SOUTHWEST AIRLINES
After the September
11, 2001 terrorist attacks, Southwest Airlines (Southwest) and the entire
airline industry in the US faced devastating losses. Major airlines rushed to
the US Congress for relief in the form of federal assistance. The industry was
allocated $15 billion; a part of the relief came as outright grants to cover
the losses of operating revenue following the shut down of the industry by
federal order, while the rest was in the form of loan guarantees.
However, this
assistance was not enough to pull the industry out of its heavy losses. It continued to lose billions of dollars
every day because of the slow rate of passenger return.
To reduce their
losses, the airline industry in the US cut the number of flights by 20% and
laid off 16% of their workforces in the weeks following the attacks. However,
one airline that responded differently to the crisis was Southwest. The airline
had its own unique approach to the crisis. Southwest avoided layoffs altogether
and stuck to its mission of caring for its employees.
It was felt
that avoiding layoffs in the face of a dramatic decline in demand would
jeopardize Southwest's short-term prospects. The company was losing millions of
dollars per day in the weeks following the terrorist attacks. However,
Southwest was willing to suffer some damage even to its stock prices, to
protect the jobs of its people.
Southwest's
no-layoff response to September 11 was a reminder to its employees of the
organization's tradition of caring for its people. When asked to comment on
this, an official explained, "Its part of our culture. We've always said
we'll do whatever we can to take care of our people. So that's what we've tried
to do
Southwest has
been profitable every year for 31 years since it started its operations in
1971. During this period most airlines have struggled to achieve three or four
years of consecutive profitability. In 2002, the total market value of
Southwest was $9 billion, larger than that of all the other major airlines in
the US put together (Refer Exhibit I). The airline achieved high levels of
employee satisfaction and was included in the Fortune magazine's list of the
"100 Best Companies to Work for in America" for three years in a row.
Many analysts feel that the remarkable performance of Southwest is because of
its ability to build and sustain relationships characterized by shared goals,
shared knowledge and mutual respect between employees.
Background
Note
In 1967,
Rollin King, a San Antonio entrepreneur who owned a small commuter air service,
and his banker, John Parker, initiated the idea of starting an airline company
called Air Southwest Co. (later Southwest Airlines Co.)
They wanted
to provide the best service with the lowest fares for short-haul,
frequent-flying and point-to-point 'non-interlining'2 travelers. Herbert D.
Kelleher, (Kelleher), who was the legal advisor to King's air service, later
joined them to start the airline company. The trio decided to commence
operations in the state of Texas, connecting Houston, Dallas and San Antonio
(which formed the 'Golden Triangle' of Texas). These cities were growing
rapidly and were also too far apart for travelers to commute conveniently by
rail or road. With other carriers pricing their tickets unaffordably high for most
Texans, Southwest sensed an attractive business opportunity.
Shaping Southwest's Organizational Culture
Operational
Philosophy
Southwest's
objective was to provide safe, reliable and short duration air service at the
lowest possible fare. With an average aircraft trip of roughly 400 miles, or a
little over an hour in duration, the company had benchmarked its costs against
ground transportation. Southwest focused on short-haul flying, which was
expensive because planes spent more time on the ground relative to the time
spent in the air, thus reducing aircraft productivity. Thus it was necessary
for Southwest to have quick turnarounds of aircraft to minimize the time its
aircraft spend on the ground. Southwest limited the turn time for each plane to
ten minutes or less. It has managed to limit airplanes' turn time to (about
20-25 minutes) over the years (Refer Table II.)...
Human
Resource and Organization Behavior | Case Study in Management, Operations,
Strategies, Human Resource and Organization Behavior, Case Studies
Leadership
Southwest's
organizational culture was shaped by Kelleher's leadership. Kelleher's
personality had a strong influence on the culture of Southwest, which
epitomized his spontaneity, energy and competitiveness. Southwest's culture had
three themes: love, fun and efficiency. Kelleher treated all the employees as a
"lovely and loving family". Kelleher knew the names of most employees
and insisted that they referred to him as Herb or Herbie. Kelleher's
personality charmed workers and they reciprocated with loyalty and dedication.
Friendliness and familiarity also characterized the company's relationships
with its customers...
Building
Relationships
Since its
inception, Southwest attempted to promote a close-knit, supportive and enduring
family-like culture The company initiated various measures to foster intimacy
and informality among employees. Southwest encouraged its people to conduct
business in a loving manner. Employees were expected to care about people and
act in ways that affirmed their dignity and worth. Instead of decorating the
wall of its headquarters with paintings, the company hung photographs of its
employees taking part at company events, news clippings, letters, articles and
advertisements.
Human
Resource and Organization Behavior | Case Study in Management, Operations,
Strategies, Human Resource and Organization Behavior, Case Studies
All these
characteristics were ingrained in the organizational culture of Southwest.
