At Southwest, the Culture Drives Success

Former Southwest CEO James Parker talks about the aftermath of September 11, a shared mission, and creating great leaders at every level

by William J. Holstein

Chief executives should place a higher priority on creating strong corporate cultures, not to give employees warm, fuzzy feelings, but to spur profitability, says James Parker, former CEO of Southwest Airlines (LUV). Parker, who was CEO from 2001 to 2004, guided Southwest through the aftermath of September 11, which temporarily grounded airlines and caused a downturn in the travel industry.

Parker, author of the recently published Do The Right Thing: How Dedicated Employees Create Loyal Customers and Large Profits (Wharton School Publishing, 2008), also argues that CEOs spend too much time grooming high-potential executives, but not enough developing frontline managers. Here are edited excerpts from a recent conversation:

What's the key to creating and maintaining a corporate culture that helps create profits?

I think it's all about people, and it starts with finding and hiring the right people. We at Southwest put a lot of effort into our selection process. We received over 100,000 applications every year and hired a very small percentage of those people, maybe 2,000 or 3,000. We used to say that we hired for attitude and trained for skill, which is obviously a little bit of an oversimplification.

If you're hiring a pilot or a mechanic, a lawyer or an accountant, you want people with a high level of skill. But what we really looked for was people who had the right attitudes, who were "other-oriented," who were not self-absorbed, who wanted to accomplish something they could be proud of.

Does hiring the right people make everything else fall into place?

No. You can hire great people and put them into a lousy environment and make them bad employees. The next thing is to create the culture where people feel like they are using their brains, they're using their creativity, they're allowed to be themselves and have a sense of humor, and they understand what the mission of the company is.

We tried to define it as a grand mission. We weren't just carrying passengers or freight. We were giving America the freedom to fly. We tried to give them an understanding of how their role fit into that mission and how they contributed to that mission. We didn't have a lot of this conflict between workers that you see in a lot of companies where people think the guy in the next department is a slacker. We tried to educate people as to what the other employees were doing so they could understand the entire workflow, so there wasn't this silo mentality that you see in so many workplaces.

How can you possibly know whether someone you're hiring is other-oriented or self-absorbed?

[Interviewing] was a collaborative effort between the People Dept., which is what we called our human resources department, and the managers in the various departments. You tried to get a feel for people by talking to them, by looking them in the eye, by seeing how they responded to questions.

And I always used to see if they had a sense of humor—I think that's very important.

How did you break down the silo mentality that's so pervasive throughout Corporate America?

You don't break it down if it doesn't exist. We tried to prevent it from existing. Every new employee would come in for orientation. It would be all sorts of employees, everybody from pilots and ramp agents to reservation agents to mechanics to executives.

Creating the culture starts from day one. For example, there was no executive dining hall. You see vice-presidents and CEOs sitting around the cafeteria having lunch with regular people. If people get the idea that this is all one organization with one mission, not individuals on a bunch of individual missions, then it's a lot easier.

Did you have a strategy to make sure top management wasn't isolated from the workplace?

Sure, and it wasn't just me. All the officers would go out regularly to make station visits to locations where people were actually working, maybe at the Spokane airport or maybe the reservation center in Albuquerque.