ASSIGNMENT ³What special organisation features do these companies have that make them different?
Evaluate the effectiveness of these features in helping the companies concerned to achieve better performance. What evidence is there to support this?´
1. Southwest Airlines Southwest Airlines is one of the most successful companies which were formed in the year 1966. It has been in the most admired airlines in the world since the year 1997 and is always been amongst the toppers. Initially when the airlines were launched, there were very few routes being followed, but later it became few of the low-priced airlines. It served more than 60 American countries earning a business of almost $12 billion by the year 2004 (LaBarre, 1996). The company has around 35000 employees in the company. There were various tactics been used by Brantiff Airlines and Texas International, who were the competitors to this company, in order to maintain it in a grounded position. After 1973, when once the profits were earned by the company, there were no losses been recorded afterwards and also, it could sustain the crisis after the 9/11 attack. This company came out of crisis well as compared to other airlines in the United States (Child, 1972). In the Fortune¶s list the company has attained a position of one of the top ten employers and it was into one of the most admired companies in America. This was the scenario since the year 1993. There was increase in the number of people wanting to work in this company and that was evident from the number of applications ± 216000 as compared to number of vacancies that was only of around 5000 jobs (Anne and Zeithaml, 1996). The company has been benefitted by the higher productivity that has enabled the company to keep itself in the low-priced airlines. The company maintained number of employees to the level of 94 in the year 1998 and in contrast to this, the other American airlines had somewhere around 160 employees each. This company had number of employees even lower than the industry average of around 130 numbers of employees (Burns and Stalker, 1961). The reason for such a high productivity can be attributed to the motivation given to the employees to become productive to the limit they can and was not just because of relaxed and employee friendly culture of work. The employees were paid at par with
industry average pays but were required to work harder by undertaking extra unpaid duties. There was also a dispute been going on with the flight crew for demanding flexibility in efforts in work as compared to their pay cheques (Peters and Waterman Jr, 1982). There were conscious efforts being made by the competitors of these airlines for developing a business model similar to it. The main areas of focus were technology, cost structures as well as planning of routes. There were problems in imitation of the strategy of business adopted by the Southwest Airlines in spite of same equipments, locations as well as market knowledge (Dorothy, 1992). The main reason for failure in adoption of the business strategy was due to the approach towards people and organisation. The approach followed by Southwest towards people and employees can be enlisted as follows: y y y y Security of Job Lesser Hierarchy levels Lower bureaucracy Corporate Culture with consistency
2. Semco Semco is a Brazilian company into manufacturing of industrial equipment. The company is located in and around Paulo, Brazil. Ricardo Semler is the Chief Executive Officer as well as the Owner of the company. The company has attracted much fame owing to its non-conventional manner of managing the organization (Peters and Waterman Jr, 1982). In 1980, this company was taken over by Ricardo from his father who was working in a conventional manner but was almost on the verge of bankruptcy. With the methods adopted and reforms came in as per Ricardo, the company became stronger and got ahead even with the worst times of Brazilian economy. The sales volume increased to five-folds with inflation during the time ±period between 1980 and 1992 and it became thrice during 1990 to 1996. There were no losses being made in 1980s and 1990s due to currency devaluation for four times, hyperinflation and also unemployment to its record. Now, the company is growing and is earning $ 100 million a year.
There has been an attempt made by around 150 fortune 500 companies to know the business success secret of the company (Child and Faulkner, 1998). There were following major values of the company (McGrath, 2001): Sense of Participation: There were self-managed group who were responsible for all the aspects of production. There were six to ten people participating in each group. These people were responsible for all work from preparation of budget to organizing activities to production. Sharing of Profit: The employees receive around one-fourth of the profits earned from respective divisions. Reduced hierarchy and lower level of bureaucracy: There were no rigid uniform rules and even there were minimum level of hierarchies. All employees were treated at par which included Semler himself. There were no offices managed privately, office attire was at the discretion of employees and there were counselors appointed for deciding of policies and strategies. Freedom of Information: The financial data of the company is freely available to the employees and they are free to access the same. There was also a facility wherein the employees were trained to interpret balance sheets as well as cash flow statements. The company as a whole has survived through the liquidity crisis in the early years of 1990s; there were pay cuts instead of layoffs. There was flexibility inserted in the work arrangements so that the productivity could be raised. With these practices, there was emergence of a very knowledgeable staff in the company (Burns and Stalker, 1961). It can be concluded that though there were many differences, but few common features existed in the companies that progressed along with greater responsibilities being handed over to the employees. The layers of hierarchy were reduced and there was more of information sharing, lesser privileges and delegating authority (Peters and Waterman Jr, 1982). It has been observed that all throughout there were non-conventional approaches to organisations and lesser formal structures which in a way resulted in no rigid division of works. Thus, it has been observed offlate that with a non-conventional approach towards the organisation, the real benefits were passed on to people, wherein often firms could resolve the crisis and could take benefit of a competitive edge (Foss, 2003).
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