Southwest's rise tests funky, upstart culture

Imperatives of growth may force airline to change

November 19, 2006|By Meredith Cohn | Meredith Cohn,Sun reporter

DALLAS -- When Southwest Airlines chief executive Gary C. Kelly was deciding on his Halloween costume early last month, a passenger suggested he "go as a guy in a gray suit, wearing a black tie, carrying a black attache case.

"You could call yourself `Our Competitor's Corporate Culture.' "

Kelly instead chose black eyeliner and went as Capt. Jack Sparrow of Pirates of the Caribbean.

But the executive attire may not be much of a joke these days. Southwest is no longer the maverick Texas upstart of 35 years ago but one of the nation's largest carriers with big-airline issues.

And those inside and outside the company say it's getting harder to hold onto the anti-corporate, corporate culture that has embraced holidays like Halloween as an all-day affair with near scary devotion.

Southwest -- the largest carrier at Baltimore-Washington International Thurgood Marshall Airport -- is growing by adding more airports, routes and workers.

To lure more customers, it is considering changing practices that have made the discounter unique, such as open seating. And it has raised fares to offset higher fuel costs.

Even so, Southwest is shifting from its past delicately. It wants to appeal to more people without losing the die-hard supporters that have helped it go from underdog to industry trendsetter.

Herbert D. Kelleher, the blunt-talking, cigarette-smoking and bourbon-drinking founder of Southwest largely is credited with creating the hallmark family-oriented, fun-loving environment. He remains chairman of the board but no longer is publicly settling company disputes by arm wrestling or posing for ads in an Elvis get-up.

Holding the reins since 2004 has been Kelly, an accountant by trade and probably more comfortable in a suit than a wig and makeup. And while he said the airline reveres Kelleher's legend and is true to its core principles, all airlines must keep changing to satisfy the customers, workers and Wall Street.

"The last five years have been extremely difficult," Kelly said recently. "It's been worse because of Sept. 11 and ensuing changes in security. There's been a cost burden. Things are finally improving, but the industry is still a mess."

Kelly said you have to serve your constituencies when times are good and when the industry is hampered by economic turmoil, new security restrictions and intense competition. Southwest has had to respond with a new aggressiveness and even some concessions.

The airline has begun flying from crowded airports dominated by other major carriers it once shunned, paying workers such as flight attendants and pilots much more, and raising fares to its highest levels.

It's also pressuring workers and planes to do more, even though they are already considered among the industry's most productive.

Loyalty threatened

At the same time, Southwest is considering assigning seats and providing entertainment for the first time because that's what its rivals do.

Such changes not only threaten its bottom line and low-cost, low-frill image, but also the loyalty of its near cult-like following that seems to like things just as they are.

All of this weighs heavily on Colleen C. Barrett, one-time legal assistant to Kelleher and now president of Southwest and considered keeper of the "Southwest way."

"I worry about the place becoming too bureaucratic," she said. "I realize there has to be process and structure, but when you start measuring everything, you lose the spontaneity.

"I don't want to find myself smiling because I have to instead of because I want to. I don't want everything so programmed that it no longer comes from the heart."

She said the environment is key to the airline's success. Happy employees will take care of customers, who will in turn, take care of shareholders.

(The shareholders -- more used to being the No. 1 -- sent the stock down 3 percent on the day Southwest reported it was among the few airlines making money last quarter but narrowly missed expectations.)

Seeking true believers

The key to maintaining the atmosphere under such pressure is to hire true believers, said Benjamin Dattner, a Dattner Consulting LLC principal and a New York University professor of industrial and organizational psychology.

"At Southwest, Herb Kelleher did a good job of creating a culture, at attracting people who could thrive in that culture," he said. "He created history and traditions and they can maintain them as long as each new leader respects them. It takes a little effort."

He said other companies -- such as Google and Pixar Animation -- have for now at least kept the founding environment through rapid growth and sales. But there also are companies that have not.

Ben & Jerry's founders lamented that their commitment to social activism was abandoned after they sold to Unilever in 2000. Snapple, sold to Quaker Oats in 1994, seemed to lose its quirky image.

Hiring for `attitudes'

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