Compensation_and_Benefits_Plan

Compensation and Benefits Plan Southwest Airlines Co. (SWA) is a company known for its fun-loving culture as well as “sit anywhere you like” and “bags fly free” slogans. Southwest Airlines is one of the nation’s leading US Airlines with 38 straight profitable years. The company has a unique strategy in the areas of recruitment, hiring, selecting and training personnel who will be a good fit for the company. Their compensation packages to their employees appear by some, to be second to none in the airline industry. The focus of this paper will be Southwest’s compensation strategy and how it works or doesn’t work for this company. Current Compensation Strategy and Benefits The broad objective of the design of compensation programs (i.e., direct as well as indirect compensation) is to integrate salary and benefits into a package that will encourage the achievement of an organization’s goals. In all cases, considerations of adequacy, equity, cost control, and balance should guide decision-making in the context of a total compensation strategy. (Cascio, 2010, p. 470) Southwest Airlines provides standard benefits that are common to most businesses (Benefits 2012). This includes medical, dental, vision, and health coverage, with additional coverage package options for family members (Benefits, 2012). Southwest provides time-off, dependent care spending accounts, long-term care disability insurance, and a 401(k) retirement savings plan. Less common benefits are profit sharing and stock purchase plans. Unique benefits are space-available free flying privileges. Profit-sharing is one way of linking compensation strategy to business strategy. Southwest’s profit sharing program is designed to encourage employees to feel like they own the place. Southwest encourages creativity and innovations from employees that will save time and money. Employees are allowed to share in those profits, which encourages workers to apply themselves. Such ideas include the ticketless travel idea and a determination by employees to speed the turnaround times. Mission, Values and Goals The Mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride and Company spirit. (Mission Statement, 2012) You can see this practically every time you board a Southwest Flight. Friendly flight attendants greeting you at the door, and pilots that brief you with a different tone in their voice than the average pilot. Southwest’s vision is to expand our locations both domestic and overseas by being the largest and most profitable airline company to achieve both short and long-haul carriers efficiently and with low cost. Also to be an airline carrier that has the most productive workforce to guarantee the best flight possible for each and every passenger. Southwest’s values are: VALUE 1: Work should be fun...it can be play...enjoy it. VALUE 2: Work is important...don't spoil it with seriousness. VALUE 3: People are important....each one makes a difference. (Quick, 1992, Vol 21, Issue 2) Goals to achieve Southwest success are: #1 in low costs with our Warrior Spirit, #1 in Customer satisfaction with our Servant’s Hearts, and #1 in Employee SPIRIT with our Fun-LUVing attitudes. (Southwest Airlines Engagement and Recognition, 2011) The Overall Picture Alignment. In looking at the organization, I can see that the mission, values and goals line up with their compensation strategy in some aspects. The fun loving atmosphere that you see when you board a Southwest jet is one example of the warmth and friendliness of almost every employee. As they are written, these areas give an overall picture of Southwest Airlines and how their employees enjoy doing what they do. Employees have good compensation plans that take care of themselves and their families. When interviewing a friend of mine, Mike Sovitsky, who has been a Southwest Pilot for approximately 4 years, and who just had a baby girl, states that he feels “very fortunate” to have the benefits he does. This allows him to flex his schedule to be able to spend more time with his newborn and his wife. (M. A. Sovitsky, personal communication, October 27, 2012). 89% of employees seem to be very satisfied with the company and its benefits. ("Southwest Reviews," 2012) There are however, some areas that Southwest should improve upon in the future. For example, Southwest’s pay is one of the lowest, and raises are not consistent. This is mainly in part to the close relationship that management has with the union. It also appears that what type of personality you have helps you get hired and promoted in the company versus in some aspects the way you perform your job. Organizational Culture. Southwest Airlines compensation strategy has successfully supported its organizational culture. Organizations have a well-defined culture founded on a set of core values and basic assumptions. This is also true for Southwest Airlines—at its core are the three values of humor, altruism, and "luv"—and, for Southwest Airlines, this has been true from day one. The organization's culture can be the vehicle through which individuals are able to better manage or overcome the challenges of the work environment and the industry in which they operate. (Quick, 1992, p. 50) Southwest Airlines is able to do this very well, by offering their employees the flexibility to be able to do what they do, and do it with an enthuse that makes work “fun”. The Future. Southwest Airlines has a very bright future ahead of them. With other airlines dropping in popularity due to increasing prices, Southwest appears by all accounts to be growing in popularity. Its employees, even though they are not the highest paid in the business, love what they do, and make everyone else feel that way too. I see little that they need to improve upon, except for possibly increasing salaries and improving on healthcare benefits to be competitive with other companies. In closing, Southwest airlines have a compensation plan that has a proven track record. Its employees seem to by all accounts enjoy the benefits that they receive, hence a very high employee satisfaction rating. Employees who are happy due to the benefits that they receive are more apt to stay in that company versus finding employee elsewhere. The mission, values and goals are in line with the Southwest is as a company, which strengthens its overall worth, References Cascio, W. F. (2010). Managing Human Resources (8th ed.). [Adobe Digital Editions version]. Retrieved from https://ecampus.phoenix.edu/content/eBookLibrary2/content/eReader.aspx Engagement and Recognition. (2011). Retrieved from http://www.southwestonereport.com/2011/#!/people/employees/engagement-and-recognition Quick, J. C. (1992). Organizational Dynamics. In Herb’s Hand at Southwest Airlines (pp. 45-56). [https://portal.phoenix.edu/library.html]. Retrieved from https://portal.phoenix.edu/library.html Southwest Airlines Reviews. (2012). Retrieved from http://www.glassdoor.com/Reviews/Southwest-Airlines-Reviews-E611.htm'listFilter=BPTW2012 The Mission of Southwest Airlines. (2012). Retrieved from http://www.southwest.com/about_swa/mission.html