Strategic Human Resource Management - Southwest Airlines

Strategic human resource management can be defined as the tactical organization and deployment of human resources through respective activities, such as skills training, to enhance a company's competitive advantage and goals. Hence, strategy formulation in strategic human resource management involves planning a calculated direction for human resources to increase the company’s competitive advantage. This decision is formulated by defining the company’s current strategies, threats and opportunities, and weaknesses and strengths. In this case, strategy formulation is needed for Southwest Airlines Company, which boasts of an exemplary human resource strategy. However, strategy formulation also includes the determination of current strategies and analysis for gaps in the business model to improve. Therefore, it is crucial to evaluate current strategies for Southwest Airlines and improve the company’s human resource management by determining weaknesses and their respective solutions. 

First, a clear definition and analysis of its current structures and strategies are necessary to create a strategy and well-developed plan to improve the company. The company boasts of a people-oriented human resource strategy and model that highly esteems its workforce and their talents and skills to increase company productivity and competitive advantage (Verasai, 2018). The human resource strategy present has created a comfortable working environment for its workforce and has become renowned as one of the best companies to work for. Some of the human resource strategies in Southwest Airlines include developed employee training programs and facilities, thorough and rigid recruitment policies, and high compensation for employees. Apart from the human resource management structure, the company’s business model is characterized by more opportunities and strengths than threats and weaknesses. For example, the company boasts of a strong fleet network of more than seven hundred Boeing passenger planes that mainly operate domestically in the United States. Secondly, the company’s operational performance is steadily growing. Compared to other years, Southwest Airlines’ previous financial operating costs produced more operating income. Another major internal strength and opportunity of the company is its expansion and potential growth. For example, the company recently added six new destinations and can add more, considering the growth prospects of the global market. However, the company is challenged by outside threats and internal weaknesses. One major weakness is the increasing trade receivables which lower the company’s quarterly profits. Outside threats include stringent government policies and growing labor costs in the American aviation market. Conclusively, major issues and potential strategy focuses include business expansion and the reduction of trade receivables (Southwest Airlines Co., 2022). Therefore, although Southwest Airlines has a strong and successful business model and strategy, there exists room for improvement. 

Business strategies can be identified and developed to increase the competitive advantage, having analyzed the airline organization's current strategies and business model. Human resource management strategies can be formulated by identifying the gaps that must be addressed and determining the best ways for their improvement. One major gap for Southwest Airlines is the opportunity for growth presented by the market and the strong fleet network. First, the company must integrate the increase of human capital and human resource management to take advantage of the growth gap (Boon, 2018). Human capital has been identified as a key resource for increasing a company’s competitive advantage. Hence, the company must manage human capital, both internally from the company by ensuring rigid job positions to reduce role redundancy and externally through thorough recruitment techniques. Secondly, the company must refine its workforce culture to ensure a more effective and productive staff, especially in reducing the number of trade receivables. Some of the implications of human resource strategies include the growth of workforce culture. Workforce culture is critical for any human resource management since it will introduce new employees to an effective and productive work environment. In this case, workforce culture, or corporate culture, refers to the major behaviors and beliefs that employees esteem in interacting with their customers. Secondly, another implication of human resource management strategies includes easier correction and streamlining of the employee culture and behaviors. For example, the workforce can be taught how to decrease trade receivables, such as initiating actions when client payment is overdue (Chaneski, 2019). Easier streamlining of employee behavior and culture through strong human resource strategies benefits the company where necessary changes or training must be made in the workforce culture. Thirdly, a strong human resource strategy affects a business by ensuring that future human resource management requirements are already met. For example, a strong employee culture prepares new employees to adjust quickly. Thus, a strong and effective human resource management strategy will reduce Southwest Airlines’ gaps, such as reducing trade receivables and taking advantage of growth opportunities. 

After analyzing the current business model used by Southern Airlines and the company’s human resource management, weaknesses and growth gaps are identified to develop viable human resource management strategies to increase the company’s competitive advantage. Identified gaps include increased trade receivables and a potential growth gap for the company in the aviation industry. A strong human resource management strategy is used to integrate human capital and human resource management, which helps expand the company’s market by increasing human capital while maintaining the same values and culture. Furthermore, a strong strategy impacts the company positively, such as by reducing trade receivables. Hence, Southern Airlines has much room to grow through the strategy’s implementation. 

References

Boon, C., Eckardt, R., Lepak, D. P., & Boselie, P. (2018). Integrating strategic human capital and strategic human resource management. The International Journal of Human Resource Management, 29(1), 34-67. https://doi.org/10.1080/09585192.2017.1380063

Chaneski, W. (2019, October 31). 6 ways to reduce outstanding receivables. https://www.mmsonline.com/articles/6-ways-to-reduce-outstanding-receivables

Southwest Airlines Co. (2022). Company Profile Southwest Airlines Co. Marketline.

Verasai, A. (2018, September 29). The Southwest Airlines HR success story you'll want to read Today. The HR Digest. https://www.thehrdigest.com/the-southwest-airlines-hr-success-story-youll-want-to-read-today/