Dear CEO, This Note is a Follow Up on Examples of Positive Leadership

By Henry Woram, Vice President at Palm Drive Capital

January 21, 2022

Dear CEO,

This note is a follow up to provide examples of positive leadership.

I first met Colleen Barrett, President Emeritus of Southwest Airlines, in 2010 when she came to speak for a leadership club at my high school. Your first impression of her would be that she looks and acts more like a grandma than a high-powered business executive. Yet, she is highly ambitious and successful, starting as a secretary and ending her career as President. This dichotomy is precisely what makes Colleen a business legend: she institutionalized a loving culture “Lead with LUV” at massive, publicly traded company in the cutthroat competitive airline industry.

With Colleen at the helm, Southwest had a very simple philosophy: “Treat your People right, and good things will happen.” What’s revolutionary about this philosophy is that it prioritizes employees first in a customer-service oriented industry. Southwest’s view is that if you take care of your employees, your employees will then take care of your customers, and your customers’ loyalty will take care of your shareholders. This is also known as the “triple bottom line,” and it underscores their threefold priorities as a business: 1) employees, 2) customers and 3) shareholders.

Focusing on employees first enables a culture of customer service and shareholder return, not the other way around. Southwest is famous for their legendary customer service. And, during Colleen’s career at Southwest, their share price increase from 50 cents to $15.

Southwest absolutely dominates in the employee satisfaction category. Just look at their combined non-voluntary and voluntary turnover rate (5%) and their voluntary turnover rate, which has always been 3% or less. This is an impressive figure when you realize that the turnover rate for the transportation industry has been in the double digits for the last decade, with peaks ranging around the 20% mark.

How do you foster employee engagement and happiness? First, you start by setting high standards for how all employees are treated. Southwest’s Executive Office sends out more than 100,000 cards annually to employees for birthdays, company anniversaries, birth of children, and other important events. Second, you constantly acknowledge the positive contributions of your employees. As Colleen says, “We celebrate little things, big things, we celebrate everything! Although we do have some formal celebrations, a lot of them are informal, spontaneous celebrations that cost little or no money. For example, just giving People chocolates when something good has happened can make them feel like you’ve given them a million dollars. What’s important is the fact that you’re honoring them and acknowledging that what they do makes a positive difference.” Southwest throws an Annual Awards Banquet where they celebrate employees who “Live the Southwest Way.” In Colleen’s own words, Southwest has “a gazillion Employee recognition programs.”

It’s not like all this celebration produces complacency in the ranks or creates a culture where mediocre performance is acceptable. Southwest’s second key value, its most important value after safety, is “warrior spirit” — a fighting spirit to be successful, to be the best, to work hard, innovate, and display a sense of urgency and perseverance. As Colleen says, “People don’t want to work for a loser.” And, Southwest knows how to reprimand employees or terminate employees who are not performing or not aligned with the culture. Employees that fall short of Southwest’s cultural or performance expectations can expect two actions. First, a loving reprimand for not living up to Southwest’s expectations. If that works, they are forgiven and brought back into the fold. If that doesn’t work, the second action kicks in: career planning. “We let them pursue their career someplace else.”

Southwest doesn’t celebrate employee success just because it’s the right thing to do — they do so deliberately to create a culture where employees feel empowered to add value beyond the confines of their job descriptions. For example, during the sky-high gas prices of 2008, Southwest’s president Gary Kelly was open with employees about how energy prices were impacting their bottom line. The finance department at Southwest began to think creatively about how to solve the problem, and created an oil-hedging strategy that enabled Southwest to stay in business while competitors like American Airlines went bankrupt.

There are several other examples of employee (not management) led initiatives that both cut costs and added revenue for Southwest Airlines.

Cost Cutting

• A flight attendant suggested removing the logo from Southwest’s trash bags — which had been color printed — saving about $100,000 a year
• Some of Southwest’s employees, on their own initiative, built the www.southwest.com website, saving hundreds of thousands to millions of dollars in web development fees

Revenue Building

• An employee initiative was the Business Select Fare, a more premium-priced ticket that gave customers the right to be among the first fifteen to board the plane, along with a few other perks
• Another employee initiative was the Bags Fly Free program, which increased ticket sales meaningfully

Obviously other companies have employees that are entrepreneurial or show initiative. But what Southwest has consistently done well for decades is to bring the best out of its own people: “people realize they can be trusted and they’re not going to get called on the carpet because they bend or break a rule while taking care of a Customer — that’s when they want to do their best.”

One of the last ideas I want to impart is the idea of servant leadership vs. seagull management as they relate to providing employee feedback. The idea of a seagull management is a manager who flies in, makes a lot of noise, dumps on people, and flies out. A servant leader deals with people in a straight and loving way as soon as they observe inappropriate behavior. A servant leader also recognizes the importance of rebuilding an employee’s self confidence so that he or she can in turn, do the same for someone else who needs help in the future. Providing constructive feedback to an employee in a positive manner can therefore ripple out and create a culture where employees proactively seek feedback and are constantly improving without the guidance of a manger.

Here’s a template for providing positive feedback. Don’t just say “Thanks for your effort,” because that is vague and has little meaning. Say something like “I just read your operational analysis report, and let me tell you, it was so clear. I love the recommendations you made, particularly the cost-cutting suggestions. They will not only help us contain our costs, but also improve our efficiency” — that person will know you’re sincere and really know what they are doing.

Good luck leading with LUV.

With LUV,

Henry

Originally published at https://palmdrive.vc on January 21, 2022.