Southwest Founder Kelleher: Cultivate Culture in Your Organizations
Southwest Airlines founder Herb Kelleher, whose colorful personality and departure from traditional airline and corporate doctrine made him one of America’s most high-profile CEOs, imparted both wisdom and a sense of humor to an audience of more than 400 students during the VIP Distinguished Speaker Series Feb. 5 at the McCombs School of Business.
Kelleher, who currently serves as executive chairman of Southwest, addressed business students on the importance of cultivating culture within a company and building a business strategy that begins with respecting and rewarding employees.
Kelleher said Southwest has built its unconventional success around the dogma that “the intangibles of spirit are ultimately more important than the tangibles of things.” Its organizational strength lays in the fact that it gives employees in all levels of the company tremendous leeway, presents company awards for service and character and involves itself in personal events in employees' lives, such as the birth of a child or death of a relative.
Kelleher said attracting and bringing back external customers begins with hiring the best internal employees. As CEO, he encouraged departments to conduct as many as 100 interviews before selecting the right administrative assistant or person to load luggage at an airport terminal.
“We say hire for attitude, and train for skills, and look for leadership capability in every potential employee,” he said. “And so we’re looking for people, no matter what they do, who have that leadership quality, that inner sense of excellence that says ‘No matter what it is, I’m going to do it right’.”
Surviving Airline Industry Woes
The airline industry as a whole has reflected a net loss over its entire history, said Kelleher. But Southwest Airlines has achieved a remarkable feat: remaining profitable for 36 consecutive years and weathering economic recessions and turbulence without a single lay-off.
“A humanistic approach to business can pay handsome dividends, even in a somewhat benighted industry like air passenger service,” Kelleher said. The $10,000 that was invested in Southwest in 1972 was worth more than $10 million in 2002, reflecting an average increase of about 26 percent each year. FORTUNE magazine has repeatedly named Southwest as one of the America’s Top Ten most admired companies.
This is all in an industry known for its structural shortcomings.
"Warren Buffett made a comment once that capitalism would have been done a vast favor if some capitalist had shot down the Wright Brothers in Kitty Hawk in 1903,” Kelleher remarked to laughter from the audience. “When Mr. Buffett was asked about his own investment in U.S. Air, he said ‘All I can do is plead temporary insanity’.”
Appreciate Your Education
Kelleher, who in 2001 donated $4 million to the McCombs School to create the Herb Kelleher Center for Entrepreneurship and who previously chaired the school’s advisory committee, referred to the university as “a great, great institution that fills me with both admiration and inspiration.”
“I know for some of our younger people, it will take them about 10 years after they graduate to realize how beneficial it was to be here. At least it took me that long to realize how much I valued and appreciated my college education,” said Kelleher, who attended Wesleyan University and the New York University School of Law.
The VIP lecture series is sponsored by the Undergraduate Business Council and brings high-profile speakers to the university each year to connect classroom subjects with current trends in the business world.