Southwest Airlines 2011 Results Reflect Benefits of Servant Leadership

Southwest Airlines (LUV) announced the 39th consecutive year of profitability yesterday. The company has been a role model of servant leadership since its founding by Herb Kelleher (and others). During the financial earnings call, CEO Gary Kelly, CFO Laura Wright and Executive VP Robert (Bob) E. Jordan reflected the company’s commitment to servant leadership.

Improved Results by Acquired AirTran

Southwest is in the process acquiring former competitor, AirTran Airways. During mergers and acquisitions it is common for companies, especially the acquired, to experience a dip in operational performance. Bucking that trend though, AirTran reflected it’s best operational results ever.

Compensation and Productivity

Although Southwest has the highest productivity numbers in the industry, analysts naturally challenged executives to identify opportunities for improvement. In response, Kelly noted that their pay rates are significantly higher than others. Yet, Southwest makes up for these costs by being more productive. The CEO noted the company was not without some waste though. Kelly spoke of opportunities to improve productivity that included both people and asset changes. It was clear Southwest would not practice “soft management” – a common misconception of servant leadership.

Gratitude to Employees

I’ve never heard an earnings call where executive gratitude toward employees was as prominent as at Southwest. Kelly’s comments included frequent references to his appreciation for the unions, their hard work and dedication. In addition, the CEO’s sincerity was evident when he expressed excitement at the first round of AirTran employees officially joining the Southwest “family”.

Not Without Challenges

When asked how the company would address future challenges, Kelly was clear: they would avoid shrinking fleets or staff at all costs. The fleet, he felt, had plenty of opportunities for deployment in a different way. One example provided was “stretching the day out” by adding flights earlier or later in the day. As for downsizing employees, Kelly mentioned it would be “very painful to downsize”. He then continued, there is a “cost to good will with customers and employees” (when downsizing). Any reduction in staff or fleet would be Kelly’s, “least favorite tool if looking for ways to sustain or improve ROI”. He then summarized any reductions were, “not in the cards right now”.

Servant leadership proponents are grateful for the examples and model set by Southwest Airlines. In an industry fraught with strong competition, rapidly increasing costs and poor personnel policies, Southwest’s servant leadership bucks the trends. Clearly, servant leadership principles have the potential to deliver outstanding business results.

 Question: What other businesses exemplified servant leadership in 2011?