January 21, 2021
TPL Insights: Building Peak-Performance Cultures #51 – How Relationships Support Southwest Airlines’ Purpose and Peak Performance
When Gary Kelly took over as Chairman and Chief Executive Officer of Southwest Airlines on May 21, 2008, some thought the iconic airline might lose its soul. After all, Herb Kelleher had repeatedly been voted best CEO in the airline industry. Fortune Magazine said he might very well be the best CEO in America. He was called a pioneer, a fierce competitor, and an innovator. But Herb was infinitely more than that. Herb changed the world for the better. He created the greatest success story in the history of commercial aviation. Herb and his team made the impossible possible with a disruptive business model and an all but impossible to replicate culture that business schools tout in case studies and businesses all over the world attempt to copy.
It has been almost thirteen years since Gary Kelly took over and Southwest hasn’t missed a beat. While there is quite a contrast between the leadership styles of Herb and Gary, the principles by which they operate are identical and the tenents on which Southwest was built are exactly the same. The underlying factors that have been so critical to the airline’s success are still alive, well and still kicking a*s. Jody Hoffer Gittell, in her book The Southwest Airlines Way, argues that the most powerful organizational competency – the “secret ingredient” that makes it so distinctive – is its ability to build and sustain high performance relationships among managers, employees, unions and suppliers. These relationships are characterized by shared goals, shared knowledge, and mutual respect. While these interdependent relationships appear simple, they are not.
Since 1967, Southwest has carefully and systematically developed a set of organizational practices that build and sustain relationships among those who are crucial to its success. Southwest’s competitors have not been able to replicate their practices, largely because of the functional silos that exist within the airline industry. Gittell conducted field research of the airline industry over eight years and found that pilots, fight attendants, gate agents, ticketing agents, ramp agents and others, working for competitive airlines, had very different and, in many cases, widely divergent goals and little respect for the roles played by others. As in any industry where different groups of stakeholders compete for resources, airtime and status, tremendous potential improvement is possible if cross-functional relationships and teamwork can be strengthened.
One station manager who left a very prominent position at American Airlines to join Southwest had made this observation and tried for eight painful years to effect positive change. As a conscientious middle manager who wanted to see her employer succeed, she repeatedly tried to garner support for a more relationship-oriented approach to cross-functional collaboration at American but found little to no support for her suggestions. The senior leadership team, as is often the case, was comprised not of team members but of competing and functionally divided individuals, each of whom was protecting their individual fiefdoms and functional turf. At American, there had also been years of adversarial labor relations under a CEO who routinely sought confrontation and fostered distrust among all stakeholder groups. Most of the airline industry is plagued by the same adversarial relationships among stakeholders.
In doing her research, Gittell was surprised to discover that, functionally, Southwest was organized almost identically to its competitors, but the ways in which cross-functional employees interacted with one another was wildly different. Unlike their competitors, relationships among front line employees were characterized by high levels of shared goals, shared knowledge, and mutual respect. No one at Southwest takes the job of another employee in a different department for granted. The skycap is just as important as the pilot and they are treated as such. Southwest employees speak of their cross-functional comrades with the same reverence that combat men and women often refer to one another. Relationships of shared goals, shared knowledge, and mutual respect help to facilitate frequent, timely, problem-solving dialogue among workers, allowing Southwest to provide premium quality service to its passengers and a meaningful and rewarding experience to its employees with the most efficient use of resources in commercial aviation history.
After 53 years, the Southwest model is still not well understood. Just the other day, I heard a seemingly clever and highly articulate businessman tell his breakfast buddy that the reason Southwest is as profitable as it is because it is largely union free and doesn’t have to deal with the labor relations issues with which the rest of the industry is shackled. In fact, Southwest is one of the most unionized airlines in the industry, with roughly 83% of its employees covered by collective bargaining agreements. The difference between Southwest and its competitors is that it views the unions as partners. Twelve unions, representing roughly 52,300 employees, are treated as partners rather than as adversaries. Southwest says that its goal is to maintain collective bargaining agreements that take care of its employees, the company, and its shareholders in ways that support its vision to become the world’s most loved, most flown, and most profitable airline.
The purpose of all these blog posts is to share what we’re learning about building cultures of peak performance. In future posts, we’ll dig further into how Southwest Airlines checks all nine boxes in terms of practicing the nine principles we’ve observed in organizations that outperform their peers: Unified Leadership, Disciplined Hiring, Leading with Purpose, Stakeholder Engagement, Cost Leadership, Measuring Everything that Matters, Customer Experience, Clarity in Everything and Staying Ahead of the Curve. These are the principles that drive peak performance cultures. If you’d like to talk about how we can help your organization, please give us a call.
Consultants in Retained Search & Leadership Advisory