01 Dec 2000
Core Values Keep Airline Flying Highby Margie Kelley
- Good people are essential for success.
- Keep the product and the process simple.
- Deliver the most reliable service at the lowest cost.
- Invest the time to connect with employees and customers.
These are the basic tenets fueling the phenomenal success of Southwest Airlines,
according to "Core Values Amidst Change: A Conversation with Southwest Airlines' Top
Management Team," a new working paper written by HBS assistant professor Jody Hoffer
Gittell, MIT professor R. John Hansman, and MIT doctoral student Anne E. Dunning. The
willingness of Southwest employees to invest time to connect with one another — from
top managers down to front-line service representatives — may well be the essential
value that sets Southwest apart from other major U.S. airlines, according to the
Gittell and Hansman conducted a group interview with ten top executives at Southwest
as part of the Global Airline Industry Program at MIT, an initiative examining how
major commercial airline carriers are facing the challenges of their rapidly changing
Staying on top of an industry facing more regulation (including the Airline Passenger
Bill of Rights), new technologies, increasing traffic, a changing labor force, and
heightened competition is a tremendous challenge. During the interview, Southwest's
managers said that they have to constantly reinvent their processes to adapt to the
changing environment. In every aspect of its business, the authors found, Southwest
has sought to simplify procedures, boost innovation, and keep costs down while
retaining a high degree of teamwork, communication, and coordination across
While its top-ranked customer service ratings have established its reputation as the
"nice" airline, Southwest is much more than a legion of smiling flight attendants.
Founded in 1971, Southwest has "literally transformed the U.S. airline industry,
particularly since reaching critical mass in the early 1990s," assert the authors.
Known for its low fares and high reliability in short-distance travel, Southwest
ranks first in on-time arrivals and baggage handling and has the least number of
consumer complaints per passenger filed with the U.S. Department of Transportation.
It gets its planes in and out of the gate faster than other major U.S. airlines and
serves more passengers per employee.
Keeping the product and process simple has resulted in innovations like ticketless
seating and online reservations, as well as snacks-only food service. This has not,
as critics predicted, precluded Southwest from introducing a coast-to-coast service
with the same simplified product.
To keep fares low, Southwest works to control costs, as opposed to cutting costs. But
that doesn't mean Southwest isn't investing in itself. The company's willingness to
spend time and money on people and equipment is evident in its low rate of employee
turnover; the high ratio of supervisors to front-line employees (1:10, compared with
the industry average of 1:20); the longer average time spent in recruitment of
employees; and the emphasis on cross-functional teams. With 80 percent of its
employees unionized, Southwest also invests time in creating strong relationships
between management and union leadership. "We have been successful in negotiations
when we go in asking how much we can pay employees rather than how little we can
pay," stated Southwest's VP and general counsel Jim Parker.
As for the changes that technology brings, Southwest has one foot in the future and
the other in the past. In addition to its pathbreaking use of online booking and
electronic ticketing, the airline maintains a relatively young fleet of Boeing 737s
— and no other models — to save money, increase reliability, and boost efficiencies
since pilots and crews need only focus on the requirements of a single type of plane.
But management confesses that Southwest lags behind in getting internal systems to
work together with other airlines and, culturally, has not adopted e-mail and voice
mail as a means of dealing with customers and each other. "We resist nonhuman
interfaces," commented John Denison, the carrier's EVP of corporate services. "We
want our customers to talk to human beings, but we have adapted to the Internet
Growing slowly and deliberately has served Southwest well, the study concludes. And
taking the extra time to re-cruit and train staff, to use technology carefully, to
control costs through simple innovations, and to make relationships a high priority
have proved to be a winning combination.
Alumni may request copies of working papers by calling 617-495-6852 or by visiting
the HBS Division of Research Web site at www.hbs.edu/dor.