Introduction
Southwest Airlines highly promote corporate culture. This is by encouraging free and open communication as well as strong coordination among the team players. This in return yields positive growth which is characterized by high levels of productivity by the employees, efficiency of the operations and thus customer satisfaction. Top-level management is responsible for the creation and maintenance of the organizational culture. It also emphasizes teamwork rather than individual’s performance. Its 2008 report outlines how it cares in terms of the environment and communities around them. Southwest culture makes it competitive and an inspiration to many people (Bethune, 1999).
Corporate Culture and How It Affects Company Performance
Southwest Airlines has a unique culture. It has always thrived to keep its culture supportive, active and fun. Indeed it is different because it is not only stated in their policies but also seen in how the employees work. This unique culture has been maintained for almost 40 years. Herb Kelleher a co-founder and a long time CEO is greatly associated with southwest Airlines’ culture. In other words, its culture was established by its initial leaders. The Southwest Airlines culture’s is a great success and one of their biggest challenges. Their everyday goal is to maintain a positive corporate culture(Gerry, 1999).
To create an outstanding corporate culture, Southwest Airlines ensure that everybody owns the culture and therefore is responsible for it. It puts in place two cultures committees; at the local level and corporate level. In addition, they promote individuals to reflect their culture. Finally, the southwest ensures that their employees’ performance is measured alongside the company’s culture.
According to the Global Reporting Initiative, Southwest Airlines emphasize a triple bottom line for sustainability. These include three elements; the people, planet and performance. 2008 report describes southwest airlines as that which cares. In doing the right thing they look into the welfare of their employees, clients, shareholders as well as stakeholders. In other words, they work hard to do the right thing for the planet, communities, people and suppliers (Hoffer, 2002).
Southwest Airlines do the right thing for their employees by providing a conducive environment for working and growing. This allows being innovative. This has a positive impact on the company in that it becomes more effective. They take care of the planet to ensure stability. A stable planet not only provides a good environment for the business but also ensures survival. The customers are provided with affordable, safe, comfortable and convenient air travel. With this worrier spirit and working smart, southwest has maintained its position as the leading commercial airline.
Southwest Airlines has based three values. They include work being fun thus people should enjoy while doing it. They also state that work is important but emphasize that it not be taken too seriously. Finally, they appreciate that people are very important in their everyday operations.
The Company’s Financial Performance
In 2008, southwest airlines announced the 68th consecutive quarter of profit-making. Its profitability ratios indicate its accomplishments (Freiberg, 1996).
Operating Profit Margin= operating profit
Total revenue
Operating Profit Margin = $449 million
$11,023 million x100%
=4.07%
The operating profit margin indicated how much profit is generated by Southwest Airlines from the revenue. It does not include taxes and expenses hence the best method of evaluating the company’s operations. In this case, there was a 4.07% profit gotten from every dollar of the revenue.
Profit Margin= Net Income
Total Revenue
= $178 million
$11,023million x100%
=1.61%
Profit margin enables companies to compare in terms of success. In this case 1.61% is generated from each dollar for the Southwest Airlines
Return on Total Assets= Net Income
Total Assets
= $178 million
$14,308 million x 100%
=1.24%
It indicates the investment return from the assets. In this case every 100 $ invested on assets provided 1.24%profit
Return on Stockholder S’ Equity= Net Income
Total Stockholders’ Equity
= $178 million
$4,953 million x 100%
=3.59%
Return on Stockholders’ Equity evaluates Southwest Airlines performance alongside stockholders’’ equity.
Recommendations
Southwest Airlines should employ leadership actions that are long term in nature. For instance, they should recognize other people who participate in the day to day operations of the company. In this case, Southwest Airlines recognize and acknowledge their customers and employees. This is important in that it motivates the individual and those who witness it.
The leadership should act as examples. They should do things that they expect others to do. This is important because people coming in will follow those they find hence maintaining the culture (Hoffer, 2002). Empowering others is also very important in leadership. Southwest Airlines should allow their employees to work and be responsible in their areas of work. In other words, they should give them leadership responsibilities.
References
Bethune, G. (1999). From Worst to First: Behind the Scenes of Continental’s Remarkable Comeback. New York: Wiley.
Freiberg, J. (1996). Nuts: Southwest Airlines’ Crazy Recipe for Business and Personal Success.Austin, TX: Bard Press.
Gerry, J. (1999). Exploring Corporate Strategy. New Jersey: Prentice Hall.
Hoffer, J. (2002).The Southwest Airlines Way: Using the Power of Relationship Achieve High Performance. London: McGraw-Hill.