Organizational Culture: Southwest Airlines and Koch Industries

Organizational Culture 

Organizational culture is a set of beliefs, attitudes, values, and policies that comprise all the activities of an organization. Although certain set of policies and values can be observed directly, it is not easy to point out the particular procedures that help an organization to effectively control its culture (Bauer and Erdogan, 2011). In particular, Bauer and Erdogan (2011) indicate that aggressiveness, stability, people-oriented, detail-oriented, outcome-oriented, team-oriented, and innovation cultures are the seven diverse dimensions of organizational culture profile. A good example of companies with contrasting cultures is Southwest Airlines and the Koch Industries. This paper entails an analysis of Southwest Airlines and Koch Industries in terms of their organizational cultures, leadership traits, how they develop their leaders, their leadership style and the culture, and the role of the leadership culture and fit in the success of the companies.

Southwest Airlines’ organizational culture 

Organizations should strive to cultivate cultures that will drive them to success (Klein, 2011). Southwest Airlines, one of the most successful airline companies in the United States, promotes utmost respect for both stakeholders and employees with an aim to uphold the organization’s success.

Firstly, Southwest Airlines employs team-oriented culture. This is a culture whose practices and principles encourage collaboration among employees (Bauer and Erdogan, 2011). Southwest Airlines exercise team-oriented culture by extensive employee training which equips the employees with necessary support that promote collaboration (Klein, 2011). Also, Southwest Airlines make sure that all the workers execute their duties as a team by promoting teamwork skill development. Additionally, Southwest Airlines conducts daily meetings in the morning and the evening with workers (Klein, 2011). Participating in the meetings allows employees to collaborate and interact with each other and in the process enabling them to identify issues affecting them. Thus, they are able to come up with solutions to the problems in the meetings. According to Klein (2011), Southwest Airlines believes that recruiting impressively competent employees can maintain the team-oriented culture it employs. That is the reason why during recruitment, the company utilizes a selection system that helps deduce competent team players while turning away those whose profile indicates that they can’t fit into the team-oriented culture. Moreover, Southwest Airlines offers incentives to its employees so as to inspire them to continue offering excellent services. The technique of offering rewards to employees ensures that they remain committed to the company’s objectives and in this way positive manager-employee relationship is promoted (Bauer and Erdogan, 2011). Lastly, the culture encourages humor and socialization that makes the organization a “fun” working environment (Bird, 2013).

The second culture Southwest Airlines employ is people-oriented culture. The employees of Southwest Airlines have been trained that the client’s needs are addressed first before addressing any personal needs. This is the reason why customers who have received services from Southwest employees always comments positively about the company’s services. The employees at Southwest Airlines are equipped with servant’s spirit, warrior’s spirit, and high-spirited mind-set (Makovsky, 2013). This implies that the employees receive training to disseminate their services to consumers the best way they can while adopting a servant hood attitude that possess a lot of humor. Additionally, the company offers sensitization of the employees to prioritize on others people’s need before their own. Therefore, such sensitization not only cultivates respect to fellow workers but also to the consumers. According to Makovsky (2013), the consumers should receive best experience while aboard Southwest Airlines before monetary interactions are put into play. Overall, the people-oriented culture is not only individual centered but touches every person in the organization.

Koch Industries’ organizational culture 

Koch industries’ excellent performance is mainly attributed to the detail-oriented culture it employs. Organizations that use detail-oriented culture basically emphasizes on precision, that is, they pay much attention to the detail (Bauer and Erdogan, 2011). In the market, this type of culture offers a company competitive advantage since it helps the organization to distinguish themselves from other players. According to Whatley (2013), detail-oriented organizations emphasize on activities that promotes good performance in the market. One way Koch Industries strives to keep a detail-oriented culture is by keeping records of all consumer requests and tries to create an exact product as requested by the customer. Through this culture, the company aims at providing excellent services that will entice the customer to keep returning to the company for more services. This implies that as a company, Koch Industries is very detail-oriented and that it strives to make sure that it answers all questions raised by the customer. In other words, it leaves nothing for granted and this has enabled the company to amass huge profits. In fact, through paying attention to detail the organization has managed to draw a huge number of customers and even secured a return visit from them. According to Whatley (2013), Koch Industries’ detail-oriented culture helps the organization to pay attention to market-based management that focuses on revenue growth and performance.

The second culture that Koch cultivates is market-oriented culture. This implies that amount of yearly revenue the company makes and the aspect of performance amongst the employees is highly compared to the competition and previous outputs. Similarly, the level of competition in the organization therefore tends to be high as employees work hard to outdo their colleagues so as to earn bonuses. The market oriented culture is well employed by use of Market-Based Management (MBM) philosophy. The philosophy developed by Charles Koch is based on rules of sound mental models, economic thinking, and just conduct aimed at harnessing the diverse knowledge possessed by employees similar to the way markets harness information from the general public. With MBM, it is a requirement for employees of Koch Industries to read its manifesto and attend a seminar on the same theory. The company also encourages interdepartmental rivalry. Additionally, the employees are encouraged to make decisions without seeking permission from their superior as long as they are directed towards gaining market for the company. Despite offering such freedom to its employees, MBM culture is centered on specific characteristics that set the threshold for building values for each employee’s action, establishing norms for behavior, evaluate conduct and practices, and evaluate policies (Whatley, 2013). The guiding principles of MBM that Koch uses are Humility, Change, Knowledge, Customer Focus, Principled Entrepreneurship, Value Creation, Compliance, Fulfillment, Integrity, and Respect (Moore, 2015). Besides, within the principles are dimensions such as Incentives, Decision Rights, Knowledge Process, Virtues and Talent, and Vision (Whatley, 2013). With MBM, Koch Industries remain successful in the oil market industry.

Leadership 

Both Southwest Airlines and Koch Industries’ leadership plays a vital role to the success of the companies. Therefore before elucidating the traits, role and leadership styles, it is essential to define the term “leadership.” The capability to influence a group of individuals for the purpose of achieving the set objectives is what is known as leadership (Robbins, 2003).

Southwest Airlines’ Leadership traits 

At Southwest Airlines, leadership is viewed as a way of commitment, desire, culture, and life. The company gives the definition of the term “leadership” a whole new meaning. The leadership traits at Southwest Airlines can simply be described as supportive and participative. A leader who is supportive is the one who demonstrate authentic concern for his subordinates’ personal and work-related needs. On the other hand, a participative leader is one who constantly engages his subordinates’ opinions in the decision making process (Odumeru& Ogbonna, 2013). The company’s CEO, Gary Kelly sits at the helm of the unique leadership traits witnessed in the company. His charisma and leadership style fully is in line with the company’s culture. For example, he is a trouper enough to report to workplace on Halloween day wearing a pink dress and size 14 high heels. As a leader, Gary insists on values that are bound to encourage people to have fun and at the same time execute their duties diligently. Additionally, honesty and concern for the wellbeing of others is another leadership that is seen to be exercised by Gary (Miranda, 2013).

Koch Industries’ Leadership traits 

Leadership traits at Koch industries can be described as constructive and corrective. Constructive traits involve use of contingent rewards. On the other hand, corrective behaviors entail management by exception (Odumeru& Ogbonna, 2013). A constructive leader defines the kind of work that an employee may execute in order to receive a reward. In contrast, management by exception implies that the leader sets the compliance standards that each employee must strive to satisfy, failure to meet the standards attract severe punishment which may include losing their jobs (Odumeru& Ogbonna, 2013). Overall, corrective trait implies undertaking close monitoring to identify errors, deviances and mistakes and then corrective measure(s) is executed as fast as possible.

Leaders’ development 

At Southwest Airlines, the strategy to develop its leaders commences with hiring competent individuals who understands the culture and expectations of the company. After hiring, Southwest Airlines assists the new recruits to fit into the organization’s culture and become leaders themselves. Additionally, they are closely monitored and if they don’t conform to the company’s culture they are removed while those who show progressive improvement are promoted (Nahavandi, 2015). This implies that Southwest develops its leaders through a transformational training process.

Similar to Southwest Airlines, development of leaders entails hiring the right person for the job. Koch industries believe that just a single individual who is non-compliant can put the company’s operations at jeopardy. After selecting the right individual, the person undergoes rigorous training and progressive improvement attracts rewards and incentives.

Leadership style and culture 

The leadership style employed by Southwest Airlines is transformational leadership style. Under this style, the company offers a supportive culture that develops its leaders and leadership (Nahavandi, 2015). The style entails a process that involves selection, training, monitoring and frequent motivation to bring out quality leadership in each employee. In addition to the transformational leadership style, the organization has a clear vision of putting the needs of other first. It acts as a guide to the entire employees’ fraternity to work towards accomplishing it through executing their duties with utmost professionalism (Odumeru& Ogbonna, 2013).

Conversely, Koch employs its generic strategy known as transactional leadership style. The style focuses on performing the required tasks in order to realize set goals (Odumeru& Ogbonna, 2013). For instance, at Koch industries the leaders encourage production of goods and service that customer values. The transactional leadership style is implemented through two main ways; Market-based Management (MBM) and Principled Entrepreneurship. MBM is a culture developed by Charles Koch that encourages the workers to take initiative to improve the processes and produce products that the consumer are in dire need of, while Principled entrepreneurship focus on empowering employees to be result-oriented and generate value. Additionally, Principled Entrepreneurship motivates employee attributes such as sense of urgency, initiative, and judgment among others.

Role of leadership style and culture in the success of the companies 

In Southwest Airlines the leadership culture plays a vital role to its success. Through working towards a singular purpose, promoting creativity, and being authentic, the company has enjoyed success. The transformational leadership style has played a great role towards empowering other people to assist in leading the company. In the long run, Southwest Airlines is leading the way for other organizations to use similar strategy.

Then again, Koch Industries has remained a top performer because of its use of transactional leadership culture. The company stresses on executing the correct actions in order to realize good performance. Additionally, unlike in Southwest where incentives are used to encourage teamwork, Koch industries use incentives and rewards to encourage inter-departmental competitions which eventually lead to improved performance.

References

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Bird, A. (2011). Southwest: Corporate culture combines work, play. Retrieved from https://www.postandcourier.com/news/southwest-s-corporate-culture-combines-work-play/article_38fbffca-5217-5447-a7d0-c1bfe9201d00.html

Klein, A. (2011). Corporate culture: its value as a resource for competitive advantage. Journal Of Business Strategy , 32 (2), 21-28. doi: 10.1108/02756661111109743

Makovsky, K. (2013). Behind The Southwest Airlines Culture. Retrieved from https://www.forbes.com/sites/kenmakovsky/2013/11/21/behind-the-southwest-airlines-culture/

Miranda, J. (2013). Leadership Secrets of Gary Kelly, Chairman CEO, Southwest Airlines. Retrieved from http://tradesec.blogspot.com/2013/09/leadership-secrets-of-gary-kelly.html

Moore, J. (2015). Koch Industries’ Market-Based Management. Retrieved from http://www.talkativeman.com/koch-industries-market-based-management/

Nahavandi, A. (2015). The art and science of leadership (7th ed.). Harlow, Essex, England: Pearson Education Limited.

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Robbins, S. P. (2003). Organizational Behavior 9th Edition. Prentice Hall Inc

Whatley, H. (2013). Principles & Dimensions of Market-Based Management® (MBM). Independent Journal Of Management & Production , 4 (1). doi: 10.14807/ijmp.v4i1.63