding corporate culture that encourages all its employees to render extra services to make flying with them a satisfactory experience.
The founder of Southwest Airlines, Mr. Herb Kelleher, attributes the airline’s success to its unique culture that is intangible and hard to imitate by its competitors. It is this spirit of competitiveness that has propelled the airline forward to continuous profits over the years. In this regard, the airline adopts the total rewards style of management that recognizes employee performance (Jenses, McMullen & Stark, 2007, p. 61). The management uses incentive plans so that it gets employee buy-in and total commitment to its corporate objectives.
The purpose of the program is to attract and retain top talent. Southwest Airlines has one of the longest hiring policies that lasts up to about six weeks through a series of tests and interviews to make sure that prospective employees fit into its fun culture termed as “LUV” as hiring managers emphasize work attitudes more than work skills. Once hired, employees are expected to help keep costs down so the airline will remain profitable despite its low fares. A reason why Southwest is profitable is because its employees are very productive, using a ratio of passengers per employee (Southwest: 2,400:1, United: 1,175:1 & Continental: 1,125:1). All employees of Southwest Airlines are eligible for its incentive plan which is profit-sharing. In fact, the firm implemented the first ...
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