RUNNING HEAD- IT’S ALL ABOUT THE LUV
(Southwest, 2014)
It’s All About the Luv
Analysis of Southwest Airlines
Ashley R. Ochoa
MBA 617
Organizational Theory and Design
Nicole Cundiff, PhD
March 11, 2014
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It’s All About the Luv:
Analysis of Southwest Airlines
Southwest Airlines was recently named one of the top World’s Most Admired Companies
2014. This is the 20th consecutive year for Southwest to be on FORTUNE’s list. This is an
extreme honor to add to their long list of honors, but the question is why? Why is Southwest
Airlines such a successful company, not only in a business sense, but also from their employees’
view?
Southwest Airlines is based out of Dallas, Texas and is the largest domestic airline, but is
still smaller compared to the rest of the airline industry (because of less international flights).
They are rapidly growing, first by acquiring AirTran to reach more of the United States in May
2011, and more recently by increasing flights domestically as well as adding five international
flights starting Summer 2014. Southwest started out with just three flights in Texas, to now
serving more than 3600 flights per day to 96 different destinations. (See Appendix A) They are
‘small’ compared to the rest of the airline industry, especially given the fact that their
competitors are American Airlines, Delta, and United Airlines. Their prices are extremely
competitive, and on a regular basis they are significantly lower than their competitors.
It all started when Herb Kelleher founded Air Southwest Co. on March 15, 1967. He
later changed the name to Southwest Airlines Co. on March 26, 1971. Mr. Kelleher wanted to
create an airline that was different. They were different right from the start, from the pricing of
their tickets to their flight attendants and their mission. Through many years and many struggles
they remained constant in their mission, culture, and success. Their mission states:
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The mission of Southwest Airlines is dedication to the highest quality of Customer Service
delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. (Southwest
Airlines, 2014)
Another difference that sets them apart from the other airlines is their mission for their
employees that states: We are committed to provide our Employees a stable work environment
with equal opportunity for learning and personal growth. Creativity and innovation are
encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be
provided the same concern, respect, and caring attitude within the organization that they are
expected to share externally with every Southwest Customer. (Southwest Airlines, 2014)
Though the customers are put first, their employees are the ‘rock’ of the company. Their
philosophy is that if the employees are happy, then they will want to make the customers happy.
The current CEO, Gary Kelly, describes them as, “Our People are our single greatest strength
and most enduring long-term competitive advantage.” (Southwest Airlines, 2014) The employees
go through extensive hiring process to ensure they believe in the Southwest culture.
Southwest Airlines’ culture and behavior are the reasons they are ranked so high in
customer rating and employee satisfaction. Southwest from the beginning began a ‘Luv’
campaign, which is basically to share the love throughout the company. Listed in their values,
they have a section called ‘Fun-LUVing Attitude,’ which includes, have fun, enjoy your work,
and celebrate your successes. (See Appendix B) This is just naming a few, but you can already
see how this company is very different from other corporations. Each and every employee has
these company values instilled in them, which in turn are passed on to their customers. Richard
Draft talks about the culture of Southwest Airlines and shares this example while explaining clan
control; “Employees routinely challenge each other on matters such as questionable sick day
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calls or overuse of office supplies… Flight attendants who are traveling off duty pitch in to help
clean planes. Pilots help ramp agents load bags to keep flights on time.” (2010 pg 355) I have
seen first-hand the culture of Southwest Airlines in the airport, they are very professional, but
they always have fun by decorating their work section, or by wearing crazy hats.
And this ‘Fun-Luving’ behavior isn’t just with customer services representatives; it is
with all the management involved. The corporate management (see Appendix C) is to make sure
that the values and image of the company stays. Their management styles are quite different
from the ‘norm.’ This is the management style that I would want to learn and practice in the
future. They are a company that treats their employees like family and they value hard work,
getting the job done right, and having fun.
While their culture and behaviors shape the company, innovation is another top priority
encouraged. “Bob Jordan, head of technology and strategy at Southwest Airlines, spoke for
managers all over the world when he said, “We have to change to survive.” (Draft, 2010, pg 411)
Southwest has had a number of innovations over the years, including the addition of Wi-Fi in all
planes and weather radar technology.
Though we often hear all about how successful and ‘fun-LUVing’ Southwest is, I do
believe that some issues are arising from their expansion in the United States and internationally.
Is Southwest Airlines expanding too rapidly for the management to keep up with the demands of
customers and employees? Their best asset, quick turnarounds and customer service are now
becoming their worst nightmare because of their current expansion. Another issue I see
potentially arising from the expansion is, can their culture and value system survive and continue
since they are adding so many employees? Overall, I do see Southwest Airlines coming out on
top mainly because they have been so successful financially and culturally for so long.
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According to Serwer’s article in the CNN Money, “Southwest hasn't really changed its
original formula. It enters markets in which traditional airlines hold sway and then blasts them
with much lower fares.” (2004) This says a lot about how much they believe in themselves and
the vision that Kelleher had in mind. Therefore, I see this as a challenge to management and to
the employees. This is the time they are truly tested and see how much they actually believe in
the system. Southwest was already put to the test post 9/11 just like every other airline company,
and they came out on top compared to the industry leaders. “United parent UAL filed the largest
bankruptcy in aviation history ($25 billion in assets) in December 2002...American is weighted
down with nearly $18 billion of debt on its books. [Southwest Airlines] earned $442 million-more than all the other U.S. airlines combined. Its market capitalization of $11.7 billion is
bigger than that of all its competitors combined, too.” (Serwer, 2004) The question is how?
Why? One simple answer is, "Because they [other airlines] don't get it," says Southwest's
idiosyncratic president and COO Colleen Barrett. "What we do is very simple, but it's not
simplistic. We really do everything with passion.” (Serwer, 2004)
As we can see Southwest has overcome some obstacles in the past, and has always had
their culture and values to get them through tough times. Not every corporation, even the ones
with the most assets or money, can get through tough times, but Southwest has conquered them.
Now, as two new issues are arising, possible new steps to get Southwest Airlines back on track.
Evaluation of Southwest Airlines
Issue #1: Expansion Overload
Expansion is mostly seen as a great accomplishment, but some companies are so big that
expansion can potentially hurt them. Southwest Airlines is a large corporation with a culture of a
‘small town feel.’ They have great employees and have overcome the scrutiny of the business
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world because they are viewed as ‘different.’ But in recent months, the expansion for Southwest
has not been viewed as an accomplishment. An example of this expansion overload is noted in
the Washington Post and Chicago Tribute articles that referenced Southwest Airlines as having
the worst delays and on time departures. They blame the tight schedule of the airlines,
“Southwest has a penchant for scheduling flights close together, giving little wiggle room when
flights encounter weather problems.” (Karp, Southwest Airlines has a surprising problem: Delays
and the worst on-time rates in U.S., 2013) How can a company expand if they are already having
issues with the airports that they are already serving? More and more people are flying, and
airport runways are getting busier every year; this is an issue that they need to fix before
expanding to other airports that could potentially be busier. “Adjustments take several months to
implement, due to the complexity of our schedule,” Parrish said. “But we do expect to see
improvement by early next year.” (Karp, Southwest Airlines has a surprising problem: Delays
and the worst on-time rates in U.S., 2013) Another article stated that, "We got a little too
aggressive," said Steve Hozdulick, Southwest's senior director of operational performance.
(Karp, Southwest Airlines Struggles with being on time, 2014) Could this statement be a forecast
of their expansion plans being ‘too aggressive’?
Recommendations
There are three recommendations that I could see potentially working for Southwest Airlines’
overly aggressive approach to expansion:

Backward Design (Planning) - Backward design is used mainly in education and the
military, but it is slowly becoming more popular in the business sense. Southwest should
come up with their goal (e.g. expansion to international sites) and work backwards, by
adding smaller goals to their current goal. Once they have the timeline in place, if they
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do not meet one smaller goal, then the ultimate goal cannot happen on time. Since the
issues of the delays are happening now, and they don’t foresee an overall fix until next
year, this will delay the expansion as well. The unforeseen delay in the plane departures
needs to be a priority in order for more expansion to happen.

Stay honest with employees and yourself - With the issues of the flight delays, plus the
expansion of new flights, the employees and management need to deal with the issue
straight on, and be honest. According to Wagner and Harter letting the employees know
the good and bad news will allow them to feel more connected. Though corporate has
not stated that they have an ‘aggressive’ approach to expanding, the potential is there and
the employee should know. (Wagner & Harter, 2006)
Issue #2: Culture and Values or Go Home
Everyone knows about Southwest Airlines culture and values, but I believe that the
expansion of the company could hinder both of these aspects. The saying of ‘Don’t put all your
eggs in one basket’ could be the future of the company. Though this issue has not come to life
through the media and news articles, I can see how the management and employees could
become frustrated with the issue presented above and lose sight of the values. When Draft is
talking about clan control, he brings up this exact issue, “ …as the company [Southwest] grows
larger and faces new competitive pressures, the culture is showing signs of strain.” (Draft, 2010)
Southwest could see a strain before July when they begin the flights to international sites.
Recommendations
Three recommendations for keeping the culture and values instilled in the company during
expansion:
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
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Stay Honest - Management always need to keep their employees ‘in the loop’ especially
during a stressful time of an expansion. This has always been a huge part of The
Southwest Way; high communication and keep their values in mind in their decisions.
Though all the employees are dealing with the scrutiny of delays, the management needs
to take the time to ensure the employees are educated and involved in the improvement
process. (Wagner & Harter, 2006)

Hire a Culture Expert/ Increase Training- Since Southwest is expanding internationally to
Mexico and the Caribbean in 2014, hiring a culture expert will help the employees and
management keep the culture and values that have differentiated them from the
competitors. Corporate and the Human Resources Department should come up with a job
analysis, job description, and interview session in order to find the perfect candidates to
motivate the employees during this stressful expansion time. I believe that this will boost
morale in the company because employees realize that management is taking that extra
step to ensure the employees are taken care of.

Culture Analysis of Potential New Expansion (international flights) - The employees that
are being hired for the international positions need to be instilled with the same culture
and values that exist at the domestic sites. Though the culture in the Mexican and
Caribbean destinations might be different than what Southwest thinks, a culture analysis
should be done in order to blend the cultures. An analyst should conduct interviews,
surveys, and observation research of each international culture in order to find the most
efficient way to spread the ‘fun-LUVing’ culture. Also, research need to be done on how
the current employees view the international sites. The research will help the
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collaboration and unity of the domestic and international sites’ employees to increase
culture and values.
Theory Analysis
I have found that the theories covered in Draft’s text will support my recommendations
for the future success of Southwest Airlines.
Organizational Control Mechanism
This theory is seen in the entire company of Southwest Airlines. Draft uses Southwest
Airlines as an example of clan control, and it is the theory that proves they are a ‘family’ culture.
Draft also forecast the decline in culture with expansion of the company. “Clan Control has
‘high uncertainty’ and things change so fast that rules and regulations are not able to specify
every correct behavior.” (2010, pg 354) This is the reason for vulnerability, which brings me to
the next theory, Organizational Decline.
Organizational Decline
Although Southwest is not declining or forecasted to close its doors anytime soon, they
have the potential to have organizational decline because of their vulnerability. Organizational
decline is defined, “a condition in which a substantial, absolute decrease in an organization’s
resource base occurs over time.” (Draft, 2010 pg 357) Because of their culture, they have more
of a chance to make a decision based on their culture and value, rather than the environment that
surrounds them (e.g. a large expansion). (Draft, 2010)
Value-Based Leadership
This leadership is what Southwest Airlines lives by. All the decisions that are made are
based on morals and ethics. Southwest will be able to conquer the aggressive expansion and be
able to attain the culture based on this theory. As long as the leadership continues to use this
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value-based leadership, they will be able to mentor the employees to carry on the traditions.
(Draft, 2010)
Organizational Change
Southwest Airlines needs to have some organizational changes, for example the ‘Culture
Expert’ mentioned above would need to be created in order to make the international expansion
successful. The process of an organizational change starts with an idea (Culture Expert), need
(collaboration of domestic and international culture), adoption (job analysis and job description),
implementation (interviews and start trainings), and resources (campaign and expose this new
position to let employees know). I believe this change will help the company to continue
growing.
Conclusion
Southwest Airlines, who is known for their superior culture in the workplace, may still
have issues arise when dealing with expansion. Richard Draft’s theories provide ideal solutions
to the issues that Southwest Airlines faces. Although they may create their own solutions, Draft’s
theories could be used as guidance to solving the problems.
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Appendix A- Southwest Airlines New Map of Destinations (Southwest Airlines, 2014)
Appendix B- Values of Southwest Airlines (Southwest Airlines, 2014)
Live the Southwest Way
Warrior Spirit
• Work Hard
• Desire to be the best
• Be courageous
• Display urgency
• Persevere
• Innovate
Servant’s Heart
• Follow The Golden Rule
• Adhere to the Principles
• Treat others with respect
• Put others first
• Be egalitarian
• Demonstrate proactive Customer Service
• Embrace the SWA Family
Fun-LUVing Attitude
• Have FUN
• Don't take yourself too seriously
• Maintain perspective
• Celebrate successes
• Enjoy your work
• Be a passionate Teamplayer
Work the Southwest Way
• Safety and Reliability
• Friendly Customer Service
• Low Cost
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Appendix C- Organizational Chart of Southwest Airlines (Southwest Airlines, 2013)
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References
Draft, R. L. (2010). Organization Theory and Design. United States: South-Western Cengage
Learning.
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Wagner, R., & Harter, J. K. (2006). 12 Elements of Great Managing. New York: Gallup Press.
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