Southwest Airlines and Koch Industries: Contrasting Corporate Cultures

The culture of a company plays a critical role in influencing its success, growth and development. Corporate culture refers to the behavioral systems and believes that determines how the workforce of an organization engages with each other and interacts with the external environment within which they operate. The establishment of a sound corporate culture can result in the optimization of competitive advantage for companies due to greater efficiency and effectiveness in utilization of human resources. This paper discusses the corporate culture of Southwest Airlines and Koch Industries, two companies with distinct cultures.

The Culture of Southwest Airlines

Southwest Airlines is one of the major airlines in the United States, and is considered the largest low-price carrier in the nation (Klein p.36). The culture of the company is one where the employees come first. According to the company, employee happiness and contentment is directly attributable to productivity and efficiency, which translates into organizational growth and development. As such, the culture of Southwest Airlines is one where humor and fun are key elements in the workplace and in fact, the company not only allows socialization but also encourages it. The maintenance of an environment that is easy going for staff plays a variety of important roles in enhancing the level of transparency and sincerity among the employees and between the leaders and their subordinates (Klein p.37). Having an open and unrestricted line of communication between managers and employees also increases the capacity of the organization to align to its objectives and targets.

The creation of an informal and fun setting of work for employees is a major factor of Southwest Airline’s corporate culture that contributes to the organization’s competitive strength. The company treats all of its employees with dignity and respect, regardless of the roles and functions that each worker performs (Bird). This contributes significantly to the employee morale, dedication and engagement. As a result, labor turnover in the company is among the lowest in the US airline transport sector.

The organizational culture of Southwest Airlines is also one that grants employees independence in performing their own duties and responsibilities. The company has established an environment that allows employees to make decisions and perform activities without undue supervision (Bird). This element of corporate culture benefits the employees and the organization as well in the sense that employees can grow and develop by handling important responsibilities on their own, resulting in success of workers and the organization as a whole.

                                  The Organizational Culture of Koch Industries

Koch Industries is an international company that operates in a variety of industries such as manufacturing, energy, chemical technology, finance, agriculture and trading among others. The corporate culture of Koch Industries is distinct and varies from that of Southwest Airlines. The company’s culture is constructed around the element of market-based management, which recommends and influences several behavioral aspects of the company (Whatley p.127). According to Whatley, the company’s culture emphasizes the need for principled entrepreneurship and industry leadership. As such, employees are required to pursue to company’s goal of profit maximization and wealth creation in ethical and morally upright ways.

Compliance is also among the critical elements of the corporate culture of Koch Industries. The company takes significant measures to ensure that it abides by the rules, regulations, provisions and guidelines of the federal and state governments as well as the industries within which it operates. Employees also work in line with a set of specific requirements to ensure that they comply with relevant rules and guidelines (Guiso, et al., 2015).

Secondly, customer focus is a critical aspect of the company’s culture and in fact, several guidelines exist to ensure that multiple aspects of operation are in alignment with customer needs and expectations (Whatley p.129). In line with this objective, the culture of the organization is also attributable to value creation for all stakeholders through the operation of the Koch Industries in a manner that ensures they reap maximum benefits.

Change, as an aspect of organizational culture is emphasized in Koch Industries. The company believes that change drives progress and growth and has therefore created an environment in which change takes place frequently to improve efficiency and working conditions (Guiso, et al., 2015). As the company responds swiftly to market environments in different nations, this cultural element makes it possible to effect change swiftly and effectively, as stakeholders appreciate the need for constant change and thus do not resist or reject positive transformations.

Koch Industries should not Purchase Southwest Airlines

The acquisition of Southwest Airlines by Koch Industries is not recommendable, primarily due to the significant differences between the corporate cultures of the two organizations. Firstly, the workplace setting of the two companies is very different as Southwest Airlines has a fun environment that encourages autonomy and creativity while Koch Industries has a formal culture where employees are required to comply to rules and regulations of performance of duties.

Secondly, the culture of Koch Industries orients towards adapting to market inclinations and meeting client needs in order to optimize growth and development. Southwest Airlines, on the other hand, has a culture associable with meeting employee needs and creating a conducive environment for workers to perform their duties. These two aspects of organizational culture are incompatible and in fact, their modification could have adverse implications on the competitive strength of both companies upon their combination (WorkatWorkTV).

The interaction between the management and employees is also a different factor that gives a case against the acquisition of Southwest Airlines by Koch Airlines. While communication channels are open and unobstructed in Southwest Airlines, the communication channels and structures in Koch Industries are formal and thus operate based on given guidelines. Changing the open door policy of Southwest Airlines upon acquisition by Koch could have negative impacts on employee motivation and dedication and could decrease their morale.

Conclusion and Recommendations

Corporate culture influences a variety of elements attributable to the success and continued development of organizations. As illustrated, different companies have different corporate cultures that play unique roles in optimizing efficiency of operation and management. While the corporate culture of Southwest orients towards creating enjoyable workplaces for staff, that of Koch orients towards alignment to market-based management principles. This results in significant variations in how the two companies operate and meet their objectives and goals.

It is therefore in the best interests of both corporations not to combine, as the cultures of the two companies are virtually incompatible and thus, acquisition of Southwest Airlines by Koch Industries is an appropriate course of action. Instead, the companies should seek partnerships with companies that have similar corporate cultures in order to ensure greater integration and interoperability.

References

Bird, A. (Mar. 13, 2011). Southwest: Corporate culture combines work, play. The Post and Courier. [ProQuest]

Guiso, Luigi, Paola Sapienza, and Luigi Zingales. “The value of corporate culture.” Journal of Financial Economics 117.1 (2015): 60-76.

Klein, Gerald D. “Creating Cultures that Lead to Success: Lincoln Electric, Southwest Airlines and SAS Institute.” Organizational Dynamics 41.1 (2011): 35-39.

Whatley, H. “Principles and dimensions of market-based management.” Independent Journal of Management & Production 4.1 (2013): 126-135.

WorkatWorkTV. (2010). Successful Organizational Cultures. Retrieved at https://www.youtube.com/watch?v=wSZ3IPDmqCg