When Mr. Kelleher, 77, entered the main meeting room, shareholders gave him the kind of standing ovation usually reserved for rock stars. The Southwest pilots union is also in the process of negotiating a new contract with management. But not only did the Southwest pilots not set up a picket line, they took out a full page ad in USA Today thanking Mr. Kelleher for all he had done. “The pilots of Southwest Airlines want to express our sentiment to Herb that it has been an honor and a privilege to be a part of his aviation legacy,” said the union president, Carl Kowitzky, in a statement.
When he brought up the pilots ad — and when he talked about how much the company’s employees meant to him — he wept. “I’m Lucky Herbie for having all of these years with all of you,” he said. More than a few people in the audience wept right along with him.
No surprise there, either. Over the years, whenever reporters would ask him the secret to Southwest’s success, Mr. Kelleher had a stock response. “You have to treat your employees like customers,” he told Fortune in 2001. “When you treat them right, then they will treat your outside customers right. That has been a powerful competitive weapon for us.”
“We’ve never had layoffs,” he told me the day before the annual meeting, sitting on the couch of the single messiest executive office I’ve ever seen. “We could have made more money if we furloughed people. But we don’t do that. And we honor them constantly. Our people know that if they are sick, we will take care of them. If there are occasions or grief or joy, we will be there with them. They know that we value them as people, not just cogs in a machine.”
When you look at a company like American, with its poisonous employee relations and its glum customer base, and compare it with Southwest, with its happy employees and contented customers, you can’t help thinking that Mr. Kelleher was on to something when he put employees first. “There isn’t any customer satisfaction without employee satisfaction,” said Gordon Bethune, the former chief executive of Continental Airlines, and an old friend of Mr. Kelleher’s. “He recognized that good employee relations would affect the bottom line. He knew that having employees who wanted to do a good job would drive revenue and lower costs.”
I agree that the ingredients to produce devotion in your employees are:
- clear goals with metrics, that people are held accountable for achieving
- joy and a spirit of lightheartedness
During his tenure as CEO of Southwest, Kelleher's colorful personality created a corporate culture which made Southwest employees well known for taking themselves lightly—often singing in-flight announcements to the tune of popular theme songs—but their jobs seriously. Southwest has never had an in-flight fatality. Southwest is consistently named among the top five Most Admired Corporations in America in Fortune magazine's annual poll. Fortune has also called him perhaps the best CEO in America.