What Makes Southwest Different?

This is not an organization facing a crisis of trust. An NPR reporter visiting a departmental party at Southwest notes how the employees swarm around Barrett and co-founder Herb Kelleher, both of whom have dropped by to sample the home-made dishes. "This party is instructive about Southwest Airlines in several ways, not the least of which is the obvious lack of deference shown to Kelleher and Barrett," the reporter observes. "There is no fear, no reticence, no carefully parse toadying going on here." Kelleher credits Barrett with being the main architect of Southwest's unique culture, telling the reporter, "She nurtured and she produced a culture which is truly extraordinary, where people feel cared for. They feel wanted. They feel that they can be individualistic. They don't have to wear masks to work."^[3] In my conversation with her, Barrett reiterates that sentiment:

We talk at Southwest a lot about freedom. We encourage freedom within the workplace and we talk about the various freedoms that we offer, both internally and externally. And one of the neatest freedoms that we offer to our employees, I think, is the freedom to be themselves. I spend a lot of time with new hires talking to them about the fact that they were hired because of their individuality.

Some may dismiss all this as warm-and-fuzziness: nice to have, but not the core reason why Southwest succeeds. But because Southwest is an Accountable Organization—and because it is accountable to its employees first—the employees in turn fight tooth and nail for their airline. Southwest calls this the "Warrior Spirit," and it's helped the company weather many a storm. Tales abound of employees taking extraordinary initiative—oftentimes at their own expense—to keep the airline successful. After September 11, concerned employees offered to give up part of their paychecks, donate some of their profit sharing—even give Southwest their tax refunds. Employees created "Pledge to LUV" (LUV being the company's stock symbol), a program in which individuals could donate one to thirty-two hours of salary to the airline through paycheck deductions. It wasn't the first time Southwest's employees had pulled together. Back during the first Gulf War, when skyrocketing fuel prices threatened the airline, a cargo employee came up with the idea for a "Fuel from the Heart" program. Through voluntary payroll deductions, Southwest workers raised money to help defray jet fuel costs.

The passion behind this Warrior Spirit also ensures a stellar corporate reputation and exceptional performance in the marketplace. Southwest's claim of legendary customer service is not inflated: the airline consistently wins accolades for customer satisfaction and safety. In the twenty-plus years since Fortune has been issuing its annual list of "America's Most Admired Companies," Southwest has landed in the top ten six times; in 2003, it ranked second. From 1997 through 2000, the company ranked in the top five of Fortune's list of "100 Best Companies to Work For in America."

And for those who believe the proof is in the numbers, in fall 2002 Money published a list of the thirty best-performing stocks during the thirty years since the magazine was founded. With an annualized return of 25.99 percent, Southwest topped the list—a $10,000 investment in the airline made in 1972 would be worth $10.2 million in 2002. Wharton finance professor and author Jeremy Siegel told Money, "When you think about it, it is absolutely remarkable that Southwest could come out No. 1 despite being in probably the worst industry in America."^[4]

^[3]Wade Goodwyn, "Profile: Success of Southwest Airlines," NPR, December 4, 2002.

^[4]John Birger, "The 30 Best Stocks," Money (fall 2002): 90.