Southwest is All About People

While reading this week’s case study on Southwest Airlines, I kept finding myself waiting for that point in the story where they reveal that the idea of the Southwest family is just a myth.  That point never came.  In fact, the description of Southwest’s family was further exemplified in part B of the case where a group of students randomly interviewed several Southwest employees at their local airport.  Why is it hard to accept the notion of a company truly being good to its employees?  I don’t mean the occassional incentives for a job well down, but a top down, systemic type of culture that says all employees are major contributors to a company’s success, so it is important to value them.  This seems like such a common sense idea: if your employees are happy, your customers will be happy; so why isn’t this value more prevalent in companies?

Most companies I have encountered through work or as a consumer, seem to only care about their shareholders and the bottom line.  What they neglect to realize is that in order to reach that bottom line, they need to take care of the top line, which includes employees and customers.    At Southwest, they not only talk about how important employees are, they show it from the Leadership team throughout the organization. 

Unlike the CEOs of Southwest’s competitors, Herb Kelleher interacts with all levels of his employees on a regular basis, as well being described as someone who knows how to have fun.  Herb has also been known to dress up in drag and as Elvis at company parties/functions, which exemplifies the relaxed management style Southwest cultivates.  Colleen Barrett, an Executive Vice President at Southwest, has a culture committee involving 65 employees from all different areas that meets four times a year to discuss how to keep the Southwest spirit going.  The leaders at Southwest also participate in a program called “Day in the Field,” which requires them to spend one day every quarter working in a front line job.

In addition to having leaders who are not afraid to relate to their employees and make them laugh, Soutwest has several other policies that illustrate the value of its employees.  First, they changed the name of their Human Resources Department to the People Department.  Rather than taking a reactive approach to employee motivation, the People Department at Southwest works hard to support the company’s growth by supporting its people.  In addition, Southwest takes employee recruitment very seriously.  Employees and even customers are involved in the hiring process because Southwest cares more about fit than skills.  In order to maintain their corporate culture, it is important to hire people who share Southwest’s attitude.  Hiring people who fit into the corporate culture ensures a better match and lower turnover.  Finally, because Southwest believes in finding employees who fit in with its culture, training is of the utmost importance.  Southwest understands that employees who receive the proper training are better able to perform their jobs, stay in their jobs, and make customers happy.

All of these elements, though risky, have proved to be successful for Southwest.  The bottom line growth that Southwest saw from 1972-1992 is shocking.  Their focus on the top line had a remarkable effect on their bottom line, with only Walmart even coming close to being as good of an investment during that time.  Although competitors of Southwest, such as Continental and United, are looking to compete with Southwest by offering lower fares and shorter haul flights, employee satisfaction is low at these companies.  What Southwest understands that their competitors have not, is that happy employees are willing to go that extra mile for the company and customers.  Therefore, it is a cycle: the company takes care of the employee, the employee takes care of the customer, the customer takes care of the bottom line.  If Southwest continues to make its employees their priority, their continued success seems immanent, no matter what cuts in fares their competitors are offering.  Employee satisfaction leads to customer satisfaction, which is what keeps customers coming back again and again.  It also leads to lower employee AND customer turnover, which can be very costly for a company.  Thus, it’s better to pay the costs upront in employee care and training in order to reap the rewards later.

If more companies take the time and money/resources to ensure that the top line is taken care of, the bottom line will take care of itself and that’s enough to make any shareholder happy.

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