south west airlines - change in leadership
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South West Airlines - Change in LeadershipTRANSCRIPT
An Airline in Trouble?Presented by:Anuprabha DBinny SinghPrapti AgrawalShachi GoyalT. Sandhya
IntroductionIntroduction
Southwest Airlines
Change in CEO
Implications of the change
Change In LeadershipChange In Leadership
In 2001Herb Kelleher stepped down as CEO and President of SW Airlines.
James Parker became the new CEO
Parker v/s KelleherParker v/s Kelleher
• KELLEHERoFlamboyant and fun loving attitudeoGreat communication and
negotiation skillsoHigh on extraversionoPromoted shared identity and values
in the companyoIconic StatusoGreat motivational power
PARKER
oReservedoStaidoGood negotiation skills oPoor communication skillsoLess motivational power
ANALYSISANALYSISTheories Of Leadership• Behavioral model of leadership- Kelleher, a
perfect example of the model • Contingency model
Casual Variables
Group performance
Contingency VariablesGroup atmosphere
Task structurePosition
Continued…Continued…
Based On Contingency Model Kelleher score high on the three
variables.Parker score low on these
variables
Leader – Member Exchange Theory
oKelleher did not believed in “in-grouping and out-grouping”.
oLess interaction with out-group by Parker
Contemporary Model
1. Transactional model2. Charismatic model
o Kelleher, a combination of both models
o Parker belongs to Transactional model
Transformational Leadership Model
o Kelleher possessed all the three variables
o Parker possessed only Intellectual stimulation variable
RecommendationRecommendation
Gradual change in leadership
Selection of the successor 1-2 years before the retirement of Kelleher
Change in CultureChange in Culture
Kelleher’s time
◦People oriented◦Informal ◦Nurturing◦No distinct level of hierarchy◦Flexible◦No employee restlessness
Parker’s time
◦Lack of communication between management and employees
◦Formal◦Lack of flexibility◦Conflict with labor unions on working conditions and pay.
◦Employee began to disassociate themselves with the culture
AnalysisAnalysis
Types of organization culture
Clan cultureEntrepreneuri
al culture
Bureaucratic culture Market culture
Flexible
Stable
Internal External
AnalysisAnalysis
In Southwest airlines they had Clan Culture
On basis of performance Southwest had a Strong CultureoManagers and employees share common
values and methods of doing business.
There was a shift towards Market Culture
RecommendationRecommendationCultural committees should work
more actively
Programs to encourage interaction between employees at all levels.
Greater part of senior management in socializing with the employees.
MotivationMotivation
Under Kelleher• Employees did not mind doing
work out of there sphere.
• Employees went out of their way to improve customer service
• Sense of belongingness in the company
Under Parker
Union unhappy with work and pay
Demanded remuneration for “extra work”
Flight attendants felt secondary to pilots
What Went WrongWhat Went Wrong??
Motivation and lack of it.
Southwest employees drew motivation from Kelleher.
No Longer Industry Outsiders.
How is Motivation How is Motivation ImportantImportant
The willingness to exert high levels of effort towards organizational goals conditioned by the effort’s ability to satisfy some individual need.
The Motivation ProcessNEEDS DRIVE
INCENTIVE
Theories Of MotivationTheories Of MotivationHerzberg’s Theory
Equity TheoriesEquity Theories
Equity
Inequity Person’s OutcomePerson’s Input
Other’s OutcomeOther's Input
Person’s OutcomePerson’s Input
Other’s OutcomeOther's Input
Person’s OutcomePerson’s Input
Other’s OutcomeOther's Input
RecommendationsRecommendations
Parker should connect with his subordinates.
Learn from Kelleher( e.g. watch his videos).
Informal meets within the organization- interaction.
Customer relationsCustomer relations
Post 9/11 security measures took a toll on first-come-first-serve seating
Refusal to take ticketing enquiries over e-mail
AnalysisAnalysis
First-come-first-serve seating a perceived benefit for the customer.
Lightly staffed airport systems resulted in delays in purchasing tickets. Not accepting email enquiries caused wastage of time.
RecommendationsRecommendations
Incorporating a system to make seating more structured.
Utilizing staff in the best possible way to ensure minimum delays in ticketing.
Accepting email enquiries.
Rising CostRising CostRising fuel prices
Early retirement plan accepted by more than thousand employees. Expenditure on recruitment.
Higher labor cost as a proportion of operating cost
Hedging position due to expire in 2005
AnalysisAnalysis
Cost was a big competitive advantage
But it was losing its cost advantage and also the market to other low cost airlines.
RecommendationsRecommendations
Needs to adapt to new costs and strategize its future policies.
Rising CompetitionRising Competition
JetBlue and Air Tran- 2 main competitors
Jet blue offered better facilities like more legroom, comfortable leather seats, set back television sets and free internet
Had best record for punctuality and baggage handling
It was a non union airline
AnalysisAnalysis
Because of increase in number of competitors in the airline industry and better services being provided by the other market players SW airlines was losing its market share.
RecommendationsRecommendations
Update itself with market trend and improve on its facilities to retain its old customers and attract new ones
Improve its customer services like baggage handling, boarding on time
Regular feedback from customers
Can Kelly Replace Can Kelly Replace Kelleher?Kelleher?
2004 : Gary Kelly joined as new CEO
Kelly would be compared to Parker not Kelleher
Kelly should learn from Parker’s mistakes.
THANK YOUTHANK YOU