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VIDEO CASE
LUV IN THE WORKPLACE: SOUTHWEST AIRLINES
    You feel the difference the first time you fly Southwest Airlines (stock
symbol: LUV). Employees are friendly and funny. They joke with
passengers, but are helpful whenever needed. That’s not always the case
with airlines these days, especially since September 11, 2001 and the
extra security and fall-off in airline revenues. Southwest is the only
consistently profitable major airline.
    Other carriers try to imitate Southwest, with some success, but
Southwest still leads the way. It has the best service record for baggage
handling, the least customer complaints, the best safety record, the
lowest workforce turnover, and the best labor relations. The latter is
somewhat surprising because the airline’s workforce is 85 percent
unionized. Nonetheless, Southwest continues to outshine other
companies in the industry for some reason. Why? The video offers several
explanations, but perhaps the most important is that Southwest focuses
as much on pleasing its workers as it does on pleasing its customers.
    The relationship between management and workers, historically, has
not always been so pleasing. That’s the reason there are unions in the
United States. Unions fought for improvements in the minimum wage,
overtime pay, workers’ compensation, severance pay, job safety, and
child labor laws. Workers today often forget the debt they owe unions for
making such improvements in working conditions.
    Today, labor contracts include the terms and conditions under
which labor and management will function over a set period of time. If an
employee has a grievance, he or she can go to a union representative to
have it settled. If settlement is not forthcoming, a formal grievance
process is in place to reach a satisfactory conclusion.
    Such procedures seem straight forward and mutually satisfying. The
truth is, however, that labor and management often fail to reach a labor
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contract. In such cases, union workers may resort to a strike—that is, a
work stoppage. They may also picket or call for a boycott of a company
and its products. Management may lock employees out of their jobs or
hire temporary workers (called scabs) to replace union workers while
they are on strike. In short, tensions can develop between both sides that
become quite heated. In these cases a mediator may be brought in to
make suggestions as to a fair and equitable solution. An arbitrator can
also be used; both sides are bound by the arbitrator’s ruling.
     How did Southwest avoid such labor problems? Southwest begins its
close cooperation with employees by bringing them to its University for
People. The New Hire Training Course gives them a history of Southwest
and the importance of employees to that history. The training looks at
failed airlines of the past that at one time were large, effective, and
profitable. Employees today are less concerned about wage increases and
work conditions and are more concerned about employee benefits and
job security, the latter being especially important in the airline industry.
That does not mean, however, that Southwest does not pay well or
provide great benefits. Benefits include child-care and elder-care
referrals, a counseling service and a catastrophe fund for those who get
caught in dire emergencies.
     The airline “hires for attitude and trains for skill.” Skills can be
learned and Southwest helps people attain their goals. Many employees
even bring their spouses to work for the firm as well. A good company
with good employees is a winner today, even in highly competitive and
hard-to-make-money industries like the airlines.




Thinking It Over:


1.    Discuss how the labor-management relations maintained by
      Southwest have provided a significant benefit to the organization.
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2.   Describe why you would or would not like to work for an
     organization such as Southwest. Identify the primary reason
     associated with your choice.
3.   Labor-management relations have a history for being adversarial in
     nature. Discuss methods used by Southwest to diminish this
     adversarial relationship. Have these methods proven to be
     beneficial to the organization? To the employees? Explain.