Chapter Ten: Southwest Airlines--Integrating Accountable Organization Principles

The Accountable Organization can sound pretty utopian. Some might say that in the real world of cutthroat competition, most companies are wholly occupied with survival—making their targets, making the stockwatchers happy. Of course, if a company doesn't make money, eventually there will be nothing for stakeholders to have a stake in. But some companies are managing to make the grade financially while staying true to the principles of accountability. In fact, some would argue that their accountable culture makes all the difference.

Southwest Airlines: A Standout in an Industry Under Siege

In chapter 2, I related my personal experience with some apparently nonaccountable thinking at a major U.S. airline—an unfortunate thing, given the precarious position of the industry at the time. Despite an enormous bailout package administered by the federal government, major carriers were still cutting routes and laying off employees a year after the September 11 terrorist attacks. U.S. Airways filed for Chapter 11 bankruptcy protection in August 2002, and United Airlines, the nation's second-largest carrier, followed suit four months later. According to the Air Transport Association of America, the industry's losses topped $10 billion in 2002.

The following year, in a dramatic series of twists and turns, American Airlines narrowly avoided bankruptcy. Just as American's unions agreed to steep pay cuts, the deal was nearly swamped by revelations of a pension trust and retention bonuses exclusively for the airline's executives. Chief Executive Donald Carty publicly apologized for how these plans were communicated, but the damage was done: Carty would resign. After intense, down-to-the-wire negotiations, the unions and American's management agreed to a compromise that would allow the airline to avert Chapter 11. At a press conference to announce the last-minute reprieve, Gerard Arpey, American's new CEO, commented, "It will come as no surprise to anyone that there is a definite need to rebuild trust within our company. Not just between unions and management—but between every member of the AMR family."^[1] (AMR is American's parent company.)

How different the picture is at Southwest Airlines. In the midst of the turmoil, the discount carrier has stood out for its avoidance of layoffs and continued profitability. In winter 2003, Southwest boasted thirty consecutive years in the black. With the weak economy and increased insurance and security costs, Southwest faced an uncertain profit picture going forward, but its relative success in the midst of an industrywide crisis is a testament to the company's savvy business strategy—and, according to the airline's employees and executives, to its accountable corporate culture. "To me, we could not have achieved our continued success without the culture, that's for sure," says Colleen Barrett, Southwest's president and COO. According to Barrett, Southwest employees "sign up for us because they have a passion for customer service and because they want to be part of a cause, not part of a company."^[2]

^[1]"CEO and President Gerard J. Arpey's Press Conference Remarks," American Airlines press release, April 25, 2003.

^[2]Colleen Barrett, interview by author, March 13, 2003. All remarks by Barrett in this chapter are from this interview.