Case Questions:In both organizations we don’t see that much training and performance management initiatives, do you consider training and performance management important for strategy attainment? Why? Suggest how these organizations should incorporate training and performance management initiatives for better development and competitive advantage. Case One: Southwest AirlineCase Two: Muffler MagicSouthwest Airlines (SWA) was one of the most successful airline companies in the 1990s. Throughoutthe decade, it was the only major domestic airline to tum a profit, and it consistently outperformed itscompetitors in customer service. Akey factor in the success of SWA hasbeen its unique corporate cultureand the HR management practices that have been developed as part of this culture. These practices areintegrated with each other and directly developed under founding CEO Herb Kelliher and maintained aspart of Southwest's competitive strategy of delivening bothlow costs and superior service. These HRpractices create shareholder value through employees vialowturnover and high productivity and allowemployees to exp erience significantjob satisfaction. But still CEO believes that training and performancemanagement should beinitiated more within the organization for continuous development to maintain theposition of the organization. Southwest's success centers around a "value cycle": Southwest first createsvalue through its HR practices for employees; this valueis then converted, in part, to customer value viathe design of specific operating processes and then captured through the provision oflow costs andsuperior servicerelative to competitors. This cycle of creating, converting and capturing value is uniqueamong not only airlines butlabor-intensive organizations in general. Other airlines have traditionallycompeted by creating barriers to entry viathe development of hub-and-spokenetworks and bysophisticated customer segmentation and information processing via computer reservation systems.Southwest sees its competition not as other airlines butrather the automobile. Most ofits flights are"short-haul" (less than 90 minutes) andinvolve quick turnaround of planes at the gate and the use ofless-congested airports. The company also restricts its growth relative to therate at which it can hire and trainnew employees who fit with the company culture. Southwest (SWA) practices an alternative strategycalled value analysis. Here, avalue chainis created for the buyer, firm, and supplier. SWA does this byincreasing its passengers' willingnessto pay, decreasing the pricepassengers are charged, decreasing itsown costs, and reducing employees' opportunity cost. SWA increases its passengers' willingness to payby providing a higher level of servicethan its competitors, offering more frequent departures, andamusing its passengers, which makes the end of along workday more entertaining. SWA also attemptstooffer thelowest airline fare in a specificmarket. This allows SWA to differentiate itself from competitorsthat offer a relatively generic service. Personnel costis one of the most significant costs an airline incurs.At SWA, however, employees aremore productive than at other major airlines. Most SWA employees aredirectly involved in moving passengers from departure to destination as gate agents, ramp agents,baggage handlers, flight attendants, or pilots. The result? An average airplanetakes 45 minutes toturnaround: SWA averages only 17 minutes. SWA can turm around its aircraft in 17 minutes for threereasons. First, ituses standardized aircraft-737s only. Second, no meals are provided on flights,enhancing efficiency and reducing costs. Finally, the airline has designedits work systems to allow cross-functional coordination by all its employees. From the moment an SWA flight touches down until theminute it clears the gate, every member of the flight and ground crews does everything necessary to getthe next flight segment out on time. SWAhas a culture that stresses LUV' and Fun'. LUV" refers to oneof the company's core values, involving respect for individuality and a genuine concern for others."FUN" refers to the company's philosophy of employees enjoying themselves at work and creating anatmosphere that allows customers to also have fun. FUN and LUV are critical elements of SWA's cultureand are embedded in the hiring process, with prospective employees being asked to describe their mostembarrassing moment. FUN and LUVare also critical components of SWA's compensation system.Actual salaries are at the industry average, but most employees consider SWA's work environment to bea form of nonmonetary compensation.Muffler Magic is a fast-growing chain of 25 automobile service centers in Nevada Originally started 20years ago as a muffler repair shop by Ronald Brown, the chain expanded rapidly to new locations, and asit did so Muffler Magic also expanded the servicesit provided, from muffler replacement to oil changes,brakejobs, and enginerepair. Today, one can bring an automobile to a Muffler Magic shop for basicallyany type of service, from tires to mufflers to enginerepair. Auto serviceis a tough business. The shopowner is basically dependent upon the quality of the service people he or she hires and retains, and themost qualified mechanics find it easy to pick up andleave for ajob paying a bit more at a competitordown the ro ad. It's also a business in which productivity is very important. The single largest expenseisusually the cost oflabor. Auto service dealers generally don'tjust make up the prices that they chargecustomers for various repairs; instead, they charge based on standardized industry rates forjobs likechanging spark plugs or repaining a leaky radiator. Therefore, if someone brings a car in for anewalternator and the standard number of hours for changing the alternatoris an hour, but it takes themechanic 2 hours, the service center's ownermay endup makingless profit on the transaction. Quality isapersistent problem as well. For example, "rework" has recently been a problem at Muffler Magic. Acustomer recently brought her car to a Muffler Magic to have the car's brakepads replaced, which theservice center did for her. Unfortunately, when she left she drove only about two blocks before shediscovered that shehadno brake power at all. It was simply fortuitous that she was going so slowly shewas able to stop her car by slowly rolling up against a parking bumper. It subsequently turned out that themechanic who replaced the brake pads had failed to properly tighten a fitting on the hydraulic brake tubesand the brake fluid had run out, leaving the car withno braking power. In a similar problem the monthbefore that, a (different) mechanic replaced a fan belt, but forgot to refill the radiator with fluid; thatcustomer's car overheated before he got four blocks away, and Muffler Magic had to replace the wholeengine. Of course problems like these not only diminish the profitability of the company's profits, but,repeated many times over, have the potential for ruining Muffler Magic's word-of-mouth reputation.Organizationally, Muffler Magic employs about 300 people, and Ron runs his company with eightmanagers, including himself as president, a controller, a purchasing director, amarketing director, and thehuman resourcemanager. He also has three regional managers to whom the eight or nine service centermanagers in each area of Nevadareport. Over the past two years, as the company has opened new servicecenters, company-wide profits have diminished rather than increased. In part, these diminishing pro fitsprobably reflect the fact that Ron Brown has foundit increasingly difficult to manage his growingoperation. ("Your reach is exceeding your grasp" is how Ron's wife puts it.) The company has only themost basic HR systems in place. It uses an application form that the human resourcemanager modifiedfrom one that he downloaded from the Web, and the standard employee status change request foms, sign-on forms, I-9 forms, and so on, that it purchased from a human resource management supply house.Trainingis entirely on-the-job. Muffler Magic expects the experienced technicians that it hires to cometothe job fully trained; to that end, the service center managers generally ask candidates for thesejobs basicbehavioral questions that hopefully provide a windowinto these applicants' skills. However, most of theother technicians hired to dojobs like rotating tires, fixing brake pads, and replacing mufflers areuntrained and inexperienced. They are to be trained by either the service center manager or bymoreexperienced technicians, on-the-job. Ron Brown faces several HR-type problems. One, as he says, is thathe faces the "tyranny of the immediate" when it comesto hiring employees. Although iť's fine to say thathe should be carefully screening each employee and checking his or her references and work ethic, from apractical point ofview, with 25 centers to run, the centers' managers usually just hire anyone who seemsto be breathing, as long as he or she can answer some b asic interview questions about auto repair, such as,"What do you think the problemis if a 2001 Camry is overheating, and what would you do about it?"

Training provides an opportunity to familiarize supervisors and managers with the performance…

Answered: In both organizations we don’t see that…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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