An evaluation of the corporate culture of
Southwest Airlines
Gene Smith
Gene Smith is an accounting
instructor at Eastern New Mexico
University. He has over 30 years'
experience in public accounting
and private industry. His current
research includes corporate
governance, quality management
and effectiveness of
undergraduate accounting
curricula.
Summary The attached paper describes the keys to success for Southwest Airlines, including
its approach to quality management. Southwest did not implement a formalized ``quality
management program.'' Numerous companies in the USA have implemented formalized
``quality management programs'' and they failed because they were ``programs of the
month.'' Implementing ``quality'' throughout a company is not the result of a formalized
program but requires a cultural change in the way daily activities are conducted. The require-
ment of ``doing it right the ®rst time'' must be integrated into the daily activities or culture
of the company. The chairman of the board and president of a company must establish
the tone for quality in not only what they communicate but also in their daily actions. Quality
must be ingrained in the overall business model and strategies of a company. Southwest
is very effective in integrating the importance of quality in its overall business model, strategic
plan and its daily operational activities. Southwest did not engage outside consultants to
develop a ``quality program'' but its style, culture and emphasis on quality were implemented in
Southwest's daily activities by Herb Kelleher, Chairman of the Board, and his management
team.
Keywords Quality culture, Quality management, Airlines
Southwest Airlines
Southwest Airlines (Southwest) is the only pro®table airlines in the USA. The market
capitalization of Southwest exceeds the combined market capitalization of the other US
based airlines. Southwest has earned a pro®t every year of its existence other than the
®rst year of operation. Southwest is presently the fourth largest airline in the USA in terms
of domestic passenger miles ¯own, serving 59 airports in 30 states (Donnelly, 2002;
Serwer, 2004). Why is Southwest successful and the other airlines in the USA are not? ``Its
employees work harder and smarter, in return for job security and a share of the pro®ts''
(Donnelly, 2002). Southwest's unique culture, called ``goo®ness'' by some individuals, keeps
the morale of its employees high. Southwest is very serious about keeping its costs down.
Southwest's employees have never gone out on strike. Southwest leads the industry in on-time
performance. Through 2002, Southwest's stock price increased 29 percent per annum for the
preceding ten-year period (Donnelly, 2002). The glue that holds Southwest together is its
corporate culture.
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MEASURING BUSINESS EXCELLENCE
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VOL. 8 NO. 4 2004, pp. 26-33, ã Emerald Group Publishing Limited, ISSN 1368-3047 DOI 10.1108/13683040410569389