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WestJet’s success story reads like a fairy tale, especially after considering the fact that the carrier continued to achieve impressive growth in the face of economic hardships and spiraling fuel costs. The conceptualization and establishment of the airline is also as mysterious as its capability to survive in an environment which other established airlines were unable to penetrate owing to a myriad of factors ranging from stiff competition to rising fuel costs to poor management styles. WestJet’s story demonstrates how good corporate culture and sound management practices can integrate both senior management and employees in the pursuit of positive organizational outcomes and success.
The idea to establish WestJet was hatched by Clive Beddoe, the President of the Hanover Group of Companies, when he discovered that it was actually cost-effective to procure an aircraft for use in his weekly business travels between the cities of Calgary and Vancouver since the aircraft could be availed for charter to other carriers when not in use, specifically to Morgan Air, owned by Tim Morgan.
The response to this idea and initiative caused interested stakeholders, comprising Beddoe, Morgan, Don Bell, and Mark Hill, to recognize there existed an “…opportunity to satisfy the need in Western Canada for affordable air travel coupled with good service by starting an airline” (Mark 52). This was to be the beginning of WestJet, a company that was largely founded using a well-nurtured framework of low-cost, optimal customer satisfaction, engaging employees in the management, and low operating costs.
More importantly, the carrier was able to build a vibrant culture through the development and initialization of programs that served to motivate employees to work productively. Some programs that have worked tremendously well for the company include: bottom-up management approach; allowing employees the leverage to own equity in the company; allowing employees to make decisions and act independently as long as they take into consideration the ramifications of their decisions; and the company’s generous profit sharing plan – a program that makes it possible for employees to be allocated bonuses based on the carrier’s profit margins (Mark 53).
These and other strategies have enabled the company to achieve success that can only be envied by other companies operating in the airline industry, including large national carriers such as Canadian Airlines. As reported by Mark, “…WestJet grew from two planes in 1996 to 21 in 2000…Revenues in 2000 were Cdn$ 332.5 million, and expected revenues in 2001 were Cdn$ 460 million” (54).
Some of the senior management members were worried that the unprecedented growth and success attained by WestJet over the few years that it had been in operation would inarguably affect its corporate culture – the very foundation of its growth (Mark 52). Don Bell, the cofounder and senior vice-president in charge of customer service, was particularly obstinate that the enormous growth of WestJet and stiff competition from established and new airlines could make it difficult for the company to maintain its culture despite the fact that other senior managers believed that maintaining WestJet culture was fundamentally important if the company was to continue achieving positive results. The problem therefore lies in the strategies that the company can use to maintain its culture in the face of stiff competition and incredible growth patterns. It was also thought that an economic downturn will ostensibly hurt a carrier that is so dependent on leisure travelers as opposed to business travelers (Mark 60)
From its inception, the company has heavily relied on its corporate culture as a strategy to move its growth agenda forward. Its low-fare structure, exceptional customer base and greater connections have served the airline right in its attempts to conquer the market and maintain its growth strategies (Mark 55). Although other low-cost airlines started to infiltrate the market in a spirited attempt to have a share, WestJet’s strong points lies in its perfect customer service record, highly motivated employees, sound management principles, and greater connections throughout Canada and beyond. Such advantages will arguably shield the company’s culture from being negatively affected by stiff competition and growth.
The sound management practices put in place by WestJet will definitely shield the company from any eventualities arising from the external environment such as an economic downturn. To cut down on fleet maintenance costs, WestJet uses one type of aircraft – the 125-seat Boeing 737. The company offers single class of service, uses the internet to sell tickets, does not offer any meals, provides minimal in-flight service, and does not have frequent flyer programs, airport lounges or link-ups with other carriers (Mark 57). In addition, the company aggressively hedges against escalating fuel costs to ensure a stable operating base. Such sound management practices will ensure the survival of the company in the face of a global financial downturn since costs are well managed within the capacity of the organization.
Employees are the most important asset of an organization, and organizational culture has been constantly linked to the success and productivity of an organization. In equal measure, companies are forced to adapt to change arising from factors in the environment. For WestJet, the factors appear to be competition, growth, and the likelihood of having to operate in a depressed economy (Mark 60). However, it is imperative to note that the corporate culture, more than anything else, will inarguably assist the organization to wade through the challenges.
WestJet’s culture has not only enabled the company to achieve superb performance, but it continues to motivate employees, enhance creativity and innovation, and internalize in employees a passion to succeed in their endeavors (Mark 55). Employees at WestJet are more empowered to take charge of their decisions with little or no interferences from supervisors or the senior management. Indeed, the management’s role is to create standards and expectations for employees to follow, not through coercion but by persuasion. These factors coupled with the well-entrenched team spirit between management and employees will inarguably act to shield the company from any eventualities arising from the external or internal environment, including competition, expansion, and economic meltdown.
A viable alternative would be to pause or cut-down WestJet growth and expansion strategies to enable the company have adequate resources to deal with eventualities such as financial meltdown, competition and degeneration of the corporate culture. However, such an alternative will give WestJet’s competitors time to catch up and establish their presence in the market. Another alternative for WestJet is to manage its performance expectations in a scenario where it is faced with a depressed economy. Performance expectations can be easily managed by using open communication between management and employees, and being honest with them in an attempt to make them understand about the situation on the ground (Mark 59). Creating alliances with other like-minded carriers such as Jet Blue is also an option (Mark 60).
The best solution is involving employees in managing performance expectations to ensure the company successfully negotiates the challenges indicated above. The corporate culture has been part and parcel of WestJet success story and, as such, using the culture component to hedge the company against harmful processes by bringing all the concerned stakeholders to manage performance expectations is the most viable option.
Mark, K. WestJet Airlines (A): The Culture that Breeds a Passion to Succeed. Ivey Management Services. 2001.