Introduction
Southwest Airlines is an American low-cost carrier whose mission is to connect people to what matters to them through low-cost, friendly flights (Purpose, Vision, and The Southwest Way, n.d.). The company currently employs a cost leadership strategy and servant leadership approach that ensures low operating costs and low costs to the customers (Zou & Yu, 2020). The airline further utilizes human resource management (HRM) implications such as a thorough recruitment process, a well-defined hiring philosophy, and need-based hiring during peak seasons. The secret of successful company management lies in encouraging an innovative approach among the personnel, the transparent management of resources, and the clarity of the designated goals. However, when entering the international arena, the company may face new challenges, including difficulties with the recruitment process the relationship of culture and vision in the context of the ethics of the new market. The company must use a new HR strategy to ensure that employees are highly qualified, retained, and productive in the face of geographic expansion of their services.
Current Strategies and Issues
The company uses the servant leadership approach within the organization, which implies an attentive and sensitive attitude towards its employees. Employees feel essential, involved in essential processes in the company, and management, taking care of them, gains authority and confirms its values. The company employs over 60,000 staff, with 4,000 domestic and international flights (Southwest Airlines, 2020). Southwest Airlines faces several competitive, technological, and human resource challenges. In addition, the suspension of the North American Free Trade Agreement is likely to present challenges in company operations and hiring practices. Southwest is not expanding fast, particularly on the international market, and, therefore, cannot hire new employees to service its planes and customers. It is shocking as countries such as Mexico have a lower gross hourly compensation than the United States. The gross hourly wage in the US is almost ten times higher than in Mexico, $39.03 and $3.91, respectively (Noe et al., 2021). In addition, employee unions demand wage increases, negatively affecting the company. Overall, Southwest Airlines faces collapse on the international market as it cannot hire employees at minimum wage to support the company expansion.
Southwest Airlines was built on low cost, simplicity, labor harmony, strong corporate culture, employee retention, and rapid expansions. Thus, it can be argued that the company employed the cost leadership strategy, with a specific focus on functioning within the established market while preserving the same level of cost for the customers (Noe et al., 2021). However, these strategies should be worked out to enter the new markets, so a new HR strategy should be considered for the further growth of Southwest Airlines. Specifically, a new approach should be implemented to expand the Mexican market.
Southwest Airlines Primary Strategy
The primary strategy of Southwest Airlines is the cost-leadership and servant strategy. The carrier is the leader in costs in the US market. According to Vargas Hernåndez and Gastélum (2018), since 2008, the company has held a nearly 33% price below the market average. Thus, the company gained a substantial advantage over its competitors due to its lowest-cost services provider. Servant leadership in the context of this airline prioritizes the satisfaction and well-being of employees who work more efficiently when engaged and confident. Maintaining affordable prices for flights in Mexico will be a relevant decision for the company, but this approach to leadership requires more attention to customers.
Human Resource Management Implications
Effective HRM strategies support the goals and objectives of a business venture, while ineffective strategies can result in a decline in corporate culture, low employee cohesiveness, poor job performance, and revenue loss. The HRM implications for Southwest Airlines include employee recruiting philosophy, thorough hiring process, and need-based hiring approach (Genovese, 2021). The carrier hires employees when more workers are required to run the companyâs services, i.e., during peak seasons or new market expansion (Genovese, 2021). These implications make it possible to select employees not only by their actual skills required for operational activities but also by soft skills and career expectations, which play an essential role in understanding the philosophy and culture of the company. All potential employees go through several interviews to assess their skills and ensure that their values and attitudes align with the company’s (Southwest Airlines, 2021). As the company positions itself as a family, its hiring philosophy is to recruit persons who are a good fit and exhibit the right attitude for the job and readiness to learn various skills to support the company. This approach is enough to implement an assessment of the skills required to work on international flights: knowledge of the language, culture, and traditions of countries, decision-making, and conflict resolution skills. While employee happiness and satisfaction are prioritized over customer satisfaction, both are extremely important, and to enter the international market, also requires taking into account the relevant ethical rules of the country.
Business Strategies
Considering the discussed HRM implications, Southwest Airlines can offer several business strategies. The focused retention strategy can be implemented to ensure that the employees whose values match the company’s culture (Noe et al., 2021). With Southwest Airlines implementing a sideboard leadership policy, the critical sources of employee satisfaction need to be activated: benefits packages, salary indexation, workplace comfort, and feedback on personalized offers. In addition, the company can introduce outsourcing for a short period to address the need for an increased number of employees during peak travel seasons (Noe et al., 2021). The business strategy for solving internal problems lies in the plane of the sideboard leadership features. The company pays enough attention to employees to maintain their satisfaction and involvement in the process builds an inclusive and diverse organizational ethics. Innovative strategy options in this situation can include both customer-centric approaches and changes within the organization. For example, low-cost flights can offer unique services as a marketing campaign that are the privilege of a more expensive segment: free food and drinks the introduction of loyalty programs. From the point of view of the organizational structure, a company can launch a project with adaptive leadership: it faces tasks that require a flexible approach and in the face of developmental uncertainty. As part of this method, a team is allocated that is responsible for making decisions at every step of entering the Mexican market, adapting the structure of the future Mexican department of the company to local conditions.
HR Strategy
As a result, capturing the target audience of a new market will require a fierce marketing campaign for unique customer offers for a low-cost airline. In addition, creating an HR strategy in the formation of a new department in Mexico will be required. At the first stage, a team is selected using an adaptive leadership approach, acting in conditions of uncertainty and analyzing the market and audience. Then the basic requirements for hiring an employee are formed, who will later receive training in the skills identified as critical within this vacancy. Furthermore, employees can be offered temporary and permanent relocation programs to ensure the transference of skills from most experienced employees to the new hires. Accordingly, a new international cultural experience will be introduced through the HR department, with the help of which Southwest Airlines will be able to enter other international markets.
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