Nuts!: Southwest Airlines' Crazy Recipe for Business and Personal Success

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In the 25 years since its founding, Southwest Airlines has become the world's safest and most on-time airline. And only in its first year did Southwest end up in the red; it has enjoyed 24 years of profitability and massive stock growth. How did a small regional airline prosper in the age of deregulation of the industry, through several recessions and an oil crisis?

Largely, it has been the vision and drive of founder and CEO Herb Kelleher, a unique figure in American business, who knows not only how to make a buck but how to build a dedicated and productive workforce. In NUTS!, he shares his secrets of success. "Professionals" Need Not Apply: Hire for Attitude, Train for Skills

When Kelleher became chairman in 1978, he charged the People Department with the responsibility of hiring people with a sense of humor. "I want flying to be a helluva lot of fun!" he always says. "Life is too short and too hard and too serious not to be humorous about it." Fun is taken very seriously at Southwest Airlines, and the company's recruiting and hiring practices are built on the idea that humor can help people thrive during change, remain creative under pressure, work more effectively, play more enthusiastically, and stay healthier in the process.

In a world where change is one of the true constants, most people are having to work smarter and harder and faster than ever before. As the pace and intensity of our work lives have picked up, it's no wonder we've lost touch with the lighter side of life and become very serious. Many organizations expect their employees to be serious and businesslike, to check their personal and emotional baggage at the door before coming into the office.

"Terminal professionalism" is the term coined by Lighten Up authors C. W. Metcalf and Roma Felible to describe the way today's overworked, overstressed, underpaid, and underplaying individuals work. Terminal professionals -- and the organizations in which they work -- have come to believe that humor is unprofessional and silliness is for children. Southwest Airlines believes that failure to nourish and encourage lightness in the workplace not only undermines productivity, creativity, adaptability, and morale, but also can drive people crazy. By putting humor at the top of its list of recruiting and hiring criteria, Southwest has found a way to nourish joy, pride, and just plain fun in people on and off the job. The company's healthy alternative to terminal professionalism has restored the faded dream of satisfying work and job security for thousands of people.

A New Kind of Professionalism

At Southwest, "professional" and "businesslike" alone just won't cut it. In fact, these are terms Kelleher despises; he believes they have lost their meaning. "Anybody who likes to be called a 'professional' probably shouldn't be around Southwest Airlines," he says. "We want people who can do things well with laughter and grace." The point here is not to offend people who think of themselves as professionals. Southwest Airlines is bursting with professionalism, but it is a unique brand, practiced with flair. The type of professionalism people experience and express within the Southwest culture is not the stuffy, serious professionalism guarded by the philosophy that "the business of business is business." Instead, the professionals that customers encounter at Southwest are remarkably uninhibited and empathetic individuals who believe that the business of business is to make a profit by serving people and making life more fun.

An example of this new kind of professionalism is captured in a customer letter applauding a memorable flight and an entertaining announcement routine:

I flew in early May to Albuquerque, on a flight that began with the flight attendant welcoming us and then telling us that we had a VIP on board. He welcomed Leonard Nimoy, the actor who played Spock on "Star Trek." We all clapped and turned to see him -- we were told this was all in fun. Instead, we were the VIPs on board! Then he graciously welcomed each of us to Southwest Airlines as the most important person.... He then treated us to the most entertaining flight announcement routine, telling us we were flying over 7,943 hot tubs, swimming pools, etc., so here was the water evacuation information. Please wave to his mother on cue. He had a great sense of humor and mixed fun several times into our flight. On arriving, he and the crew sang a song, and he closed by saying if we enjoyed our flight, their names were Reggie, Sam, and Pete. However, if we didn't enjoy his foolishness, their names were Fred, Tom, and Harry. Everyone was laughing and in a great mood by the time we deplaned.

Now I realize that not everyone has Reggie's personality and showmanship. But I think many people don't risk this kind of playfulness because they fear that it will be seen as unprofessional. There is a new kind of professionalism that Southwest is becoming known for, all over the world -- great service with lots of fun mixed in.

Southwest's philosophy of professionalism in no way puts a damper on personal style. Employees at Southwest are encouraged to be authentic, to be real. They are free to express themselves in real, creative ways and encouraged to influence the uniqueness of Southwest by projecting their own individuality. Perhaps this is one of the reasons customers find themselves drawn to Southwest employees. Somehow they have found a way to make work fun in spite of the intense pace of the airline business.

No one at Southwest doubts that the company's playful work style enriches the lives of customers and employees alike. Fun, humor, and laughter are treated as life-enhancing gifts for everyone. So how does Southwest go about creating the kind of relaxed and accepting atmosphere that grants people the freedom to play and have fun? The company is religious about hiring the right people.

Hiring for Attitude

The People Department is Southwest's equivalent of a human resources or personnel department. To Southwest, employees are more than just resources; they are real people, with real needs and real emotions, whose satisfaction is valued and respected. Libby Sartain, vice president of people, told us that fun counterbalances the stress of hard work and competition. Fun is about attitude, so Southwest hires for attitude and trains for skills.

The First Cut

First and foremost, Southwest Airlines looks for a sense of humor. As "The High Priest of Ha Ha" -- Fortune magazine's nickname for Kelleher -- frequently says, "We look for attitudes; people with a sense of humor who don't take themselves too seriously. We'll train you on whatever it is you have to do; but the one thing Southwest cannot change in people is inherent attitudes." Although each department has a unique hiring process, there is one fundamental, consistent principle -- hire people with the right spirit. Southwest looks for people with other-oriented, outgoing personalities, individuals who become part of an extended family of people who work hard and have fun at the same time.

Southwest has tailored the general principles of Targeted Selection to hire people with this special kind of spirit. In the interview process, prospective employees are typically asked, "Tell me how you recently used your sense of humor in a work environment. Tell me how you have used humor to defuse a difficult situation." The People Department also looks for humor as well as unselfishness in the interaction people have with each other during group interviews.

To test for unselfishness, Southwest uses an exercise that's not all that creative in itself; it's the analysis of the applicants' approach to the exercise that makes it a powerful hiring tool. The interviewing team asks a group of potential employees to prepare a five-minute presentation about themselves and gives them plenty of time to prepare. As the presentations are delivered, the interviewers don't watch just the speakers; they watch the audience to see which applicants are using this time to work on their own presentations and which are enthusiastically cheering on and supporting their potential coworkers. Unselfish people who will support their teammates are the ones who catch Southwest's eye, not the applicants who are tempted to polish their own presentations while others are speaking.

Passing Through the Screen

Not everyone makes it through the screening process. Even with pilots, whose technical proficiency is supremely important, attitude also plays a major role. A highly decorated military pilot -- on paper, he ranked among Southwest's all-time best applicants -- applied for a position. On his way to Dallas for the interview, this pilot was rude to the customer service agent at the ticket counter where he received his transfer pass. When he arrived for the interview he seemed cold and arrogant to the receptionist. These episodes suggested to the interview team that, although the pilot was highly qualified on the technical side, he didn't have the right attitude for Southwest. He was automatically disqualified.

Another example of hiring for attitude involved a group of eight applicant pilots who were being kidded about how they were dressed -- dark suits, black shoes, and dress socks. They were encouraged to loosen up by changing into Southwest's standard-issue Bermuda shorts. Six of the applicants accepted the offer and interviewed for the rest of the day in suit coats, black dress shoes and socks, and Bermuda shorts. They were hired.

By hiring the right attitude, the company is able to foster the so-called Southwest Spirit -- an intangible quality in people that causes them to want to do whatever it takes and to want to go that extra mile whenever they need to. In spite of (or maybe because of) such high expectations, people who go to work for Southwest Airlines tend to stay with the company for a long time.

Act Like an Owner: Ask Questions, Think Results

People who think like owners have a unique perspective. They ask provocative questions. And the answers they come up with influence their attitudes and behaviors, which, in turn, determine the company's performance. It's not unusual to hear someone who is thinking like an owner ask, "If this were my company, how would I handle a customer in this situation? Would I buy this piece of equipment or make that investment? If I personally owned this business, how would I treat my employees? Would I establish this committee, attend that meeting, or make that trip?"

What does it take to get employees to assume ownership for a business, to truly take personal responsibility for its success? This is one of the most frequently asked questions in business today. Finding an answer to this question is critical because, as Southwest has learned, ownership is a powerful catalyst for organizational change. It seems that if only we could get employees to show more initiative for cutting costs, serving customers, and improving productivity, we could gain the advantage we need to excel in a highly competitive business environment.

Think Like an Owner

Owners think differently from nonowners because ownership is a state of mind. It's about caring, about becoming fully engaged in the active pursuit of organizational objectives. For example, nonowners are more apt to worry about how their actions are being perceived by their superiors. Owners focus on the business results of their actions, regardless of who's watching. Nonowners may be more inclined to protect functional areas, pursue self-interest, and approach the business from a parochial point of view. Owners transcend functional boundaries. It doesn't matter where an idea comes from, owners evaluate its merit based on whether it contributes to the ultimate objective of delivering customer value.

Nonowners have a greater tendency to live by the rules, even when the rules run contrary to common sense. Owners bend, stretch, and even break rules that don't serve the organization's purpose. If breaking the rules is not an option, owners take the initiative to change them. Owners pay attention to details others fail to notice. When people have a vested interest in the outcome of a business, they become more cost-conscious, industrious, and imaginative. Owners are also different from nonowners in their willingness to take action without being asked; they are rarely spectators. An owner takes the time to follow up with a customer who expresses a concern during a casual meeting. An owner picks up the piece of trash that others have been ignoring for hours. An owner makes the extra phone call to pass on a small but important piece of information that could be helpful to another employee.

"Our people think like owners and have for a long time," says Gary Barron, who offers retired skycap Tommy Perryman as an example. Perryman, one of the original employees, worked at Southwest for fifteen years without missing a single day. "When I was in San Antonio back in the early days, I would go to the airport to catch a flight to Dallas. Inevitably, when I got out of the parking lot and started to walk into the terminal, I would run into Tommy. Every time, he would pull clippings out of his pocket about Southwest Airlines and the legal battles we were having, and there were a bunch of them. Tommy always wanted to know what was going on and how we were doing. He cared and he thought about it. Being a skycap wasn't just a job to him."

What sets Southwest apart from the competition is thousands of employees like Perryman, who exemplify the dedication and consistency that come with ownership. Chic Lang, a Southwest captain, says, "It amazes me how you go talk to a ramper or a flight attendant and they'll tell you what the stock price is that day. There are articles all over the wall about what's going on with the competition and they're all reading them." Ownership is a very powerful incentive because it inspires motivation and encourages the kind of loyalty for which Perryman was so well known. Here are some of the ways Southwest Airlines encourages people to assume ownership of the business.

Hire Entrepreneurial Self-Starters

Southwest not only attracts people who are fun and like to have a good time; the company also looks for self-starters who have an entrepreneurial spirit. Previous airline experience doesn't carry a lot of weight at Southwest. The company is much more interested in ordinary people who are driven to do extraordinary things, people who are not afraid to step outside the routine and use their initiative to challenge the status quo. Southwest doesn't worry about hiring people who are mavericks. A new applicant who didn't fit in a large bureaucracy or who shuns a profession that requires specific, formal education may be just the right fit for Southwest.

The hiring process for pilots is a good example of how Southwest attracts people with an entrepreneurial spirit. Southwest Airlines is the only company in the airline industry that requires a pilot to have a 737-Type Rating before he or she is considered for hire. This rating, given by the Federal Aviation Administration, essentially says a pilot is qualified to be the captain of a Boeing 737. This means that all first officers are qualified to fly as captains.

Terry "Moose" Millard, a Southwest captain, explains how this hiring policy attracts pilots who have an entrepreneurial spirit: "The average person will pay about $10,000 to get this qualification. It's interesting because this is another part of the equation of hiring entrepreneurial people. There is about a one-in-five chance that one of these pilots will be hired at Southwest. Each one of these people is taking a risk. Some of them are borrowing money to get $10,000 so that they can compete -- just so they can throw their hat in the ring. That eliminates a lot of contenders at the very outset. Every step of the selection process tends to eliminate those folks who simply want to find job security, for the minimum investment."

When people come to the job with this kind of entrepreneurial drive and enthusiasm, they naturally look for opportunities to assume ownership. Why? Because it's in their very nature. It's who they are. The company's role, then, is to create an environment that nurtures the entrepreneurial spirit. Southwest has been particularly successful at drawing out of its employees the very characteristics for which they were hired in the first place.