Introduction
Southwest Airlines is a passenger airline that provides air transport services in the United States of America. The airline has been a role model for not only other domestic airlines but also other businesses from different industries. The company has witnessed massive growth and development throughout the years and part of this growth has been attributed to the company’s overall organizational structure and design. The fact that the company belongs to the “low cost” market segment has also been a contributing factor to its success. This paper seeks to conduct a comprehensive analysis of Southwest Airline organization structure and design and provide recommendations for improving this design and structure. The paper will also assess the organization system utilized by Southwest airlines and the effectiveness of this system.
Before dwelling on the actual organization design of Southwest Airlines, it would be wise to first explore the concept of “organizational design” in detail. Organizational design is one of the most important components of organizational theory. In its simplest definition, it refers to the manner in which an organization’s management achieves the perfect combination of integration and differentiation of its organization’s operations in response to the uncertainty level in the organization’s external environment (Jones, 2010). As discussed in the previous papers, Southwest Airlines exists in a highly uncertain environment. Factors or forces within the specific as well as the general environment bring about this uncertainty. Specific environment forces include suppliers, customers, competitors, distributors and the government. General environment factors include technological forces, political forces, economic forces, international forces, environmental forces, demographic forces and cultural forces. It is in times of high uncertainty that the appropriateness of an organization design is exhibited. In such a situation, great organizational effectiveness is attained via high differentiation together with high integration. In times of low uncertainty, the reverse applies.
In an established organization such as Southwest Airlines, it is extremely important that the organization management and shape is adjusted accordingly depending on the level of uncertainty so that the organization can achieve its goals. As mentioned previously, Southwest Airlines has experienced massive growth in recent years and with such growth, the organization design slowly becomes more complex. This paper therefore hopes to provide some of the key concepts of organizational design and its importance. The relationships between structure, strategy and process in South West airlines will also be assessed. In addition, the relationship between the organizational design and the decision making process in the organization will also be explored. The advantages of the company’s type of organizational structure will also be looked at.
The main goal of Southwest Airlines is to be a leading domestic carrier that operates direct flights on domestic short haul routes at a high frequency rate and at low prices or fares. The airline is often referred to as a “low cost carrier” due to its relatively unique model of business. This business model usually includes the flying of only one aircraft type, which is the Boeing 437, on routes of high density throughout the US. The airlines’ “low cost” model of business is also characterized by another distinct element. This is the fact that the airline does not offer many airline related services that are common with other domestic and international carriers (Gittell, 2003). These include things such as airport lounges, First Class cabins, audio/video programming, reserved seat assignments and so on. By the company not offering some of these services common with other carriers, Southwest asserts that it can offer reduced fare prices and at the same time produce a high return on investment that the other air carriers that provide luxurious services to their customers. Southwest model of business can be summarized into six operation strategy traits as shown below:
- Limited Passenger
- Short haul routes between cities that are midsized and secondary airports
- Low-ticket prices
- High aircraft Utilization
- Frequent departures that are reliable
- Lean but heavily productive gate and ground crews
A company’s organizational structure can make or break the company. In the presence of highly advanced technology, many organizations are operating in a business environment that is highly dynamic. To adapt to the changing environmental factors, it is of crucial importance that the organization has an appropriate type of structure (Jones, 2010).
In terms of organizational structure, the company utilizes one of the functional type that is very flexible in nature. This type of organizational structure comprises of three layers of management. In this functional structure, the entire decision making process occurs at the top management levels. Such a decision-making system makes sure that the upper management is the one with complete control of the organization. In addition, it provides the company’s employees with a clear career trajectory, that is, from the low or junior level positions to the decision-making positions located at the top (Gittell, 2003).
A functional structure has several advantages over other types of structures. First, it provides efficiency and stability, especially in a complex and large corporation such as Southwest Airlines. This is because every stakeholder including the employees and the management use similar process. Such a structure also allows large and complex organizations to make utilize the economies of scale to their advantage (Jones, 2010).
The functional type of organizational structure however has its disadvantages. For instance, it can lead to poor interdepartmental communication. This can translate into situations a company’s departments fail to work in unity and conflict ensues. This can then lead into another situation where the customers or client so the company become frustrated because of the lack of interdepartmental cooperation especially in situations where they have to go from one department to the other to complete their transactions (Jones, 2010).
As mentioned earlier, the functional organizational structure that Southwest Airlines has adopted is unlike many because of its high flexibility. Although the top management makes most of the decisions, employees in the lower levels are given a platform to air their views and opinions (Gittell, 2003). The organization also encourages creativity and innovation from its employees when they are carrying out their duties and roles in the company. The management of Southwest Airlines fosters team coordination as well as open communication lines between the management and the employees. The company’s management offers great support to its employees to facilitate their delivery of efficient services and increase overall productivity by making sure that customer complaints and flight delays are minimized (Gittell, 2003).
Burton (2006) defines an organization system as the procedures and processes that a particular organization utilizes when planning, executing and evaluating strategies and measuring their performance levels. Southwest Airlines is notorious is famously known for its practice management style that places focus on risk management in the organization. For example, the company takes initiatives to hedge against or protect itself from fluctuating fuel prices. Its ability to sustain a low cost strategy has been one of its most critical success factors. The price of fuel usually forms the bulk of the cost incurred by airline corporations and therefore, the ability of Southwest airlines to mitigate the fluctuating fuel prices effect is a critical success factor.
Form the above discussion, it is clear to see that Southwest Airlines has a very good organizational design that supports strategy implementation. This is in accordance with Burton (2006), who claims that if the organization is to succeed, it organization design must support the implementation of strategy. As mentioned earlier, organization design mainly refers to the structure, the procedures and processes as well as the technology utilized by a company in achieving its goals and objectives. Southwest Airlines has an organization structure that support threes key factors of success. These are teamwork, open communication and job autonomy. Such factors that impact stupendously on the ability of the employees to work effectively and efficiently and consequently increase the organization’s overall productivity.
However, no organization is perfect and there is always a room for improvement. One area that the company needs to improve on is adherence to federal standards and guidelines for safety and maintenance requirements. In the past, this issue has caused the company to experience substantial losses due to the fines that are incurred. The management needs to re-adjust it systems and structures so as to ensure that such issues are taken care of and do not cause problems in the future. It should be ensured that the company fully adheres to the regulations and roles of the industry to ensure to avoid future damaging publicity as well as legal expenses.
In addition, the company needs to adopt a more decentralized organization structure and systems. Although employees are given a platform to air their views and opinions as well as be creative and innovative under the current functional structure, the decision-making system needs to be decentralized. The departmental heads and the employees to be given more power when it comes to decision making. The power to make decisions should not be exclusively reserved to the top management. In any case, many of the individuals at top management levels have no clue of what of what is taking place at the company’s roots and should therefore not be handed this enormous power. The level of flexibility in the organization structure and system is not enough especially in a period where the environment is very dynamic.
In conclusion, it is safe to state that Southwest Airlines has been able to adopt an organizational design that is supportive in the pursuance of its goals and objectives. Its organizational design and structure has enabled the company’s management to implement a corporate strategy that fits with all the organizational components. If the company rectifies some of the little misdemeanors mentioned above, it will continue growing and experiencing massive revenues.
References
Burton, Richard M. Organization Design. New York: Springer Science+Business Media, LLC, 2006. Print.
Jones, G. R. (2010). Organizational theory, design, and change (7th ed.). Upper Saddle River, NJ: Pearson Prentice Hall. ISBN-13: 9780132729949
Gittell, J. H. (2003). The Southwest Airlines way: Using the power of relationships to achieve high performance. New York: McGraw-Hill.
