Southwest Airlines: We Love Bags Determine How

Southwest Airlines: We Love Bags

Determine how Southwest Airlines' corporate culture differs from other airlines.

Southwest Airlines was founded on the premise that an airline needs to put its customers and their needs at the center of all operations, and further create a customer experience that is highly differentiated, memorable and sought-after by passengers. Southwest has surpassed even its own initial expectations in these areas. The culture of Southwest galvanizes the employees, customers, stakeholders, suppliers and partners into a cohesive value chain all aimed at keeping costs down and increasing lifetime customer value through loyalty (Krames, 2003). Due to its excellent control of costs and aggressive use of fuel hedging, all supported by a very customer-centric, positive culture, Southwest is the only U.S.-based airline to never file for bankruptcy protection, much less ask for a government handout (Rhoades, 2006). Southwest is one of the most unique service businesses in the world due to its ability to translate a core set of values exemplified by a whatever it takes attitude of service to the passenger, friendliness, individual pride, and Company Spirit (Strategic Direction, 2005). Southwest Airlines employees are empowered to take any action that is ethical and legal to ensure customers' satisfaction (Hardage, 2006).

The uniqueness and highly differentiated nature of the Southwest culture is also attributable to the thirteen core values that founder and CEO Herb Kelleher put into place with the company was founded (Freiberg, Freiberg, 1996). He wanted to create a culture of accountability, transparency and trust, in addition to allowing employees to be themselves as well. Mr. Kelleher also believed that when employees were fulfilled in their work, they would be willing to go the extra mile for customers as well (Krames, 2003). All of these assumptions turned out to be correct, and led to the definition of the thirteen values the company is based on. These thirteen values include seeking out low cost yet high value solutions to customers' challenges and problems; relentless pursuit of profitability; family; fun; hard work; individuality; ownership; legendary service; egalitarianism; common sense and good judgment in serving customers; simplicity; and altruism. These values are so critical to the success of the company that new employees are screened using procedures to see if they value them, while also submitting to a 360-degree evaluation cycle within six months of being hired (Hardage, 2006). Southwest is serious about keeping their culture highly focused on the thirteen core values, while also ensuring their new hires have an immediate and very clear idea of what it means to be passionately focused on customer satisfaction. No other airline comes close to Southwest's commitment to cultural excellence.

Analyze three (3) ways that Southwest's unique culture has benefited the airline and its employees.

Of the many ways that the Southwest culture has benefits the airline and its employees the foremost is that it has given every job in the company a very unique value, and underscored the importance of each employee. The culture makes it very clear that each and every position counts and is necessary to the successful operation of the airline.

First, there is the advantage of long-term motivation created in the culture, through the continual reinforcement of autonomy of roles, mastery of specific skills and an overriding purpose to excel for customers (Krames, 2003). These three factors of autonomy, mastery and purpose are the building blocks of long-term motivation.

Second, turnover and employee absenteeism is significantly below the airline industry national and global averages (Rhoades, 2006). This has a corresponding effect of dropping operating costs, which makes a direct contribution to gross margin and profitability. In a services-based business having control over variable costs can very well make the difference between long-term viability or not (Hardage, 2006). Low absenteeism and turn-over have helped to keep Southwest profitable even in the midst of significant recessionary periods over the last seven years.

Third, Southwest continues to win awards for its exceptional customer service and focus on customer satisfaction. The culture of the company makes a direction contribution to this achievement as well, which has led Southwest being consistently ranked as one of the most preferred low-cost carriers in the U.S. (Carey, 2012). The culture is what makes the customer experience on Southwest so differentiated and unique, leading to long-term customer loyalty and higher lifetime customer value.

Speculate how Southwest Airlines would continue to thrive as a company if its current corporate culture would need to change in the near future.