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Staff post about: Herb Kelleher Become an Author

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“I always felt that our people came first,” says Kelleher. “Some of the business schools regarded that as a conundrum. They would say: Which comes first, your people, your customers, or your shareholders? And I would say, it's not a conundrum. Your people come first, and if you treat them right, they'll treat the customers right, and the customers will come back, and that'll make the shareholders happy.”

Southwest Airlines has grown to become one of the largest in the industry not because of the customers or the shareholders, but because of the people that work for the company – the employees. Kelleher understood that hard-working and motivated employees would do what it took to ensure their own success and that of the company as a whole. From generous compensation packages and benefits to personalized attention, Kelleher made his people his number one priority.

“We’ve always tried to be sensitive to the needs of our people and recognize the things that are important to them in their personal lives,” says Kelleher. To that end, Kelleher makes sure that personal needs are always taken into account in business affairs. “At Southwest Airlines, you can’t have a baby without being recognized – getting communication from the general office,” he says. “You can't have a death in your family without hearing from us. If you're out with a serious illness, we're in touch with you once every two weeks to see how you're doing. We have people who have been retired for 10 years, and we keep in touch with them. We want them to know that we value them as individuals, not just as workers. So that's part of the esprit de corps.”

On top of that, Southwest implemented the first profit-sharing plan in the airline industry in 1974. Employees owned 13 percent of the company’s common stock. Kelleher wanted his workers to be very cognizant that they were part owners: “Western Airlines asked to borrow a stapler in Los Angeles, and our customer-service agent went over with the stapler to their counter, and the Western ticket agent said: Why are you [waiting]? He said: Because I want the stapler back. That affects our profit sharing.”

All of Southwest’s employees, from the janitors to the pilots, receive stock options. “We feel that everybody, no matter where they work or what they do, should have an ownership position in the company,” says Kelleher. “And we have seven, I think - or maybe eight - collective-bargaining agreements with our unions.” Today, Southwest is the most heavily unionized airline in the country that also has a stock-option base.

On top of job security and benefits, Southwest is also able to offer its employees something else: “First of all, if you come here, you'll be happy,” says Kelleher. “And No. 2, if you come here, you'll be the most highly compensated employee in the airline industry. Not compensated the way other airlines compensate people, but when you put it all together, why do you care?”

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