Tuesday, July 17, 2007



ap·pre·ci·a·tion (ə-prē'shē-ā'shən)
1. Recognition of the quality, value, significance, or magnitude of people and
2. A judgment or opinion, especially a favorable one.
3. An expression of gratitude.

Why is it so hard in Asian countries to get appreciation for a job well done? Especially Malaysia. Even in a city it is already like that. Why is it so hard for management to say "well done, u did well today" or "good job in dealing with that account".

Good words do not usually come out from the mouths of management. But if some thing happens, all kind of bad words would come out. Some people are already under paid for the job they are doing. They do not mind the hard work or even the stress but once in a while a show of gratitute or appreciation should be in order. Just a simple kind word (free of charge), yet most management won;t do it. So don;t be shock if some management guy who get into accident won;t be help if any of his/her employee drive by.

Here is an example of good corporate culture.


Southwest Airlines have the combined market capitalization of all other US-based airlines put together. How have they accomplished this? The economic climate over the past four years has not been kind to airlines, so how has the company which did not lay off any staff following September 11, 2001, remained top of the pile? By seeing their employees as the top customer, allegedly.

Southwest: a brief history

Southwest was founded in 1971 by Herb Kelleher and Rollin King as a low cost airline concentrating on short-haul flights of less than 500 miles. A mission statement was adopted in 1980, a dedication of customer service delivered with “a sense of warmth, friendliness, individual price, and company spirit.” A statement was also commissioned for the employees:

We are committed to provide our employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest customer.

This mission statement is still carefully followed today, over 24 years later. It is clamed that those traveling with Southwest notice the difference in the employees compared to other similar airlines. The aim of Southwest is to provide affordable air travel to those passengers who usually drive rather than fly. Southwest's average flight is 50 percent less in length than it's major competitors, and the average distance flown is less than 500 miles.

It is presently the fourth largest airline in the USA in terms of domestic passenger miles flown, and presently serves 59 airports in 30 states. In 2001, Southwest's stock price increased 29 percent per annum for the previous ten-year period. The employees (referred to as “people” by Kelleher) have never gone out on strike (a statement to be proud of in the current climate). The culture, referred to as “goofiness” by some, allows its people the freedom to travel economically, obtain financial security, work and have fun at the same time, and make a positive difference within the company.

There are no rigid rules within the work environment, in fact employees often announce a free flight for the first customer to present socks with holes. This is not company regulation, but an example of the creativity of the staff.

Kelleher is renowned as an effective communicator and has gained the trust of the people through the years. He is happy to be seen on floor level, and returns the calls and emails of every member of staff on a timely basis. He relies on other company executives to mange daily activities, both of whom came with him from the Houston-based law firm he managed before setting up Southwest.

A successful business model

Southwest business model consists of two parts:

1. Identify customers you want to serve.
2. Be the low cost provider.

This is consistent with similar companies, however Southwest's methodology is somewhat unique.

The first part is catering for those who would usually drive the distance than fly. Southwest offer a service priced at such a level that it may be preferable to fly on this occasion. By offering such short distances they ensure they are the only airline to cater for such short distances.

The second is ensured by the offer of a frequent but no-frills service. No food is served, and only one model of airplane is flown, providing low cost economies compared to other carriers.

Southwest ensures their competitive cost advantages by keeping unit costs down, that is, the cost per seat for each mile flown. Their unit cost is 50 percent less than that of other carriers, which is a result mainly of:

People job security. The lack of lay-offs and strikes in Southwest Airlines means that the employees feel secure in their job, and enjoy a high level of compensation. The benefits offered are the highest in the US airline industry.

People work for their compensation. Southwest's people work harder than those of any airline. The hours flown by pilots are nearly twice the industry average, as the pilots are paid per trip rather than per hour and are only paid for the hours they are actually in the air. The pilots are therefore interested in minimizing the time spent on the ground, and as such the average turnaround time for a Southwest plane is only 15 minutes. The flight attendants fly 150 hours per month compared to the 80 hours flown by the competition. Therefore there are fewer flight attendants per passenger mile flown. It is also in the contract of each flight attendant to “make reasonable effort to tidy the plane between flights.”

This reduces the need for a cleaning service at the airports, which also helps to cut costs. Of all pre-tax income, 15 percent is contributed to the employee profit sharing plan.

Meal costs. The average cost for providing a meal for passengers is $5.00, compared to the 20 cents it costs Southwest to provide peanuts and soft drinks.
Boarding system. Planes are turned around very quickly at Southwest, and utilizing reusable plastic boarding passes and not assigning passenger seats maintains a cost advantage.

Fare structure system. By keeping costs low and providing a good service that ensures customers return, Southwest can afford to offer extremely low fares.
Reservation system. Southwest does not use any travel agents and therefore does not the added expense of commission, and takes 30 percent of their bookings over the internet.

Airports utilized. Southwest uses the least congested airports, and is therefore able to ensure a quick turnaround and enjoys minimum operations disruption.
Fiscal conservatism. Southwest's relaxed attitude towards their employee's is not matched in their attitude towards finance. The cash on hand time after September 11 was averaging 90 days when the other companies were averaging 40 days.

The debt-equity was by far the lowest in the industry, which enabled Southwest to manage the difficult period after September 11 without laying off any staff. Other companies suffered from a lack of financial reserves and had to cut staff costs.

Corporate culture. In Southwest's first year, the most difficult for any new business, putting the problem to the staff rather than simply making cuts solved cash flow difficulties. They agreed to cut turnaround time by 40 minutes, and pay cuts were taken in exchange for the safety of each job. This survival mode lasted for the first nine years of operation, once the revenue was more stable, the emphasis turned to the people.

He has been known to host a 2.00 am barbeque for the staff that work on the less social shifts, so that everyone can participate in company activities. Staff have been allowed to work in pajamas for a day, and rocking chairs are provided for impromptu meetings. In order to maintain good working relationships and prevent finger pointing between departments, Southwest employees have shared goals and each job involves aiding others whenever necessary.

Any company in Asia have this kind of work culture? Probably no one in top management ever get a pay cut in time of trouble. Instead cut down the work force and force the existing ones to work their hearts out.

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