October 8, 2020
TPL Insights: Building Peak-Performance Cultures #36 – Stakeholder Engagement and Clarity – Clarity in Crisis: Stakeholder Communication
Southwest Airlines is a company to which we’ve paid close attention for decades. Herb Kelleher, the airline’s co-founder and first CEO, practiced all nine principles we observe in organizations that perform at the very top of their sectors, all of which enjoy cultures of peak performance. The principles continue to be practiced today under Gary Kelly, Southwest’s current Chairman and Chief Executive Officer.
No organization, regardless of its cultural prowess, is immune to disasters like COVID-19. Companies in our Total Performance Leadership study are as diverse as the hardships they’ve weathered and include all capital structures and industry verticals. Their behavior, however – their response to crisis – is surprisingly predictable. Leaders in these organizations can be counted on to communicate proactively and with near-perfect clarity. Human beings don’t function well in a communications vacuum. Where there is no clear story, we’ll fabricate one. And we usually fabricate the worst-case scenario.
This week Gary Kelly outlined the specific steps the company plans to take in an attempt to prevent furloughs and layoffs through 2021 now that the government assistance funds have run dry. In July, Southwest Airlines had committed to no furloughs or layoffs through the end of the year. Since Congress has not approved any additional support for the airline industry, SWA’s employees’ fate beyond this 2020 was not clear.
The urgency of communicating a clear message to all stakeholders, however, was very clear. Kelly has stated repeatedly throughout the COVID-19 pandemic that his goal is to prevent any furloughs or layoffs for the company’s roughly 60,000 employees. Southwest has never conducted an involuntary furlough or layoff in its nearly 50 years of flying, a point of pride for Southwest’s leadership.
In absence of another six months of financial aid, the airlines lobbied for — which is still currently being negotiated in Washington — Kelly delivered a message to employees clearly explaining Southwest’s plans to trim costs enough to avoid furloughs or layoffs.
He laid out the key elements of leadership’s plans:
- Effective immediately, Kelly’s salary is reduced to $0. It will be that way through the end of 2021.
- Southwest’s board of directors’ cash fees have already been reduced by 20%, and that will continue through 2021.
- Senior executives’ base pay has already been slashed by 20%, and that will continue through 2021.
- Effective January 1, 2021, all employees in remaining leadership roles will have salaries cut 10% for the duration of 2021. On January 1, 2022, pay snaps back to previous levels. A similar approach will be taken for non-contract employees.
In addition, Kelly said the company will begin approaching union leaders about concessions, with the clear goal of avoiding furloughs.
Like his predecessor, Herb Kelleher, he focused on the airline’s people and their needs.
Gary attempted to rally employee support for these measures by underscoring the dire circumstances facing the industry. “You all have done a heroic job in the most challenging of times. I could not be prouder of you. Don’t give up now. Don’t ever give up. You’ve worked too hard, you have persevered. We can fight our way through this. We can save every job. Fifty years from now, they will look back and say, ‘Those employees of 2020, they were really something. They saved Southwest Airlines and they saved each other’s jobs. Truly, that was Southwest’s finest hour.’”
Effective leadership is critical from the boardroom to the hangar. It is about connecting with your constituents so they feel that you know where you’re going, that you believe what you’re saying, and that there is something in it for them.
Our research and leadership communications methodology suggest there are seven essential elements of an effective leadership message.
Connection: Your first task is to make the shift from “you and me” to “we”. Clearly, Kelly establishes a strong connection with his workforce and lauds them for their hard work, loyalty, and a job very well done.
Vision: People want to know you have a vision and what it is. What might it look like next year? In five years? How do we want the world to see us? How do we want to feel about the work we do? Gary speaks of this in his wrap-up.
Strategy: Stakeholders care less about the details of a plan, and more about the existence of a plan, and that it is already underway. Gary described a simple and effective approach to effectively deal with the current pandemic.
Implications: Stakeholders want to understand the impact on them. Where there is a vacuum, employees will fill it by making up their own stories. Gary spoke candidly of specifics and other temporary pain points, as necessary, in the short term.
Urgency: Stakeholders will often cling to a flawed, broken system rather than venturing into the unknown. Change requires a credible call for urgency, especially this year.
Rewards: Will the rewards be shared among those who expended the effort? Leaders need to acknowledge individual and group contributions and design reward systems in which everyone wins.
Hardball Issues: Stakeholder groups are different, but each is listening for evidence that you understand the challenges at hand: from inadequate resources to the unknown implications of Covid-19. Gary acknowledges the challenges and asks his stakeholders to unite with him while Southwest works through them.
Communicating with clarity starts with a decision, and a formula. One need not be highly educated, charismatic, or well-traveled to deliver an effective leadership message. What’s needed is a message that lands with your constituents, so they know you believe what you’re saying, that you know where you’re going, and that there’s something in it for them.
If this material causes you to want to improve the way in which your leaders communicate, give us a call.