Strategic and Administrative Issues of the Southwest Airlines Merger

SOUTHWEST AIRLINES MERGER 8

Strategicand Administrative Issues of the Southwest Airlines Merger

Strategicand Administrative Issues of the Southwest Airlines Merger

Whenorganizations merge, there human resource cultures are likely to bereconciled. In most cases, the organization carrying out theacquisition carries out the dominant role in which the corporatecultures of the other smaller organizations are merged into thedominant culture. Recently, the company merged with the AirTranAirline Company (Gittell, 2003). This was one of the significantmergers in the aviation industry. Southwest Airlines has alongstanding reputation of having a low cost structure. Hence, itshuman resource adjustments after the merger are supposed to maintainits corporate culture and its industry reputation. This paper willdiscuss the human resource issues culminate for the merger. A SWOTanalysis of the merger entails several changes that will take placein the human resource of Southwest Airlines as a result of themerger. Finally, the metrics of assessing the effectiveness of thehuman resource management for the organization is an essential facetof this discussion. The recommendations of the paper focus of theissues that are likely to affect the effectiveness of the Southwestairlines human resource.

Themission of the Southwest Airline is to provide the highest possiblequality of aviation services to its customers with friendliness, thatdemonstrates the company spirit, deliver warmth, and inculcateindividual pride. The employees of the organization receive the samerespectful, caring attitude, and concern in a manner that encouragesthem to extend the same to customers.

Therole of human resource management

TheAirline’s human resource management recruits, hires, promotes, andtrains employees that have values and qualities that are concordantwith the company’s human resource culture. As a dominant humanresource culture, the department must hire the individuals that havethe qualities that fit the overall hiring strategy. AirTran employeesmay not be subject to these strategies and values because they werehired based on a different human resource culture. The airline’shuman resource culture also crafts interview questions and waysthrough which employees are hired into the organization. SouthwestAirlines has remarkable latitude in integrating the hiring andretention culture of its subsidiaries with its own. Although theAirline does not have a leeway for managers to use informalstrategies, they can still exercise their creativity in ensuringthat the merger has a progressive human resource culture.

SWOTAnalysis

Strengths

Agreat working environment for employees: The Southwest airline iscelebrated in the aviation industry as one of the best to workfor(Belcourt, M., &ampMcBey, 2010). This quality makes it attractivefor many prospective employees. The internal policy of theorganization is that they ought to help each other and support eachtowards their greater career fulfillment.

Theculture of targeted selection is likely to enable the airlines to getthe best out of prospective employees. Attitude is a very importantfactor in the company’s hiring profile. The airlines trainemployees who have identified to have the best attitude to work withother employees as a team. Such a culture is strength because itshields the airlines from the effects of professional rigidity thatare increasingly becoming outdated in the current businessenvironment in the aviation industry.

Adynamic reward system: The airline has a reward system that providesrun-of-the-mill benefits for its employees. Some of these benefitsinclude health coverage, vision, medical, and dental healthinsurance(Gross &ampSchröder, 2007). Few companies have suchbenefits hence, the merger is likely to enjoy one of the mostreassuring and smooth transitions in the history of the aviationindustry. Considering that even the Air Tran does not have such asreward system, the employees of the later are likely to find themerger more rewarding than the previous working environment.

Weaknesses

Alack of a unified strategy when getting into new markets: Thisweakness is more of a perception for than a real weakness for theairline because even other airlines also use the same strategy. Theairline uses celebrities such as actors instead of employees inrunning commercials in the media.Furthermore, salaries are awarded tothe top management and junior employees with a sense of pride andrecognition. Top manager receive below-mean salaries while junioremployees get above-mean salaries(Benkard,Bodoh-Creed &ampLazarev,2010). This strategy strengthens the human resource because they feelknow they also share in the profitability of the airline.

Opportunities

Theairline occupies a strong competitive position especially in theshort-haul market. The Airlines have different market segments thatother airlines do not serve. Hence, the company has a wide range ofhiring options that target many of the market segments they serve.

Threats

Themain threat for the Southwest Airlines is new competitors. Theindustry is not easy to enter but regional airlines are a potentialsource of competition in terms of providing the best workingconditions.The industry’s strict labor laws are also likely toincrease the wage bill especially for unionized employees.

Themetrics of the human resource management for Southwest Airlines

Verifyingthe effectiveness of hiring strategies

Theverification of the effectiveness of the airline’s human resourcepolicy is the best way to collect information about critical issuessuch as customer-contact personnel(Kaplan &amp Norton,(2004).Observation provides firsthand information on the behavior ofthe employees when serving customers. Their behavior can revealwhether or not they like their work. Management then responds byinitiating motivational strategies that would enhance the performanceof employees especially those from AirTran who need acclimatize to adifferent human resource culture.

Follow-upstrategies such as observations, evaluations and assessments

Theairlines’ managers can use these strategiesthrough retentionnumbers, employee satisfaction surveys, and the length of time of anemployee has been either of the airlines that merged. Each of thesemetrics provides information about the potency of the methodsemployed by the human resource department.

Performanceappraisal

Performanceappraisal is the best metric to know if employees are meetingcustomers’ needs especially after the merger. In this case, themanagement must ensure that the aspects such as customer services andemployee empowerment are part of the entire synchronization processfor employees that are working together in the merged businessset-up..

Thebalanced-scorecard: The balanced scorecard measures employee issuessuch as satisfaction, employee fit, and operations. The balancedscorecard measures and assesses the airline’s human resourceobjectives to determine existing loopholes.

Recommendationsto address the issues

Solicitfor feedback from employees and customers

Feedbackfrom employees vitally finds out the opinion of employee of thecurrent working environment. Honest feedback can be obtained throughquestionnaires that do not mandate the employee to disclose theiridentity.Alternatively, employees should have the opportunity tosubmit their suggestions on the changes that would improve theirworking environment. Customers are also a vital source ofconstructive feedback that would facilitate a change of animprovement in the human resource policy of the airline.

Retainits culture of fun-love for it to maintain its hiring competitiveness

Embedcustomer service in corporate culture so that it serves as a basis ofevaluating the suitability of the employees of both airlines in themerger. Both airlines have a unique customer service policy. However,the effectiveness of the strategies varies because of the uniquenessof each of the airlines. Southwest airlines should therefore, alignthe customer service strategy of AirTran with the dominant culture ofthe southwest airline with the aim of establishing a single metricfor customer service.

Initiatean open communication culture

Opencommunication is only possible when employees have a rapport withtheir seniors in each department. Open communication establishestrust and confidence in the existing human resource managers.

Conclusions

TheSouthwest Airline has very scanty information about its evaluationsand assessment strategies. This provides sufficient justification forthe manager’s culture of keeping their own data. For that reason,it would be plausible for the company’s management, through thehuman resource management, to formulate and execute additionalassessments through observations with the sole aim of establishingthe potency of all human resource practices for the companies. Thecompany should also determine the contribution of each employee tothe overall corporate culture of the airline. Many customers arecognizant of the airline’s corporate culture of fun-love. The bestof the airline is to maintain this corporate culture through aneffective human resource that continually makes customer experiencebetter by the day.

References

Belcourt,M., &ampMcBey, K. J. (2010).Strategichuman resources planning.NelsonEducation.

Benkard,C. L., Bodoh-Creed, A., &ampLazarev, J. (2010).Simulatingthe dynamic effects of horizontal mergers: Us airlines.Manuscript,Yale University.

Gittell,J. H. (2003). Thesouthwest airlines way.McGraw-HillAudio.

Gross,S., &ampSchröder, A. (Eds.). (2007). Handbookof low cost airlines: Strategies, business processes and marketenvironment.Erich Schmidt Verlag GmbH &amp Co KG.

Kaplan,R. S., &amp Norton, D. P. (2004). Strategymaps: Converting intangible assets into tangible outcomes.Harvard Business Press.