Southwest Airlines’ Leadership and Performance

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There is a belief that effective leaders have to think of and implement the best strategies to make the companies meet their goals and also be reserved and extremely serious, especially in public. Otherwise, leaders who are quite emotional or can demonstrate their unusual hobbies or passions may be seen as eccentric and not trustworthy. Herb Kelleher, the former CEO of Southwest Airlines, is known for his affinity for whiskey, Hawaiian shirts, and pranks. Thus, some people might have doubted his leadership skills and responsibility, while others say he was the best CEO of all time (Freiberg & Freiberg, 2019). Kelleher’s communication skills, respect for employees, passion for business, and leadership talent allowed him to be the “right person at the right time” to lead SWA.

Herb Kelleher is the best example of a successful servant leader who did not put the company’s profit and competitiveness above the comfort and interest of his employees. According to Freiberg and Freiberg (2019), “Herb was repeatedly voted as the best CEO in the airline industry,” so one may ask about the reasons for this title (para. 2). Probably his first passionate achievement was from 1967 to 1971, about a decade before he became the CEO of SWA.

During those years, Kelleher was leading a fight for SWA to begin its operations, eventually getting a favorable ruling from the U.S. Supreme Court. When Kelleher became the CEO of Southwest Airlines in 1981, the company had only twenty-seven planes, about two thousand workers, and $270 million in revenues (Thompson et al., 2018). However, over the course of the following two decades, Kelleher managed to develop the company and make it one of the major leaders in domestic air travel. In 2001, SWA had more than thirty thousand employees, over three hundred planes, and “annual revenues of $5.6 billion” (Thompson et al., 2018, p. C-316). Overall, Kelleher managed to overcome all obstacles, determine the strengths and opportunities of Southwest Airlines, and gain a competitive advantage. Eventually, thanks to him, the company received many loyal and determined employees who felt secure and supported by their leader.

SWA’s Achievements in Beating Its Performance Targets

It is hard to disagree that organizations need to achieve good execution of their objectives and strategies. There are two best indications that a firm is successfully meeting or even beating its performance targets, namely, financial and customer success indicators. The former mostly includes net profit and return on investment, while the latter is about customer satisfaction and retention. Research and statistics are needed to assess these points and evaluate whether Southwest Airlines meet these criteria.

To begin with, it is essential to refer to the company’s annual reports. As shown in SWA 2016 yearly report, the net income was constantly growing from $421 million in 2012 to $2,244 million in 2016 (Southwest Airlines, 2017). Further, in 2019, the company managed to receive profit ($2,300 million), while in 2020, due to the challenges and obstacles brought by the COVID-19 outbreak, there was a net loss of $3,074 million (Southwest Airlines, 2021). Nevertheless, now the company is successfully recovering from the damages and trying to increase its profit.

Further, it is possible to compare SWA’s returns on investment. In 2016, the company’s ROIC was 30.0% (Southwest Airlines, 2017), and then 17.8% in 2019 (Southwest Airlines, 2021). As for 2020, SWA “has chosen not to present ROIC in this Form 10-K and does not expect to present it again until and if the operating environment normalizes sufficiently to return the company to operating income instead of operating loss” (Southwest Airlines, 2021, p. 58). Overall, these measures do not indicate that the company is unsuccessful or ineffective because no one expected the coronavirus to appear. Since SWA was rather successful before 2020 and is still operating and recovering, it is possible to say that Southwest Airlines Co. generally achieves its performance targets.

As for the customer success indicator, the COVID-19 pandemic has not affected it negatively. The company’s mission is to deliver the best quality of customer service (Thompson et al., 2018). Therefore, as noticed by (Peek, 2022), SWA successfully fulfills its mission, “with Southwest’s customer service earning a 33.9% ‘excellent’ rating, and only 3.3% said its service was ‘poor'” (para. 3). Further, for long- and short-haul flights, the company ranks highest in customer satisfaction, with a score of 826 and 839, respectively (Effler, 2020). Overall, SWA has always paid close attention to the needs of its clients, and the very core concept of the company’s foundation was to help people travel more comfortably (Thompson et al., 2018). Consequently, Southwest Airlines is successfully exhibiting these two indicators.

Organizational Culture of the Southwest Airlines

The type of SWA’s organizational culture is the clan one. It is people-oriented, supportive, friendly, and collaborative, and these adjectives describe the essence of Southwest Airlines Co. Indeed, making sure that employees and customers are satisfied was the primary aim of the former CEO, Herb Kelleher, and is still the objective of the company. In the organization’s promises and purposes, it is stated that SWA embraces Fun-LUVing Attitude and friendliness. It promises its employees to “provide a stable work environment with equal opportunity for learning and personal growth” and treat them with respect and concern, as well as their clients (Southwest Airlines, n.d.). Therefore, SWA’s organizational culture supports its corporate goals.

Strategy Execution Effort Utilized by SWA

One way to facilitate strategy execution is to promote and enhance a work environment that engages employees and supports their desire to increase performance. This way was chosen and successfully implemented by SWA. Maintaining a friendly workplace climate is one of the primary goals of the company. It allows Southwest Airlines to have loyal and grateful workers who are interested in making SWA more effective in achieving its aims, including innovative logistics solutions, customer satisfaction, and low-cost pricing.

Defined Company Values for the Southwest Airlines

It is hard to disagree that a company’s mission statement, objectives, and values are not just words. The latter, defined organizational values, can influence the achievement and realization of a firm’s strategies. For example, SWA’s values are pride, integrity, humility, teamwork, honesty, efficiency, discipline, excellence, and service with LUV (Southwest Airlines, n.d.). These are interesting and engaging values have a direct influence on the staff’s attitudes towards their work and sincere desire to succeed. For instance, before Kelleher became the CEO of SWA and put workers’ comfort above profitability, the company was not very successful. However, after employees started sharing the corporate values, they became united in a team and oriented at the achievement of common goals, increasing SWA’s performance.

References

Effler, G. (2020). Importance of trust, transparency to airline satisfaction grows as industry confronts pandemic fears, J.D. Power finds. J.D. Power. Web.

Freiberg, K., & Freiberg, J. (2019). 20 reasons why Herb Kelleher was one of the most beloved leaders of our time. Forbes. Web.

Peek, S. (2022). Southwest airlines: A case study in great customer service. Business. Web.

Southwest Airlines. (2017). Southwest Airlines Co. 2016 annual report to shareholders [PDF document]. Web.

Southwest Airlines. (2021). Southwest Airlines Co. 2020 annual report to shareholders [PDF document]. Web.

Southwest Airlines. (n.d.). Purpose, vision, and the southwest way. Web.

Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, A. J. III (2018). Crafting and executing strategy: The quest for competitive advantage, concepts and cases (21st ed.). McGraw-Hill.

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