The Effectiveness of the HR Policies and Practices for Southwest Airlines - Example

The efficiency and effectiveness of the HR policies and practices for Southwest Airlines Introduction Of the domestic airlines in America, Southwest Airlines Company is the major one. It mainly provides short haul, point to point, high frequency, and low fare service. The airline forms the major carrier in the United States of America (Barney, 1991). The firm is famed for its low operating costs which have made it to be more competitive in USA. The firm is able to have low operating costs because it sources its aircraft from a single supplier; they have an efficient process; they have a high utilization, they have adopted point to point route structure and have employees who are highly hardworking and innovative. The aircrafts used by Southwest Airlines are manufactured by Boeing and only Boeing 737 is used. Since only Boeing 737 is used, the cost of training, maintenance and parts inventories are low (Huselid, 1995). In addition, southwest airline does not provide meals for its passengers. This keeps overhead costs down (Miles & Snow, 1984). The airline does not penalise its customers on issues such as changing same fare tickets are charged. Furthermore, the airline does not assign seats or provide electronic entertainment onboard. Passengers onboard Southwest planes are usually entertained by flight attendants who are highly energized and fun loving. The firm’s management employee relations, organizational training and strong leadership have been identified as sources of motivation for employees. HR Efficiency Efficiency refers to the ratio of outputs to inputs. Effectiveness has been highlighted by systems theory to be an important dimension for managers. The performance of a firm’s HR and its operations is related to HR efficiency (Gittell, 2005). HR performance entails the effectiveness of human resource management. Although there is no official link connecting organizational performance and HR practices, there is still that link. HR efficiency ensures proper management of people in a firm which lead to improved performance in the long run. The recruitment process of an efficient HRM is usually a sophisticated one. Employee recruitment and selection is one of the main decisions made by a company. This is because the running of any organization is dependent on the employees (Huselid, 1995). An organization ought to understand the process of hiring for it to be able to hire the most qualified and talented personnel. A company that sets the culture of learning, growth and advancement for its personnel is better placed when it hires new employees (Gittell, 2005). A firm needs to create a culture where its workforce is motivated to work by being respected in order for such a firm to be able to hire and retain top talent employees. Therefore, a company can only succeed when it takes care of its current workforce. Satisfied workforce is easily retained by an organization. In addition, firms ought to provide an enabling environment that can allow employees to learn and expand their knowledge and can therefore be selected for other tasks within the organization. Dynamic employees who are result oriented are usually required by a high performance firm. Such firms also are in need of workforce that is talented which is equipped with multidisciplinary knowledge and up to date skills. Such knowledge and skills helps in enhancing the values of the firm to its customers and ensure that it is well equipped to achieve this. Employees at Southwest Airlines are valued and therefore the firm delivers the necessary resources and services to prepare their employees to be winners. This supports the growth and profitability of the company as they preserve their values and culture. Southwest has a great reputation as a place to work and it therefore attracts many applicants for any job openings (Guest, 2002). In addition southwest is employee friendly and thus its recruitment process is usually successful. The firm spends enormous amount of time and money recruitment and selection process. This has made Southwest Airlines company to have a lowest turnover in the industry of 5%. The recruitment objective of southwest airline company is to invest a lot in the hiring process in order to get qualified and talented people who fit in the company’s culture of providing exemplary customer service. This is in line with its strategic plan of becoming the best airline with outrageous customer service. Based on the recruitment process, Southwest airline can be said to have an efficient HRM system (Gittell, 2005). An efficient HR entails appropriate psychometric tests and employs clear criteria in the selection of qualified people from its pool of applicants. In addition the interviews are structured as they should be in efficient HRM system (Guthrie, Snell, Nyamario, 2002). Detailed explanation on selection process of employees at Southwest Airlines Company is usually provided by the company. The company expends more money and time on selection process for it to find right people and therefore any company which can try to ape this can easily fail (Renga and Mentges, 2010). The selection process at the company is also in line with its culture. They look for people who can amuse their customers whether onboard or during any interaction with the customers. The company looks for people with the right attitudes because it believes that it cannot change the inherent attitude of a person (Huselid, 1995). This differs from other companies which do not value attitude at all in the selection process. Thus inherent attitude of potebntial employee is highly valued during the hiring process at Southwest Airlines. In particular, the firm looks for a blend of energy, team spirit, a sense of humour, in addition to self-confidence. This attributes are believed to be essential for any new employee to fit in the Southwest Airlines company culture. Southwest airline spends about six weeks to hire anew employee. Of those recruited, only 80% make it through the process of training at the university for People in Dallas. Selection process is carried out by the People Department of Southwest Airlines Company (Guthrie, Snell, Nyamario, 2002). The selection process is carried out by line managers and other employees the company has laid down procedures for all kinds of selection. These include personality tests, interviews and any other assessments. In spite the involvement of other employees in the selection process, the final decision is made by the line managers and specialized representatives from the People Department. All applications for placement at Southwest Airlines go through the peoples department and those selected undergo aptitude and attitude tests (Huselid, 1995). The managers at southwest company have undergone a career growth at the firm going through various promotions before attaining the current status. Interviews are also used in the selection process and this depends on the job available (Hill and Jones, 2009). Candidates who are team players from previous experience are the ones mostly selected when this method is employed. Calls for application are also used for selection process. Thus, based on the comprehensive selection process undertaken by Southwest Airlines, the firm can be said to embrace an efficient HRM process. Furthermore an efficient HRM is also characterized with a sophisticated induction and training. Induction entails introduction of new into the company or the organization. The time taken to induct and train new employees is believed to be an important determinant of the efficiency of the HRM system of the firm (Guthrie, Snell, Nyamario, 2002). At Southwest airlines new workers undergo theoretical training for two weeks and additional practical training for two weeks. All employees at the company also undergo training once a year to reinforce shared values. Given that there is an induction process and training of new employees at the firm, Southwest Airlines seems to support an efficient HRM system. The last process to look into when looking at the efficiency of HRM is performance management (Shipton et al., 2005). This pertains to how the HR department supervises and monitors the whole operations of the HR department, as well as the rest of the people that comprise the organization's workforce. Under efficiency HRM performance management processes are maintained as coherent as possible. This implies that all processes are orderly and logically organized and fitted (Guthrie, Snell, Nyamario, 2002). Even though Southwest Airlines management gives much independence to its employees, it expects all employees at the Southwest Airlines Company irrespective of their job to show outrageous customer service. Thus the firm rates its employees based on customer service. In spite this; thye firm also rates performance based on comments from various functional units within the firm and thus it is not limited to the judgment of managers. This ensures justice in the rating of performance and encourages team work instead of competition. Any delays in a certain process are blamed to entire team and not an individual (Huselid, 1995). This reduces cases of shifting blame and encourages employees to assist one another. Thus performance measurement is used to foster team work, learning and improvement instead of providing accountability and being connected to punishment as seen in other companies. Thus there is some evidence the management at the firm managing performance and thus the firm can be said to have an efficient HRM system in terms of performance management. Human Resource Management Effectiveness HRM effectiveness entails tailoring the organization's outputs to be in line with needs and wants of the external environment. The external environment includes groups such as customers, suppliers, competitors, and regulatory agencies. It has been argued that sustained competitive advantage emerges from effective human resource management. HRM effectiveness has been defined as the ability of the firm to deliver strategic and technical qualitative HRM activities. Operationally, HRM effectiveness is the satisfaction of the HRM with various activities of HRM department (Grubbs-West, 2005). Some assumptions have been made in literature about high performance work practices that firms implement these practices in a holistic, meaningful, and effective manner (Huselid, 1995). However, many firms implement these practices in a pieces, which implies that the efficacy of such firms is eroded by inconsistency and a lack of supporting HRM systems. Furthermore, HRM practices may be adopted for institutional reasons instead of being adopted and implemented for provision of potent organizational force. It has been noted that what matters is how a firm employs its organizational capabilities and its ability to manage human resources because resources or practices do not produce on their own (Ulrich and Brockbank, 2005). Another factor which erodes the effectiveness of a firm is an organizational environment. Thus, high performance work practices are by no means synonymous with effective HRM systems. HRM systems have traditionally been based an efficiency objective which offers stable procedures and protocols. These procedures and protocols have a set of processes which deals with routine employment problems (Ulrich and Brockbank, 2005). It has been noted that bureaucracies are introduced in firms to manage routine tasks in order to attain organizational efficiency. Traditional HRM systems have rules and procedures which ensure that there is consistency and fairness within the firm. Thus, an effective HRM system should enhance the firm's ability to attract and retain qualified employees and promote efficiency. Contrary to this, most effective HRM practices lack the flexibility of high performance work practices (Michie and Sheehan, 2005). Thus a firm that is pursuing an innovation objective may have its effective HRM practices interfering with this goal by focusing on routines and rules that do not provide an environment conducive for stimulating innovation (Huselid, 1995). Further, organizations that are structured to deal with stable routine tasks are less able to adapt to uncertain, dynamic environments. Many authors have argued that high performance work practices have substituted traditional HRM. This is based on the fact that firms must choose either to implement high performance work practices or to implement the traditional bureaucratic HRM practicess (Grubbs-West, 2005). This argument is consistent with the strategic approach which suggests that firms must align their HRM practices with their business strategy in order to attain superior results (Huselid, 1995). Based upon this reasoning it has been found that high performance work practices are associated with increased innovation while HRM effectiveness is associated with increased performance, and together both high performance work practices and HRM effectiveness is associated with both goals (Ulrich and Brockbank, 2005). Owing to this finding some researchers have argued that although high performance work practices and HRM effectiveness are typically viewed as substitutes, they may complement each other. Thus, high performance work practices apparently yield more benefits in an environment where HRM is managed well, and HR management is enhanced because high performance work practices lend flexibility. HRM researchers have suggested that high performance work practices are beneficial to all employers. The connection between high performance work practices and HR effectiveness has resulted in emergence of strategic HRM which has been found to be crucial for superior performance. Strategic HRM requires firms align their HRM practices to their business strategies (Grubbs-West, 2005). It is argued that a firm which invests in its employees and their training results in earning the employees’ commitment and work effort. However, because high performance work practices do not come cheaply, firms either need to increase their productivity or to provide an innovative environment which can offset these expenses. Thus, the compatibility of high performance work practices is less with firms pursuing efficiency objectives as opposed to firms whose success is more dependent on innovation. Strategic HRM thus embraces high performance work practices which gives employees some autonomy in decision making process and thus reduces the need for formal supervision (Lauren & Foss, 2003). Thus firms or employers who seek to innovate or provide a responsive service find high performance work practices to be important although this may be problematic for employers pursuing efficiency objectives. Firms which embrace bureaucratic structures are not likely to benefit from strategic HRM. This is because such firms have rigid rules and procedures which do not give the employees an avenue to participate in decision making process. Such rules and practices enhance HRM efficiency and at the same time hinder innovation (Grubbs-West, 2005). Thus, it has been argued that firms which seek innovation objectives would benefit more from high performance work practices than would employers seeking a market efficiency objective. On the other hand, employers who are seeking market performance would directly benefit more if HRM were implemented effectively. Thus, performance objectives are best met through effective HRM and high performance work practices alone are not able to meet performance needs of the firm (Lauren & Foss, 2003). On the other hand, high performance work practices are correlated strongly with innovation objectives suggesting that they are much more consistent with generating ideas rather than efficiencies. It has also been found that HRM effectiveness alone may be too rigid to enhance innovation. Thus in order to enhance innovation and at the same time ensure market performance a firm must integrate HRM systems with high performance work practices. Southwest Airlines embraces practices that enhance innovation and performance of the firm. The firm employs several practices to support these objectives. For instance, the benefits received by employees at Southwest Airlines are incomparable. They include medical, dental, vision, life and long term disability insurance, dependent care, mental health assistance and adoption assistance. Other benefits include free flights by employees’ families on the flight. These practices enhance output of employees at hence enhance performance of the airline (Lauren & Foss, 2003). The company also values its employees a lot. There is also a job security at Southwest Airlines. These benefits have helped the company to have a low employee turnover. Low turnover at Southwest Airlines has great contribution to its performance since the process of recruiting new workers is time intensive and expensive. In addition the training enhances the capabilities of the employees and therefore when they leave the company new recruits will need to undergo the training. Furthermore, most managers at the company have been promoted from within which implies the company has invested much in their development if they leave the performance of the company will be derailed. At Southwest Airline an individual forms part of the system (Lauren & Foss, 2003). At individual level Southwest Airlines recognizes that their employees are their competitive advantage and therefore they deliver the necessary resources and services to prepare their employees to be winners in order to support the growth and profitability of the company as they preserve their values and culture. This is internally derived and not external hence supporting the fact that the firm has a closed system. Another component of the system is the formal and informal organization. As a formal and informal organization, Southwest Airlines has incomparable benefits offered to its employees (Grubbs-West, 2005). The benefits offered by southwest airline differ from other airlines implying that the firm is innovative. In terms of patterns of behaviour emerging from role demands of the organization, southwest airlines company is an excellent example of a social invention that helps people to discover their true capabilities (Grant & Shields, 2002). The social environment at southwest airline combines humour and responsibility. Employees at southwest airline work in teams without outside supervision (Michie and Sheehan, 2005). At job interviews, prospective employees are expected to be humorous and an attitude of self development. Only those candidates who meet the laid down profile are hired. This often results in recruitment of employees who are highly motivated, and an efficiency work environment that attracts customers. In terms of role comprehension of the individual at southwest airline, management employee relations, organizational training and strong leadership has enabled all individuals to know what is expected of them (Shipton et al., 2006). Thus, employee acquisition at southwest is not based on the known HRM procedures but rather internally derived. In terms of physical environment in which individuals work, southwest airline is conservative about the safety and its finances. Southwest has created a horizontal organization based on cross functional teams to diffuse blame that is common flat organization. Southwest airline’s culture emphasizes teamwork over individual effort (Lauren & Foss, 2003). The firm employs a procedure called team delay which is a less precise reporting of the cause of delays with the aim of diffusing blame and encouraging learning. Thus, team delay is used to identify problems between two or three different employee groups which work together (Trusss and Gratton, 1994). Southwest culture also emphasizes small supervisory spans of control. For instance a southwest supervisor is on the job to help the front line employees perform their jobs better, not police the duration of someone’s lunch hour (Lauer, 2010). All these facts point out that southwest has adopted a closed system which is highly dependent on internal environment rather than inter dependent with external one. Thus the firm has an effective HR and embraces high performance work practices. Conclusion Even though it has been argued that HR efficiency, HR effectiveness and high performance work practices are difficult to be implemented at the same time in one organization; Southwest airline has innovatively tried to balance the three aspects in its HRM practices. As a consequence of this, the firm has efficiency, effective and high performance work practices. This has allowed the firm to be one of the best performers in the airline industry and at the same time being innovative. Reference Barney, J 1991, ‘Firm resources and sustained competitive advantage’, Journal of Management, 17(1), 99–120. Gittell, J 2005, The Southwest Airlines way: using the power of relationships to achieve high performance, New York, McGraw-Hill Professional Grant, D & Shields, J 2002, ‘In search of the subject: Researching employee reactions to Human Resource Management’, Journal of Industrial Relations, (44–3), 313–334. Grubbs-West, L 2005, Lessons in loyalty: how Southwest Airlines does it: an insider's view, London, CornerStone Leadership Inst. Guest, D 2002, ‘Human resource management, corporate performance and employee well-being: Building the worker into HRM’, Journal of Industrial Relations, (44–3), 335–358. 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