Southwest’s Biggest Mistake Was Forgetting Its Own Culture

December 30, 2022 by Stewart

Commentary

Four days before Christmas, Southwest Airlines Co. Vice President of Ground Operations Chris Johnson sent an urgent memo to Denver airport employees. Declaring a “state of operational emergency,” Johnson said the airline had received an unusually high number of absences among some workers and would require employees “claiming illness” to provide a doctor’s note on their first day back. A note from a telehealth visit would not be enough, and the mandatory overtime would go into effect as well. Failure to comply would be considered insubordination and would result in termination.

The collapse at Southwest that the memo heralded (more than 15,000 of its flights canceled since Dec. 22) stunned industry insiders. But so would the memo itself.

“When I read it, I couldn’t believe it was written by Southwest,” airline analyst Henry Harteveldt told me. “It absolutely goes against everything that Southwestern culture stands for.”

Industry consultant Robert Mann called it “draconian” and a “cultural failure”. “They just have a bigger stick,” he said. “They didn’t offer any carrots.”

In fact, it was a remarkable turnaround for Southwest. In an industry known for its acrimonious management-worker relations, the budget airline built its reputation around being a fun and harmonious workplace. That was the case for a long time despite being the most unionized of the big American carriers.

But the mood has changed in the last year or so. Unions representing its pilots and crews have become more vocal, publicly complaining about brutal and erratic schedules and high levels of fatigue as the industry grapples with the same staffing issues as other industries. Both the pilots’ and flight attendants’ unions have called for federal mediators to intervene in their multi-year contract negotiations with management. And earlier this month, Southwest pilots picketed the New York Stock Exchange on the company’s investor day.

In contrast, when the company’s legendary co-founder, the late Herb Kelleher, announced his retirement amid contract negotiations, the pilots’ union ran a full-page ad in USA Today thanking him for his service.

When Southwest executives and industry watchers do their post-mortem on what caused this week’s chaos, they’ll talk about bad weather, outdated technology and Southwest’s core model of flying directly from city to city instead of going in and leave the centers. But an apparent breakdown of its famous “people first” culture has to be at the top of that list.

When Kelleher launched Southwest some five decades ago, he sought to build not just a different kind of airline, but also a different kind of company. Southwest never had layoffs, handed out generous stock options and, unlike many of its competitors, never filed for bankruptcy. Building trust and goodwill with employees was ultimately a business decision: happier pilots and crews meant a more efficient and productive airline.

“You have to treat your employees like your customers,” Kelleher once said. “When you treat them well, they will treat your external customers well. That has been a powerful competitive weapon for us. You have to take the time to listen to people’s ideas.”

It’s clear that more recently the company hasn’t been listening. Executives have recognized that the airline needs to invest in and upgrade its IT systems. But for years, Southwest pilots and crew say they have sounded the alarm about the carrier’s outdated technology, making it difficult to get its people to the right places when weather events strike.

The warnings grew louder after Southwest suffered crippling problems last fall, and union leaders predicted they would only get worse. They weren’t wrong. Amid the mass cancellations this week, employees said they were on hold for hours with their own airline as they tried to get their marching orders.

With this most recent crisis, the pressure is now more intense for management to resolve its negotiations with the various unions that represent its employees, especially after rival Delta and its pilots earlier this month reached a preliminary agreement to increase wages by 34% over the next month. few years.

That kind of increase would be hard for a budget airline like Southwest to swallow. To do so, management would have to summon the same kind of creativity that Kelleher did when he decided to fly only one type of plane and have flight crews help clean the plane to keep fares lower than some competitors. Executives might also consider taking their founder’s advice and listening to employees’ ideas on how to improve operations. If they don’t, they risk becoming like every other airline, an outcome that nobody wants.