Southwest Airlines – Effective employee relations program/ Career development Southwest Airlines Southwest is a major player in the airline industry, which employs nearly 35,000 individuals. According to an article, (Hollis, 2003), Southwest Airlines has taken a different approach to building interactively relationships with the company, with employees, and with its customers to ensure the success of the business. As a result, Southwest has sustained an enhanced growth and profitability when most airlines struggle to avoid bankruptcy.
Fritz Petree, Senior Manager Career Development Services, states, “Southwest philosophy is to hire for attitude and train for skill” (Hollis, 2003, p. 2). Southwest has successfully launched Virtual University at Southwest Airlines’ the University of People provides professional and personal development for the entire workforce. They offer leadership classes, software training, and career development workshops. Southwest has made the company’s vision and goals clear to all employees.
Southwest established a Career Development Services group, which enhances employees’ personal development and professional growth. Riordan should take note of the accomplishment on behalf of the programs established by Southwest Airline. These programs will provide a positive and proven guideline in employee potential. This will give additional securities to the enhancement of HR and provide a traceable means of career development on behalf of Riordan employees by identifying the training needed and skills that need to be developed.Riordan should provide its employees with proper training and support to achieve their career goal like Southwest. If Riordan were to compare the cost of having to hire and train new employees versus giving current employees added training they would find that retaining and training current employees will save more money.
In addition to that offering training and development to their employees will make Riordan more attractive to skilled workers looking for jobs.Herb Kelleher, the legendary founder and former CEO of Southwest Airlines, was strongly committed to putting employees first. What was his rationale for doing so? As stated by Steve Thomas, CEO of Pathlore Software Corp, “They’ve got a very happy employee staff, and there’s a great ability to move around and grow within the company, and they do this deliberately. They’re still profitable, and a lot of it has to do with their culture, and a lot of culture is driven not only by making sure that the employees are happy, but by making sure that hey have the skills to do their jobs the best they can” (Hollis, 2003, p2.
). Direct Energy – Compensation as it relates to the organizational strategy Direct Energy is a multi-national company with “$6 billion in annual revenue and 5,200 employees” (Hansen, 2007, p. 2). Riordan Manufacturing is also a multi-national company with 550 employees and generates revenues in excess of $1 billion (Apollo Group, 2007). Direct Energy is located in the United States and in Canada. Riordan is located in the United States and China.Both of these companies were faced with the challenge of developing compensation plans that relate to their organizational strategy. Direct Energy developed their philosophy of rewarding employees for high performance and to achieve corporate goals through the compensation program.
The board of directors who designed a pay program where approval and adjustment are managed through their global compensation system accomplishes this. Direct Energy’s parent company is Centrica based in the United Kingdom.Direct Energy models the plans and payout formulas, for their top 100 employees compensation to be determined by Centrica Direct Energy controls compensation for 1,800 employee below the top 100 and employees below the second segment do not participate in Direct Energy variable pay plans.
In 2006, their variable pay averaged 12% of payroll included in the company’s incentive plans (Hansen, 2007). Direct Energy’s goals are not to be the market leader in pay, but to be at the market level for based pay and above for variable pay.Direct Energy used talent management software to automate reviews and allocate merit increases. These automated reviews are conducted at the end of the year and managed online. Payouts are given in March then in June high performers go into a succession planning process. The performance reviews are applied to goal setting for each employee. Having performance rating online create clear communications to employees about what drives bonus payments.Salaries are also managed online, so when a manager uses a lesser increase percentage is seen in real time and leadership can pull the money to another unit where market conditions may require above average spending.
Riordan can learn from Direct Energy and quickly move to a global compensation system. Riordan needs to address long-term incentive design in a homogeneous manner, using similar vehicles and delivering equivalent values to employees across geographies regardless of local market practices.ReferencesHansen, Fay. (2007). Many Countries, One Compensation System. New Jersey: Workforce Management.
Retrieved July 12, 2008 from http://www. workforcemanagement. com Hollis, Emily (2003). Southwest Airlines: Employee Education Takes Flight. Chief Learning Officer Magazine. Retrieved 12 July 2008 from:http://www. clomedia. com/content/templates/clo_casestudies.