What special organisation features do these companies have that make them different?

ASSIGNMENT

“What 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

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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:

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.

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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 off-

late 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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References:

1. Anne D Smith and Carl Zeithaml (1996), Garbage cans and advancing hyper-

competition: the creation and exploitation of new capabilities and strategic flexibility in

two regional Bell operating companies, Organization Science,7, 388-399.

2. A.T Kearney (2001), Measuring globalization, Foreign Policy, Jan/Feb, pp.56-65.

3. Alan Rugman (2000), The End of Globalization, London, Random House.

4. Dorothy Leonard-Barton (1992), Core capabilities and core rigidities: a paradox in

managing new product development , Strategic Management Journal,13 (special

issue),pp. 111-125.

5. John Child (1972), Organization, environment and performance: the role of strategic

choice, Sociology, 6 pp. 1-22.

6. John Child and David Faulkner (1998), Strategies of Cooperation, Oxford, Oxford

University Press.

7. Karl E. Weick (1969), The Social Psychology of Organizing, Reading , MA, Addison-

Wesley.

8. Nicolai J.Foss (2003), Selective intervention and internal hybrids: interpreting and

learning from the rise and decline of the Oticon spaghetti organization, Organization

Science, 14(3), 331-349.

9. Polly LaBarre (1996), This Organization is dis-organization, The Fast Manager,

June/July, www.fastcompany.com/magazine/03/oticon.html; www.oticon.com.

10. Rita G. McGrath (2001), Exploratory learning, adaptive capacity and the role of

managerial oversight, Academy of management journal, 44, pp. 118-131.

11. Thomas J. Peters and Robert H. Waterman Jr (1982), In Search of Excellence, New York,

Harper & Row.

12. Tom Burns and G.M. Stalker (1961), The Management of Innovation, London, Ta-istock.

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