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Unit 16: Organisational Culture

Southwest's objective was to provide safe, reliable and short duration air service at the Notes
lowest possible fare. With an average aircraft trip of roughly 400 miles, or a little over an
hour in duration, the company had benchmarked its costs against ground transportation.
Southwest focused on short-haul flying, which was expensive because planes spent more
time on the ground relative to the time spent in the air, thus reducing aircraft productivity.
Thus it was necessary for Southwest to have quick turnarounds of aircraft to minimize the
time its aircraft spend on the ground.
Since its inception, Southwest attempted to promote a close-knit, supportive and enduring
family-like culture. The company initiated various measures to foster intimacy and
informality among employees. Southwest encouraged its people to conduct business in a
loving manner. Employees were expected to care about people and act in ways that affirmed
their dignity and worth. Instead of decorating the wall of its headquarters with paintings,
the company hung photographs of its employees taking part at company events, news
clippings, letters, articles and advertisements. Colleen Barrett even went on to send cards
to all employees on their birthdays.
The organisational culture of the company was shaped by Kelleher's leadership also.
Kelleher's personality had a strong influence on the culture of Southwest, which epitomized
his spontaneity, energy and competitiveness. "Culture is the glue that holds our
organisation together. It encompasses beliefs, expectations, norms, rituals, communication
patterns, symbols, heroes, and reward structures. Culture is not about magic formulas and
secret plans; it is a combination of a thousand things", he used to say.
Southwest's culture had three themes: love, fun and efficiency. Kelleher treated all the
employees as a "lovely and loving family". Kelleher knew the names of most employees
and insisted that they referred to him as Herb or Herbie. Kelleher's personality charmed
workers and they reciprocated with loyalty and dedication. Friendliness and familiarity
also characterized the company's relationships with its customers.
Kelleher was so much into this culture that he once said, "Nothing kills your company's
culture like layoffs. Nobody has ever been furloughed [at Southwest], and that is
unprecedented in the airline industry. It's been a huge strength of ours. It's certainly
helped us negotiate our union contracts. One of the union leaders….came in to negotiate
one time, and he said, "We know we don't need to talk with you about job security." We
could have furloughed at various times and been more profitable, but I always thought
that was shortsighted. Post-September 11, 2001, when most airlines in the US went in for
massive layoffs, Southwest avoided laying off any employee.
Southwest showed its people that it valued them and it was not going to hurt them just to
get a little more money in the short term. The culture at the organisation spoke about its
belief in the thought that not furloughing people breeds loyalty. At Southwest, it bred a
sense of security and trust. So in bad times the organisation took care of them, and in good
times they're thought, perhaps, "We've never lost our jobs. That's a pretty good reason to
stick around."...
As a result, Southwest was the only airline to remain profitable in every quarter since the
September 11 attack. Although its stock price dropped 25% since September 11, it was still
worth more than all the others big airlines combined. Its balance sheet looked strong with
a 43% debt-to-equity ratio and it had a cash of $1.8 billion with an additional $575 million
in untapped credit lines. The entire credit to the profit was given to the loyal employee
base the company had and it could be developed only as a result of the organisational
culture at Southwest. The company left no stone unturned to boost employee loyalty and
morale and made many a competitors to follow suit.

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