Still sound crazy? Only if you haven't heard about Southwest's president and CEO, Herbert D. Kelleher—dubbed by Fortune magazine as the "High Priest of Ha-Ha." "What we are looking for, first and foremost, is a sense of humor," Kelleher has been quoted as saying. "We look for attitudes. We'll train you on whatever you need to do, but the one thing we can't do is change inherent attitudes in people."
Fun pays off.
At Southwest Airlines Co., the corporate culture makes the airline unique, says Elizabeth Pedrick Sartain, a longtime employee who was named vice president of the People Department three months ago. "We feel this fun atmosphere builds a strong sense of community. It also counter-balances the stress of hard work and competition." Indeed, SWA is one of the growing number of American companies that recognize how humor enhances employee management, customer service and profits.
Although SWA reported a 72% drop in profits during this year's first quarter (due in part to its acquisition of Salt Lake City-based Morris Air in December 1993), it has remained consistently profitable throughout its 24-year history. Between 1990 and 1993, the industry lost $4 billion, and last year earned only $100 million on revenues of $54 billion—barely two cents for every $10 in revenues, according to industry analysts. In 1994, SWA earned $179 million, and its competitors haven't been able to match the airline's 7-cents-a-mile operating costs.
In an industry dinged by labor-management battles, changes in executive nameplates, layoffs, fare wars and increasing operating costs, Southwest's success has gained much attention. Besides a no-frills approach to running operations, Kelleher's creative vision fuels the company's methods of managing, recruiting and training its 83% unionized work force. According to Jim F. Parker, SWA's vice president-general counsel, the airline has been able to maintain cooperative labor relations in a couple of ways: SWA encourages union members and negotiators to research their pressing issues and to conduct employee surveys before each contract negotiation. For example, when SWA negotiated with the Southwest Airlines Pilots' Association (SWAPA)—a company union that represents 2,000 pilots—it proposed a 10-year contract with stock options in lieu of guaranteed pay increases over the first five years. "Like most things, [the agreement] emerged from a series of discussions and exchanges. Herb wanted to find a structure that would give the pilots a long enough time to hold the stock options and exercise them," says Parker. The pilots, he adds, retained their own outside experts to give advice on investment issues so they could make a fully informed decision. "They approved the contract," he says. Adds Sartain: "If we treat employees the right way, they'll naturally treat our customers the right way."
Last year, for example, Dallas-based Southwest Airlines won the U.S. Department of Transportation's Triple Crown award for the third consecutive year. Based on statistics published in the DOT Air Travel Consumer Reports, Southwest achieved the highest ratings for on-time performance, baggage handling and fewest customer complaints. As other airlines plan to jettison their workers to drive down costs per seat-mile, Southwest hasn't laid off an employee since its inauguration in 1971. After acquiring Morris Air, Southwest added seven new cities and hired more than half of the smaller airline's 2,000-plus former employees. It also provided employment-seeking classes for those who weren't retained.
Today, SWA's merry band of 18,000 belongs to the sixth largest U.S. airline—the United States' only major shorthaul, low-fare, high-frequency, point-to-point carrier. Southwest operates a fleet of 203 Boeing 737s in 45 cities and 22 states nationwide—cruising at a speed of 564 miles per hour while serving 62 million bags of peanuts annually.
Southwest's customer-driven values have in part been attributed to Kelleher's personal history. He didn't evolve as one of America's most notable CEOs by just impersonating Elvis or Ethel Merman—antics that have brought him much attention. No, Kelleher remembers sweating six summers on the factory floor at Camden, New Jersey-based Campbell Soup Co., where his father was general manager. It was there, he says, he learned the basics of industrial management. After college, Kelleher pursued law and later moved from his home state of New Jersey to San Antonio, Texas. By the 1960s, the entrepreneurial lawyer began searching for new business opportunities.
In 1966, Rollin W. King, a banker client, suggested that Texas could benefit from a short-haul commuter airline similar to Pacific Southwest Airlines—then a major player in California. The two drew up plans for a low-cost carrier that would serve Houston and San Antonio from Love Field, near downtown Dallas. On June 18, 1971, SWA launched its operations with three aircraft and a crew of bouncy flight attendants wrapped in hot pants. The fleet made six round trips between Dallas and San Antonio, and 12 round trips between Dallas and Houston—for as little as $20 one way—and without a single tray of food. Within two years, the airline was out of the red and has remained profitable every year since—an unrivaled achievement in the U.S. airline industry.
Sartain, known by her colleagues as Libby, remembers what it was like when she first arrived at SWA. She was initially hired in 1988 as director of compensation and benefits. "We had a traditional personnel department for a number of years," says Sartain, who had previously worked in human resources for Dallas-based Mary Kay Cosmetics, Inc. and National Sharedata Corp. Soon after her arrival, Southwest began to grow and change from a company that served fewer cities and employed a work force about one-third of its current size. "Even though we were becoming a larger company, we wanted to still maintain that special environment unique to us," she says. Six years ago, Southwest made two decisions to ensure that the corporate values of employee satisfaction and customer service remained intact: First, it created the position of "executive vice president of Customers" to oversee the human resources functions, marketing, customer relations and public affairs. Then, the company changed the personnel department's name. "We agonized over what to call it. We considered changing it to human resources," she says. Then someone suggested People Department. At first, her staff laughed at the idea. Then it stuck. "[Our employees] aren't just resources. They're real people. Since then, I've been shocked by how many other companies have changed their [human resources department] names. We didn't realize we were setting a trend. We were just doing something that fit into our culture," says Sartain, who reports directly to Colleen Barrett, SWA's executive vice president of Customers and corporate secretary. The People Department—located at the Dallas headquarters—employs a staff of 157 who manage recruitment, People Services (affirmative action and EEOC charges), learning and development, and compensation and benefits.
Recruitment takes off.
Unlike many other U.S. companies, Southwest doesn't have to rely on headhunters and employment agencies for job candidates. For example, last year, Southwest received more than 126,000 applications for a variety of positions: flight attendants, pilots, reservation agents and mechanics. "A lot of times, people will come in and say, 'I want to work for Southwest because it's so much fun.' So sometimes we have to downplay the [image] by saying there's a lot of hard work," she says. Warnings don't keep the applicants away. Last year, for example, the People Department interviewed more than 35,000 individuals for 4,500 positions. In just the first two months of this year, Southwest hired 1,200 new employees. "We're growing extremely rapidly. I don't think anyone else is hiring like that," says Sartain. "The real key to me is to get the right people into the right jobs," she says.
Because SWA prefers to stay ahead of the curve, the company accepts applications all year round—except for the position of pilot, which requires greater selectivity, according to Sherry Phelps, director of employment in the People Department. One of Southwest's original employees, Phelps began working for the airline in 1972 as an administrative assistant for the vice president of marketing. Utilizing her experience in marketing, Phelps oversees a multipronged approach toward recruitment for the entire company. It includes ads, jobs fairs, even online promotions on the Internet. "Every person who interviews for Southwest goes through this department," she says. Adds Sartain: "We have a very unique process. Each group we hire requires a different approach."
Take the pilots, for example. Southwest usually announces its openings once a year in professional publications. "It's the only area where we restrict the number to 1,000," says Phelps. The reason for the quota is that once an applicant has met SWA's minimum requirements (a required number of flight-time hours in a jet aircraft and piloting command hours), the candidate is promised an interview. That's not the case for those applying for ground operation positions—as reservation agents, mechanics, fuelers, luggage handlers—or as flight attendants. SWA accepts those applications all year long.
Not surprisingly, many of the applicants are Southwest customers who've picked up an inflight magazine or have come across an ad like the one that featured Kelleher dressed as the King of Rock. It read: "Work In A Place Where Elvis Has Been Spotted... The qualifications? It helps to be outgoing. Maybe even a bit off-center. And be prepared to stay awhile. After all, we have the lowest employee turnover rate in the industry. If this sounds good to you, just phone our jobline or send your resume. Attention: Elvis." Phelps says that a small number of people may scoff or question why SWA indulges in such showy activities. They wonder how an airline can treat its jobs so lightly. Her answer? "We do take our work seriously. It's ourselves that we don't."
Besides answering ads, there are other ways applicants can board Southwest's job ramp. With the recent opening of two more reservation centers in Little Rock, Arkansas, and Oklahoma City, Oklahoma, Southwest was able to attract local residents through its successful job fairs. After the airline issued a public announcement about the Oklahoma City reservation center, more than 9,000 people attended the four-day event. "We held it in a location close to where the center was built," says Sartain. This month, about 1,000 new employees are scheduled to open up the newest of SWA's nine reservation centers.
As if reaching thousands at a time wasn't enough, Southwest also jetted into cyberspace last March. Its Web site debuted as "Southwest Airlines Home Gate—Our Home Away From Home On the Internet," (http://www.iflyswa.com). According to Kevin Krone, SWA senior marketing analyst, the company established its presence online in order to reach a significant portion of the 30 million current Internet users worldwide. "What's more staggering is that the number is growing by 10% each month," says Krone. "We felt it [the Internet] was an attractive medium in which to tell the Southwest story." Although the main purpose is to attract more airline customers, one of the project's other goals is to keep Southwest's culture in the mind's of potential applicants. With a simple click, users can hop from a choice of 29 topics, a photo gallery, flight schedules, the company's annual report and, of course, a welcome from Herb—which says: "Greetings from our wild and crazy CEO." "Folks can also read or download information about the open positions in our system," he says. SWA's homepage receives thousands of hits per day. "There's been a tremendous response," he says.
Once the applications are received, they're turned over to Phelps' department for further processing. Southwest manually processed the myriad applications until two years ago. Every single one. "It wasn't fun," says Phelps. Now, data-entry clerks key in basic information, such as name, address, phone and education. The computer program allows recruiters to sort by any field, such as job category or city. If a recruiter is searching for a ramp agent in Chicago, for example, he or she can specify that geographically specific need. "You can put in any conditions you want. It'll narrow down the field," she says. Then the recruiters can go back to the applications to review a candidate's employment history.
The initial screening process for some job categories differs, however. Applicants for flight attendant must first appear before a group panel that represents the People Department and Inflight Department. Candidates are given the opportunity to share their backgrounds in an informal, conversational setting. "We want to see how they perform in front of a group because that's the way they do their business," says Phelps. After passing the group interview, a flight attendant candidate—like all other candidates—must complete three one-on-one interviews, conducted by a recruiter, a supervisor from the hiring department and a peer. "You get three different perspectives on one individual." Next, the three interviewers determine their separate ratings. Once they reach a consensus, they either recommend or drop the candidate.
Targeted Selection® finds the right people for the right job.
Most employment specialists will agree that a company will save more money and reap greater levels of productivity when it hires smart. The basic hiring approach that Southwest uses was developed by Pittsburgh, Pennsylvania-based Development Dimensions International, Inc. (DDI). Known as Targeted Selection, the system is more than an interviewing technique; it has aided SWA's human resources professionals to develop a comprehensive approach toward hiring:
- Use past behavior to predict future behavior
- Identify the critical job requirements (target dimensions) for the position
- Organize selection elements into a comprehensive system
- Apply effective interviewing skills and techniques
- Involve several interviewers in organized data-exchange discussions
- Augment interview with observations from behavioral simulations.
Southwest, Phelps says, doesn't use personality tests as some companies do. It places more emphasis on an applicant's previous history through the Targeted Selection process. According to DDI, many interviewers commonly fail to seek behavioral information about an applicant. Instead, they ask theoretical questions about what the applicant would or should do. A misplaced focus forces interviewers to interpret or be persuaded by an applicant's ability to sell him or herself.
The employment staff at Southwest, therefore, conducts a job analysis for each category, identifying specific job dimensions. (Dimensions are the behaviors, knowledge and motivations needed to be successful in a job.) "Typically, we end up with a long list. But those are narrowed down to the top ten because that's what's most practical in an interview," she says. Clearly, one dimension that's important for flight attendants and pilots is judgment. Several questions might be asked to find out how they made a decision in another job situation. Another job dimension is teamwork—an important attribute for any job category at Southwest. Interviewers might say, "Tell me about a time in one of your prior jobs where you went above and beyond to assist a co-worker." Or, putting it another way: "Tell me about a time when you had a conflict with a co-worker." By allowing the applicant to talk about his or her previous experiences, interviewers are less likely to be subjective in their appraisals.
Another common error that interviewers often make is what DDI refers to as the halo effect. That's when interviewers permit one dimension—favorable or unfavorable—to influence their judgment on other dimensions. Oral communication is a good example. Although being a good speaker doesn't necessarily indicate managerial ability, research skill, decision-making ability or other talents, interviewers sometimes relate skill in oral communication to those areas.
Or how many times have you seen an interviewer make snap decisions about an applicant? Many interviewers decide for or against an applicant as a result of information provided early in the interview. Their decisions, according to DDI, are based on initial positive or negative information such as a review of the individual's application, a first impression or even a handshake. Whatever the basis for the decision, the interview is similarly affected; accuracy is decreased because the interviewer doesn't objectively seek additional facts. Moreover, after an interviewer has made a judgment, he or she tends to seek more information to confirm his or her thinking. By learning better interviewing techniques, SWA recruiters have been able to improve their employee selection process.
According to Phelps, although Southwest adopted the general principles of Targeted Selection, it tailored the method to fit its own unique corporate culture—mostly because of SWA's priority on attitude. It's what the People Department and Kelleher call the Southwest Spirit—sprinting that extra mile. "Our fares can be matched; our airplanes and routes can be copied. But we pride ourselves on our customer service," she says. That's why SWA looks for candidates who generate enthusiasm and leans toward extroverted personalities. "We're not trying to clone people, but we encourage the unique things that every individual brings. The person who's not a comedian by nature isn't going to be told to stand up and do a routine. But those that can are free to do that," says Phelps.
A perfect example is Kolette Miller, an SWA flight attendant who celebrated her 12th anniversary this past April. She had just received her bachelor of science degree in business when she decided to apply at Southwest. "It's one of those careers you grow up with an interest in," she says. Even 12 years ago, the company was highly recommended to her. "I could foresee an opportunity to grow." Ask her about the interviewing process, and she'll tell you how "warmly" she was treated. "They told me, 'Now, Kolette, we don't call the CEO Mr. Kelleher. We call him Herb.' So I thought, 'This is cool. They're on a first-name basis.'" (Kelleher, by the way, has been known to remember the names of thousands of his employees.)
Last year, Miller received the President's Award for her excellent performance as a flight attendant. "It was the highlight of my career," she says. The award—one of the highest honors an employee can receive—is presented annually to one individual nominated by SWA employees and selected by a group of company executives.
Miller also is known for being playful on the job. "We have a lot of little toys like rubber cockroaches," she says with a laugh. "If you see someone being a little ornery, you think 'Oh, he deserves a cockroach in his drink.' Of course, we don't let him drink it, but the assumption is that we're given a lot of flexibility to let our personalities come out and express it to our customers. And they love it," she says.
Minutes before Miller was about to board a recent flight to San Francisco, she plotted her next gag. Because Southwest passengers aren't served meals on the flights, Miller loves to rub it in. "When people ask what we're serving for food, I tear out [magazine] pictures of steak and potatoes and take it up to them," she says. And what if the humor just doesn't fly? "You have to judge your crowd because some flights are very calm. But if you've got the glory and guts, go for it," she says.
University of People provides employee training.
With the exception of New-Hire Celebrations, most of SWA's employee training takes place at Love Field Airport-based University of People. The facility is equipped with four classrooms, a dining room, a reception area and office space for its staff of 12: six full-time instructors, two managers and four administrative support staff. "It's great to be located in an airport facility. When out-of-town participants arrive, they can walk directly to the University and return to their gates for departure," says Liz Simmons, director of Corporate Learning and Development—a division of the People Department. The University's curriculum includes the Frontline Leadership program for all those in supervisory levels or above; the Leading with Integrity program, which trains first-time managers; and the Customer-Care Training program for flight attendants, pilots and other employees so they keep in step with the company's latest performance standards.
Orientation for new hires, however, begins at the company headquarters in Dallas or at offices located in Phoenix or Chicago, says Simmons, a 16-year employee. Because the airline has been hiring so rapidly, her department conducts between two and five orientations per week. Attendance varies between 20 and 100 participants. But SWA prefers to bring its new employees to the Dallas headquarters because that's where the show begins.
New hires, for example, embark on a scavenger hunt throughout the building. Given only a time line with specific dates in Southwest's history, they're encouraged to view the memorabilia decorating the corridors and badger other employees to fill in the missing details. "[The exercise] gets them out and meeting different people working at headquarters," says Simmons. That takes about 30 minutes. Then they're shown a series of three videos. The first is entitled "The Southwest Airlines Shuffle," which incorporates rap music performed by various employees describing their job functions. Even Herb appears as Big Daddy-O. The second one—called "Graveyard Video"—takes on a more serious tone. It presents an overview of the volatile airline industry and how quickly things can change. It also includes interviews with Southwest employees and customers who share their work and traveling experiences. The last video, "The Spirit Weaver," honors the past by documenting some of Southwest's history, but also conveys the belief that "we shouldn't become so ingrained in traditions that we stifle our growth and productivity," Simmons says.
New hires also participate in another exercise designed to demonstrate creativity through teamwork. A team of eight is given 12 straws, four strips of masking tape and a raw egg. The objective: to manufacture a device in seven minutes that will keep the egg intact when it's dropped from a height of 10 feet. "We roll out the plastic, and they have to test their device. There's exhilaration, disappointment and everything in between." After each team completes its experiment, the class listens to each team share how it devised the invention. The teams' success depends on the dynamics. How creative they wanted to be; whose idea they were willing to entertain; how they were able to identify and tap a member's expertise or idea. "The most important lesson is [forging] teamwork with limited time constraints," says Simmons. "There's always one successful team."
Incoming employees aren't the only ones who get to play games. Once a year, SWA supervisors, managers and executives attend the two-day Frontline Leadership training program at the University of People. (Kelleher also has been known to pop in.) About eight years ago, Simmons' department purchased off-the-shelf training devices that would help foster teamwork. Since then, her staff has developed its own curriculum—exercises that better incorporate Southwest's pert culture. "Our people are active. If they just sat in a classroom, they wouldn't transfer the learning. [After all], we encourage flight attendants to play harmonicas and sing songs."
So each year, Simmons' department selects a new activity that instills an important corporate value such as teamwork, trust, harmony or diversity. In one exercise called "Oz," managers take a journey to uncover the mysteries behind being an effective employee and leader at Southwest. Some of the stops along the journey include building a network of trust in the workplace and exploring how fear affects that value. In "Crocodile River," participants are given two-by-fours, which they utilize to cross a simulated river—thereby enhancing teamwork in a perilous situation.
This year, the University will roll out another program called "Harmony" in order to promote more cultural diversity at the workplace. The training will include interactive activities to help managers explore their "personal beliefs and stereotypes of others," she says. More than 2,000 supervisors and managers will attend 55 sessions that the learning institute will organize. "We're going out into the field to cover more geographical locations," says Simmons.
As managers and supervisors become more experienced through these training sessions, they will also be able to spot other potential leaders. Employees, therefore, may be recommended by their managers, or they can apply for openings in their department themselves. Through the Targeted Selection process, the candidates will undergo the same one-on-one interview procedure required when they first applied at SWA. Once an employee is newly appointed to a supervisory or managerial position, he or she must attend a three-day class entitled "Leading with Integrity," which is currently being revised, according to Simmons. The program's objective is to further develop positive communication and leadership skills. Guest speakers often lecture on the operational aspects of the company:
- Basic principles of SWA leadership
- Giving constructive feedback
- Enhancing communication skills
- Interviewing techniques
- Giving employees effective performance appraisals
- Introduction to EEOC, Affirmative Action and ADA policies
- Employee-Assistance Program
- Southwest Airlines Drug-Testing Policy.
Those who are considered for managerial positions at larger operations, such as a reservation center, attend a special program called "The Up and Coming Leader." Instead of a two-day session, individuals undergo training for six months. During that period, the employee maintains his or her current position, but also receives training in every department within the company. At the conclusion of the program, the candidate is provided with 360-degree performance feedback from the various department heads, peers and subordinates. "[He or she] receives information about how to become a better leader," says Phelps. Once the feedback is evaluated, the People Department decides upon the assignment at one of the larger facilities. Clearly, the company's practice of hiring from within has benefited both sides of the labor-management team. Those who have risen from the ranks are most likely to gain the respect of one's fellow peers and managers.
Culture Committee ensures Positively Outrageous Service.
As the airline industry slowly picks up, other airlines may begin to imitate or adopt some of SWA's operating practices. However, Kelleher doesn't believe that the company's personality, which drives customer service, can ever be cloned. It may seem kitsch, but everywhere you look Southwest promotes red hearts and "LUV." The symbols are supposed to embody the Southwest spirit of employees "caring about themselves, each other and SWA's customers," states an employee booklet. You see it on the company training books. It's in the name of the mentor program, "CoHearts," and it's used for the "Heroes of the Heart Award." In fact, SWA is so doggone proud of its star employees, it wants to let the whole world know. Because Southwest presented this year's Heart Award to the scheduling department, its name will appear on a banner painted across a red heart on the nose of an airplane for one year, says Simmons.
Many of these ideas spring from a special group known as the SWA Culture Committee. Chaired by executive vice president Barrett, the group is composed of 66 employees representing a cross-section of departments. Occasionally, it includes customers such as Ann McGee-Cooper, a management consultant based in Dallas. McGee-Cooper has maintained an ongoing relationship with the airline since 1989. "I've been traveling on Southwest for years," she says. She started observing them unofficially—looking for holes in its highly touted customer service. "I didn't find it, so I asked to study them internally," says McGee-Cooper. To her surprise, Kelleher and Barrett invited her to study the company and propose some customer-service improvements. She was allowed to attend training sessions, observe meetings and interview the employees. Later, she was invited to serve on the Culture Committee, an honor that obligates her to attend four annual meetings to discuss customer service. All of the participants volunteer their time. "It's the only committee I've been on where everyone is active. We talk about how to keep the LUV alive," she says.
When Southwest received criticism for transporting passengers "like a cattle car," McGee-Cooper made a suggestion. Observing the rails at the boarding gates, she concluded they served no other purpose than creating the perception that people were being herded into the airplanes. Southwest eventually removed the rails at Love Field and other airports. "It helped the flow of traffic, too," she says. That kind of openness is what McGee-Cooper describes as unusual for many large companies.
As a creative management consultant, McGee-Cooper also helps the Culture Committee explore different concepts such as mind space. Mind space, she describes, is the very first thing you think about in reference to a person, place or thing. "Cheap is not good mind space. Fun is. I try to encourage people to stretch themselves. Fun doesn't have to take more time," she says. But when SWA employees do extend themselves beyond the call of duty, that's what the airline calls Positively Outrageous Spirit. Like the time when a passenger in Houston rushed to the gate with his Chihuahua, only to discover that the airline required a crate to ship the animal. With no obvious alternative in sight—and his two-week vacation to Hawaii in peril—one of the gate agents came to his rescue. She volunteered to watch the dog. For peanuts.
Personnel Journal, June 1995, Vol. 74, No. 6, pp. 62-73.