Back in 1971 Southwest Airlines was the brainchild of Rollin King, John Parker and Herb Kelleher. It started as a small Texas intrastate carrier know for its progressive policies and innovative thinking. Southwest Airlines’ corporate culture differs from other airlines in that it that prides itself on “ doing the right thing by our Employees and Customers” . When the stock went public on the New York Stock exchange it adopted the ticker name “LUV” to match its attitude and the way it feels about its people and community. This attitude has paid off and it is the only airlines to show a consistently profit since 1973. There are few frills but no charges for checked in baggage charges, the peanuts are free and there are plenty of smiles to go around. , If you click the Southwest Difference on their web site, the top item is charitable giving, the next is community outreach and volunteerism, the third is Environmental Initiatives. Obviously, they are concerned about their community. The next section is Our Company; the first item is our people, our Diversity & Inclusion, Our Suppliers lastly you finally get to Our Reports. The bottom line is there, but it is not the most important focus of the page. Perhaps that is why their bottom line has kept them on top, even through the economic fluctuations of the 21st century.
The three founders John Parker the banker, Herb Keller, the lawyer and, Rollin King, who owned a small San Antonio commuter air service were the perfect combination to brainstorm together and get Southwest Airlines launched. They stayed as an intrastate carrier serving the San Antonio, Dallas, Houston triangle at a time when the area was seeing a growth surge in that brought in innovative technology and people. Southwest’s unique culture has benefited the airline and its employees from the very start. In 1972, the company could not meet payroll. Instead of downsizing staff, they sold one of their planes and the staff responded. They turned the planes around in ten minutes time, the fastest in the industry, to keep the company in the air. “Kelleher called this the airline's most challenging time.”. They made it through and were perfectly placed to help the American oil industry cope and reorganize in response to the October 1973 OPEC oil crisis. They showed their first profit that year and have not stopped since.
Southwest Airlines also has a history of recognizing the value of their employees, and the contribution its employees make to the business. In 1978, Herb Kelleher became the interim CEO and moved into the position full time in 1981. In 2001, he was replaced as CEO by James Parker, the companies general counsel although he stayed on as Chairman. As they were restructuring they selected Colleen Barrett, Kelleher’s former legal assistant, as President. . This is not an isolated incident of promoting someone from within. The company’s general policy is to train and move their staff up whenever possible. This benefits everyone in the organization. Staff does not have to move out to move up, and Southwest does not have to suffer from the expensive interim period when a new hire is learning the corporation’s policies and procedures as well as their new job duties.
They treat their employees differently, from the “People Department” (instead of Human Resources), which recruits and selects new hires, through the “University of People” with its full time internal training staff the value Southwest Airlines places on its staff is obvious. Because Southwest Airlines treats its employees so well, The People Department customarily has far more applicants than it can hire for every opening. That allows them to choose based on personality type as well as job skills.
To fit in with Southwest Airline’s corporate structure individuals need to be able to take the job seriously while retaining a sense of humor; stuffed shirts need not apply. . As a result “Southwest Airlines rates consistently high in Fortune Magazine’s ‘100 Best Companies to Work For in America’” . The University of People is one reason for this rating. With a full time staff of instructors, administrators and support staff, “The mission of the University of People is to "equip employees to practice the kind of leadership that Southwest Airlines expects.". Some of the courses are those you would expect from any airline, customer care, training programs for flight attendants and pilots and the like. Other programs are less typical; they address how to run an airline, the practice of stewardship and the care of customers and how to live the core values of the company. Because they have a solid training background, employees have the freedom to make decisions. “The philosophy of David Young is to "treat fellow employees as customers and you will never get in trouble for helping a customer.".
Part of Southwest Airline’s strategy was to take advantage of a location where the population and business centers were spread out over a large geographic expanse and transportation alternatives were sparse. Since they were an intrastate air transportation service, they did not have to comply with the same Federal Regulations as the larger carriers.Southwest Airlines is frequently used as an example of how a company should be run, and how to treat employees. Business Books like “THE SOUTHWEST AIRLINES WAY, Using the Power of Relationships to Achieve High Performance” by Jody Gittell is illustrative of this. She states, “By any measure, Southwest Airlines has been the standout success story of the U.S. airline industry.” This corporate structure has allowed Southwest Airlines to thrive and grow while other airlines were struggling and going under.
In measuring its success, Ms. Gittell points out not only the obvious year after year profitability but also the market capitalization. She calls up the statistics to show that in 2002 Southwest Airlines’ market capitalization exceeded the market capitalization of all the other United States Airlines - Combined. Southwest Airlines achieved another benchmark; from 1992 to 1996, they also won the airline industries “Triple Crown.” This means they had the fewest delays, the least complaints, and the smallest number of mishandled bags. “It is the small things that make the difference. Southwest still gives out free peanuts, an oddly emotive subject among travelers. It lets passengers switch their flights often, for no extra charge. Most importantly, perhaps, it does not charge for checked-in luggage.”.
Southwest Airlines thrives as a company because of its current corporate culture, if that were to change in the near future its very existence would be endangered in today’s uncertain economic environment. One of the reasons Southwest Airlines enjoys the success it does is because of the tight unity and seamless communications staff and management enjoy. This is reflected in the way they can treat their customers. Staff has the autonomy to solve problems. When a customer approaches a Southwest Airlines employee they can expect to hear “Yes, I can help you with that” not, “I have to call my supervisor, please wait.” Anyone who has ever waited for a supervision knows how frustrating that can be, especially if they have to make a connecting flight. If that were taken away, it would be just another airlines fighting the battle of high overhead, market share and fierce competition, no amount of free peanuts could make up for that.
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