Caring for customers and trusting employees are the key ingredients of a successful company, says Southwest Airlines former boss James Parker
Doing the right thing seems to come naturally to James Parker, former chief executive of Southwest Airlines. But Parker is quick to credit his upbringing for his ethical foundation.
In the dedication of his new book, “Do the Right Thing”, Parker recalls that his father “sat outside on the steps with the black soldiers who were not allowed to eat at the inside lunch counter during the long bus ride home to Texas after World War II”. Parker believes such role models set the tone for others’ actions.
The same is true in business, Parker says, where it is incumbent on those in leadership positions not only to be role models, but also to communicate missions, values and teamwork. And Parker believes good leaders must be found at all levels within organisations.
Parker speaks with the truest sense of experience. He led Southwest, once a small Texas airline and now a major US carrier, through the dark days following the September 2001 terrorist attacks on the US. In a gut-wrenching time for the airline industry, Southwest was the only major US airline to remain profitable after 9/11. Parker takes great pride in knowing it did so, while protecting the jobs of all of its employees, with no lay-offs or pay cuts.
Customers want to do business with companies they feel comfortable with and can trust, Parker says. “That was the bond that Southwest established early on with its customers, and it has on more than one occasion caused them to rally to our cause.”
After 9/11, Southwest offered refunds to ticket holders – no questions asked, with no penalties or fees. Parker admits if everyone holding a ticket had asked for a refund it would have put Southwest in a bind financially. Despite the risk, however, “we simply decided to follow our gut and do what we perceived to be the right thing,” he says.
To Southwest’s surprise, not only did few ticket holders ask for refunds, many of its customers sent the company money to help sustain it through the crisis.
And Parker says Southwest’s employees proved they understood the true meaning of customer service when, in many cases, they pulled out their own credit cards to feed and entertain the company’s stranded customers while flights were suspended after 9/11.
Leaders at all levels
Parker is quick to acknowledge that Southwest’s employees are its greatest asset. Most people, deep inside, have a desire to be part of something meaningful and contribute, he says. And they don’t want to work somewhere they have to leave their values at the door.
Carefully selected employees, if treated with trust and respect, will do the right thing, Parker says. “I’ve always tried to expect the best of people and to trust them – and I have almost never been disappointed,” he says.
Part of trusting people is empowering them to make decisions, Parker says. When you have people dealing with customers and employees on the front lines and they have the authority to make decisions – that’s what gives an organisation a “special sauce”, he says.
One important aspect of Southwest’s special sauce comes from its employees’ sense of ownership in the company. A generous profit-sharing programme has allowed Southwest employees to reinvest in the company through stock purchases. Employees, in fact, own about 10 per cent of the company’s stock.
This sense of employee ownership, Parker believes, has helped the airline strike hard bargains with its trade unions.
“We were intent on not making promises we couldn’t keep and tried not to over promise,” Parker recalls. “That sometimes led to some tough negotiations, because we didn’t want to offer extravagant pay and benefits that would bring the airline down.
“It is because we did have a good, warm respectful relationship with our employees that for the most part our relationship with the unions was positive.”
Although running any big business is a complex undertaking, Parker says it is important to step back and take a more simplified view of what the right thing to do is – for customers, for employees and for the long-term, sustainable good of the company.
He concludes: “Southwest takes care of people, both employees and customers, and people take care of the company. It’s just that simple.”