Answer the questions after reading the case below.

1. Analyse Southwests culture in terms of artifacts, values, and assumptions. What artifacts are associated with each value? Can you determine any assumptions? Which values appear both intense and pervasive?

2. How has Southwest socialized its employees into its strong culture? Use examples from the case as you discuss how Southwest has used various socialization tactics and principles to influence its employees.

3. What do you see as the benefits and drawbacks to Southwests strong culture? Discuss at least two benefits and two drawbacks that apply specifically to Southwest and describe ways that Southwest might overcome any challenges.

4. What will happen to Southwests culture if it a) grows larger domestically, and b) expands into the international market? Describe specific challenges to the companys culture in each of these situations. How might the challenges be overcome?

5. Using examples from the case, describe how Herb Kelleher, as the founder and leader, has contributed to Southwests culture. Will Southwests culture be sustained when he is no longer involved? What forces might contribute to its change or maintenance?

6. How easy do you think it is for one company to copy anothers culture? If another company tried to duplicate Southwests culture, do you think it would be successful? Why or why not?

Case

In 1971, a small, three-jet airline began serving the three Texas cities of Dallas, Houston, and San Antonio. Today, it operates more than 700 jets to 60 cities across the United States. For the past nine years, it has been recognized by Fortune magazine as the worlds most admired airline, and for five consecutive years, the U.S. Department of Transportation has awarded it the Triple Crown Award (which recognizes on-time performance, having the fewest lost bags, and having the fewest customer complaints).¹ In an era when the airline industry has endured great losses, it has been profitable in every one of its last 34 years. In 2003 its net income was $442 million, more than all the other airlines in the U.S. industry combined.²

The airline, Southwest, began when Herb Kelleher and Rollin King drew up a business plan on a cocktail napkin with the intention of founding a different sort of airline.³ Several notable attributes have set Southwest apart. Its airports are closer to city centers and it uses a point-to- point structure (city to city), rather than the usual hub-and-spoke structure (flying passengers from a few central terminals), both of which increase convenience for customers. Southwest also maintains a Wal-Mart-like devotion to keeping costs down and passing on these savings to customers. This is achieved, in part, by maintaining operational simplicity: It has no assigned seating (including first-class), serves snacks but no meals, and flies only one type of jet.

Many attribute Southwests success not only to its unique operating style, but to its spirited culture.⁴ Its founder and Chairman of the Board, Herb Kelleher, is perhaps one of the most unusual businessmen in American history. Always ready to promote fun, he appeared one Halloween dressed in drag and appeared in company advertisements dressed as Elvis Presley. When a competitor accused Southwest of stealing the slogan Plane Smart, Kelleher suggested an arm-wrestling match to settle the matter. Although Kelleher lost the match, the event generated so much goodwill and publicity that the competitor allowed Southwest to continue using the slogan.⁵ Kelleher stated, Ive always felt that theres no reason that work has to be suffused with seriousness, that professionalism cant be worn lightly. Fun is a stimulant to people. They enjoy their work more and work more productively.⁶

This philosophy pervades the entire company. Southwests fleet includes planes painted in the likeness of Shamu the whale, headquarter walls are covered with thousands of pictures (from employees pets to stewardesses in miniskirts), and considerable attention is paid to parties.⁷ For example, for Halloween, each department gets a budget and plans for months to create a theme, and the entire corporate office is closed for the day of the party.⁸ Southwests President, Colleen Barrett (who started out as Kellehers secretary and has been with the company since its inception) explains, We arent uptight. We celebrate everything. Its like a fraternity, a sorority, a reunion. We are having a party!⁹

In addition to fun, the social events serve another purpose by assuring employees that they are a vital part of the company. Southwests mission statement to its employee states this explicitly:

We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.¹⁰

To preserve and enhance Southwests employee- and customer-focused culture, Barrett established a culture committee.¹¹ One outcome of the committee is having groups of employees express their appreciation for others contributions. For instance, pilots once held a barbeque for the mechanics, and officers and directors participate in a program called Day in the Field, which involves working in a front line job for one day per quarter. These initiatives are intended to improve teamwork, an important attribute at Southwest, as job descriptions include the guideline to do whatever you need to do to enhance the overall operation.¹²

Another element of Southwests culture is a sense of family. As one employee says, I was pretty dubious at first, having been at places where everyone but the top two or three people were considered commodities. But I have come to appreciate a place where kindness and the human spirit are nurtured.¹³ This family spirit can be seen in a number of ways. For example, Southwest employees who need emergency financial help can turn to the catastrophe fund, which consists of voluntary contributions from fellow employees. Furthermore, unbeknownst to management, employees once raised $130,000 for the airline during an oil crisis to help defray fuel costs.

So intent is Southwest on maintaining this atmosphere of helping that they hire employees because of their attitude.¹⁴ Southwests outlook on the necessity of a positive attitude is best expressed by Kelleher: We draft great attitudes. If you dont have a good attitude, we dont want you, no matter how skilled you are. We can change skill through training. We cant change attitude. Indeed, Southwest is exceptionally selectivefor every employee hired, the company receives more than 100 resumes.¹⁵ The selection process consists of an application, a phone interview, a group interview, three additional interviews (two with line employees), a consensus assessment and a vote.¹⁶ Because Southwest realizes that many of the candidates it turns down are potential customers, it has designed the selection process to not make people feel inferior or rejected.

Among those hired, all are exposed to the history, mission, values, and culture of the company.¹⁷ Managers go through a three-and-a-half-day course on leadership, pricing, revenue management, and how the business works. Flight attendants go through four weeks of classes with much of the training oriented towards customer service. In all the training, there is an emphasis on fun and teamwork. In addition to training new employees, Southwest offers The Front-Line Forum, which brings together 12-15 employees with 10-15 years experience in the company. These employees meet with top officers and discuss whether their expectations have been met and what needs to be done to keep the culture alive.

At work, employees are encouraged to bring their personality and individuality to their jobs. For instance, employees at all levels are encouraged to make decisions and take necessary actions to either meet the needs of customers or to help other employees, even if they break company policy in the process. As Kelleher states, You have got to take the time to listen to peoples ideas. If you just tell somebody no, that is an act of power and, in my opinion, an abuse of power. You dont want to constrain people in their thinking.¹⁸ Additionally, both employees and union representatives are routinely surveyed before contract negotiations to discover pressing issues.¹⁹ This contributes to the empowerment of both employees and unions, and also ensures peaceful relationships with unions, which is important for Southwest as over 80% of its workforce is unionized.²⁰

According to Mark Levine, former dean of the Yale School of Organization and Management, Herb is an extremely gifted labor-relations talent, especially when you consider he has somehow managed to get union people to identify personally with this company.²¹ The fact that Southwest has never laid employees off, which is unprecedented in the airline industry, undoubtedly contributes to this. As Kelleher explains, Nothing kills your companys culture like layoffs It is undoubtedly helped us negotiate our union contracts. One of the union leadersa Teamster leadercame in to negotiate one time, and he said, We know we dont need to talk to you about job security. We could have furloughed at various times and been more profitable, but I always thought that was shortsighted.²²

Kelleher also states, The people who work here do not think of Southwest as a business. They think of it as a crusade.²³ Going one step further, Barrett comments, Its so simple. Its a cult. Its a religion with us.²⁴ Perhaps as a result of this attitude, stories of employees helping customers abound. For instance, when a customer arrived at the departure gate with his dog and found out that he could not bring his dog with him on the plane, the gate agent took care of the dog until the customer returned from his holiday.²⁵ When an attendant found out that a woman, along with her family, was flying to see her dying mother, the attendant changed the familys tickets to an earlier flight. As a result, the woman got to her mothers home hours before she would have arrived on the original flight and only moments before her mother died.²⁶

Employees are happy to share their stories, and Southwest has taken advantage of this by implementing a communal corporate weblog that gives employees opportunities to discuss their work experiences and engage with customers outside of the usual transactional relationship.²⁷ Employees write the posts across all levels of the organization, and they are encouraged to write about whatever they want.

Southwest faces several new challenges in the years ahead. First, it is continuing to expand, as evidenced by the doubled number of aircraft orders in April of 2006. As other airlines shrink their domestic markets to take on profitable international routes, Southwest increases its domestic service.²⁸ At the same time, the airline is publicly eyeing the international market. When asked whether international flights are on the horizon, Gary Kelly, Southwests current CEO, answered, Im assuming some day we will.²⁹ Second, several other competitors, such as JetBlue Airways, have emulated the low-cost model with some success, providing Southwest with competition it had not faced in previous years. Finally, Herb Kellehers charismatic leadership and vision have been a driving force behind Southwests success. It remains to be seen whether Southwest can maintain its unique culture after he retires. Early reports on Gary Kellys leadership style indicate that his approach to the culture is similar to that of Kelleher, but other challenges such as expansion may threaten Southwests tight grip on its culture.

Nonetheless, it cannot be denied that its longevity has been due to its unique and strong culture. By focusing on its people in addition to its balance sheet, Southwest has managed to grow from an upstart to a prime-time player. When asked why no competitor has successfully replicated Southwests strategy, Barrett replies, [Its] because they dont get it What we do is very simple, but not simplistic. We really do everything with passion.³⁰