According to an article in the economist, the United States federal government is taking legal action against Southwest airlines after 44 planes of their planes were found to not comply with FAA (Federal Aviation Administration) regulations. Allegedly, these planes were repaired improperly, and were allowed to return to service prematurely.
Although it is not specified in the article, I believe this event is a result of flawed reward system. In class 17, we talked about performance management and the dangers of rewarding one behavior while hoping for another. Southwest airlines utilizes a cost leadership strategy, and in order to maximize their profit they must operate at a very low cost. For this reason, it is likely the employee responsible for the proper maintenance of their aircrafts was offered incentives to devise a low cost strategy. While Southwest may have been unaware their actions did not meet required regulations, they are at fault for rewarding low cost over consumer safety.
Unfortunately, this event will likely damage Southwest’s reputation among consumers, and may cause them to lost market share. This is not good news for Southwest, as their relatively low margins demand a high volume of sales in order for the company to maintain its current profitability. Hopefully, this will serve as a lesson for Southwest, and lead them to reform their reward systems.