Southwest Is Best: How To Run An Airline On Trust and Generosity

-evilgenius: March 11, 2002

I recently watched an interview on the CNN with Colleen Barrett, the former Chief Operating Officer and now President of Southwest Airlines (at age 56, the highest-ranking woman in U.S. Airline History) and was stunned to see not only an executive that personifies the best one can hope for in a manager, but also was greatly pleased to hear of a company which actually lives up to the corporate ideal.

The airline hires people with a sense of humor. The flight attendants joke while doing their flight presentation by saying things like, "For those of you living in the dark ages that have never seen a seat belt, look up at the flight attendant. She will now show you how to buckle and unbuckle one." That's the kind of fun that Southwest brings to each and every one of their flights. According to Colleen Barrett, "We hire for attitude, and train for skills."

It celebrates, rather than stifles, individuality. It resists bureaucracy and puts employees first, affords them with respect, listens to their concerns and suggestions, and then empowers them to achieve solutions. It has committed to a policy of no employee furlows or mass layoffs, and it has lived up to that promise in good times and bad. It is the only airline which didn't lay off workers following 9/11. And unlike the pattern of bad behavior demonstrated by so many executives, wherein the executive takes huge multi-million dollar bonuses while laying off thousands of employees, Chairman Herb Kelleher, CEO Jim Parker and COO Colleen Barrett, as well as the airline's board of directors, all volunteered to temporarily forgo any compensation rather than fire workers. Far from leading to a fiscal crisis, these policies have led to Southwest Airlines becoming America's most successful airline.

Southwest Airlines provides primarily short-haul, high-frequency, point-to-point, low-fare service, and they operate exclusively American-made Boeing aircraft. In addition to it's continual profitability since 1973, according to the Department of Transportation, Southwest has the best on-time record, as well as the fewest customer complaints or lost-baggage claims for five years running. This is what happens when management does more than merely give employees a pat on the back, or pay them lip service. This is what happens when a company's management actually VALUES it's workers. "It’s easy to attribute these results to a solid strategic business plan," says John Christensen, CEO of ChartHouse Learning. "But, the smartest strategy Southwest has pursued is the deliberate creation of a culture characterized by committed, happy employees. This is truly what is behind the success at Southwest."

And the corporation itself has in turn been rewarded with loyalty from both it's customers and it's employees. During the Gulf War, when fuel prices skyrocketed, employees voluntarily worked overtime without pay and donated bonuses due to them back to the company. After the tragedy of 9/11, employees continued to donate extra hours of their hard work. They announced plans to help the airline save money by working some hours without pay. The program was named "Pledge to LUV." (LUV is the company’s stock symbol.) During November and December, employees donated a portion of their pay --- between one and 32 hours --- back to the company. Ginger Hardage, Vice President of Communication at Southwest said, "It was completely voluntary, completely generated and inspired by employee suggestions."

Even passengers were donating money to the airline and giving back mileage bonus tickets and refund tickets to help the airline out, saying "You've been good to me, so I'm gonna be good to you now."

I also feel that it is possible to contribute much of this company's success to the fact that so many women hold high-ranking executive positions. This is no doubt one of the factors which has contributed to the company's overall sensibility and proof of the value of breaking the glass ceiling into tiny bits.

Business should be based on practical reality. Yet in spite of this, many businesses still operate under the old idea that work must be WORK, and wonder why they have employee relations difficulties, poor performance, and poor profit results. I would expect business people above all to be able to do the math. Act like Southwest Airlines and these are the results. Act like Enron, and compare the devastating consequences.

Southwest understands this, and obviously can "do the math" far better than either Enron or it's dubious accounting firm, Arthur Anderson. Perhaps this is because even it's executives remember what it was like to be an ordinary employee. Vice President Elizabeth Sartain has been quoted as saying, "At one of my first companies that I ever worked for, I was laughing very loudly in the hall, and my boss called me aside and said, 'People will think you're unprofessional if you cackle in the hall.' When I came here and I met everyone here and saw how much they laughed, I said, 'This is where I need to be because I can laugh here with reckless abandon.' I love it." In fact, Colleen Barrett began as one of the airline's original employees, starting out as a legal secretary.

Yet to many in the business world, former President Herb Kelleher's leadership style was considered as "unconventional" at best, or "eccentric" at worst. Considering the end product, I would think that whatever the "conventional" approach might have been, it's fairly obvious that this "eccentric" approach WORKS about a thousand times better. Such profitability and performance cannot be so easily dismissed, and if thought about intelligently, should be adopted immediately throughout the corporate world.

"We value our employees first. They're the most important, and if you treat them right, then they treat the customers right, and if you treat the customers right, then they keep coming back and shareholders are happy. And so we give people the opportunity to be themselves," said Mr. Kelleher. He went on to say, "Everybody seems to think that Southwest Airlines is a non-union airline, which is absolutely not true. We're probably the most heavily unionized carrier in the United States of America, and have been for a long, long time."

Southwest is a true PARTNERSHIP between management, unions, employees, stockholders, and customers. By having reasonable expectations, affording each other with respect, and behaving honorably with one another, they achieve profitability without strife. Says Kelleher, "A company is stronger if it is bound by love, rather than by fear." Barrett adds, "It's just so simple that most people just can't figure it out."