Executive Summary

This paper provides an analysis of Herb Kellehers leadership of during his tenure as CEO of Southwest Airlines from 1971 to 2001. Under the charismatic Kellehers servant-leadership approach which placed a high priority on employee empowerment, Southwest transformed from a small regional carrier into the largest domestic low-cost airline in the U.S. Indeed, Kelleher was a textbook example of a servant-first leader that was effective in promoting employee satisfaction and a fun workplace culture. These leadership practices resulted in unmatched metrics for the airline industry including Southwests consistently high profitability, low employee turnover, immense customer loyalty, and remarkable revenue growth even during periods of economic downturn. The paper points out, though, that Southwest did become heavily reliant on Kellehers larger-than-life persona to drive its unique corporate culture, making leadership transitions problematic. The paper also notes that in contrast to Kellehers employee-focused leadership, Ryanairs Michael OLeary exemplifies ruthless cost-cutting efficiency which succeeded in making Ryanair highly profitable but also created labor disputes and succession planning challenges. The research findings indicate that Kellehers leadership principles and practices played a crucial role in Southwest's expansion and transformation into a major player in the aviation industry. The paper concludes with recommendations for modern business practitioners that build on Kellehers legacy.

Aviation Leadership: Herb Kelleher

If you're a leader, consider how you might learn from the legacy of Herb Kelleher to build the success of your team and organization. John Millen, 2022

As the above epigraph makes clear, Herb Kellehers tenure at Southwest Airlines (hereinafter alternatively the company or Southwest) from 1966 to 2001 in various leadership roles had a lasting impact on entire business world. Indeed, Kelleher succeeded in transforming a modest fleet of 27 aircraft flying regional, intrastate routes into a multibillion-dollar global enterprise with a fleet of 800 sleek Boeing 737s and 400 domestic and international flights each day (Singh, 2020). Today, Southwest is one of the largest and most profitable low-cost carriers in the United States, an outcome that is attributable to its reputation for excellent customer service, efficient operations, and strong corporate culture cultivated during Kellehers influential tenure as chief operating officer (CEO).

As the review that follows clearly shows, most authorities agree that being the largest low-cost carrier in the country today is directly attributable to Kellehers inspired leadership style and principles which have contributed to an existing organizational culture that places a high priority on employee and customer satisfaction. As a result, Southwest has consistently boasted the lowest turnover rate in the industry, and Southwests future appears bright despite the wide array of challenges that face the aviation industry at present. The purpose of this paper is to provide a review of the literature concerning Southwests cofounder and longtime CEO, Herb Kelleher, who has made a significant contribution to the aviation industry. This review includes a comparison of Kellehers effectiveness with Ryanairs leader, Michael OLeary, which is followed by a summary of the research in the conclusion together with salient recommendations for business practitioners in any field.

Review and Discussion

A major part of Southwest's sustained success over the years since its founding in 1966 has been its focus on excellent customer service through policies like open seating, free checked bags, and a streamlined boarding process. Southwest operates a fleet consisting only of Boeing 737 aircraft, which allows for operational efficiencies, and provides over 4,000 flights daily to destinations across the US and in several foreign destinations, including Mexico, Costa Rica and the Caribbean (Hawks, 2023). Moreover, and perhaps even more impressively, Southwest is well-known for never having laid off an employee, even during the darkest periods of economic downturns, a feat that has earned it undying loyalty from its thousands of employees and admiration and respect from the flying public (Cote, 2018).

By and large, Kelleher is best known as a charismatic, transformational leader who subscribed to a servant-leader philosophy (Nobles, 2019). Indeed, Kelleher believed that organizational leaders should serve their employees and empower them to do their best work, achieve their personal and professional goals, and embodied a servant-first mentality during his tenure at the company (Ahmad et al., 2023). Although it is not possible to pigeonhole all of Kellehers leadership exchanges into a specific style since he used multiple leadership styles during his tenure at Southwest which were undoubtedly situation-specific, it is possible to evaluate the effectiveness of his performance by using both quantitative and qualitative data. For example, effective leadership can be evaluated through various quantifiable indicators or key performance indicators that reflect leaders impact on their organizations. In this regard, financial performance as reflected in metrics such as revenue growth and profit margins indicate the quality of organizational leaders strategic decision-making and operational efficiency (Costa et al., 2023).

Likewise, employee engagement and satisfaction, measured through surveys and retention rates, demonstrate the leader's ability to create a positive work environment. In addition, customer satisfaction and retention levels also reflect leaders commitment to quality and customer service. In other words, these types of indicators should also be considered alongside qualitative assessments and organizational context to comprehensively evaluate leadership effectiveness (Ahmad et al., 2023).

The research shows that across the board, Kelleher leadership provided continuous revenue growth, remarkably low employee turnover rates, sustained loyalty among the flying public, a brand that is known the world over for its commitment to safety and customer satisfaction, and an organization that is characterized by a community of caring for its employees (DePaola, 2009). This is not to say, though, that Kelleher never employed other leadership styles, but it is to say that he leveraged his unwavering commitment to sound leadership principles and practices to guide the company during his tenure as CEO (Iriandi & Gili, 2021).

The net effect of Kellehers leadership at Southwest from 1970 through 2001 reveals a pattern of sustained growth and transformation in the aviation industry. During the 1970s and 1980s, Kelleher successfully expanded the airlines network and relied exclusively on a fleet consisting exclusively of Boeing 737s to promote operational efficiency. By keeping operational costs low and providing no-frills services, Kelleher also succeeded in attracting new passengers from alternative modes of transportation and the company enjoyed steady revenue growth as a result (Hawks, 2023).

Although it is impossible to categorize all of Kellehers countless interactions with employees and other stakeholders during his tenure at Southwest, it is possible to characterize his primary leadership styles and principles based on empirical observations and anecdotal reports from contemporaries. A list of Kellehers main leadership styles, a brief description of their key features and some reports from the field, academic literature and mainstream media are provided in Table 1 below.

Table 1

Kellehers Main Leadership Styles and Examples

Leadership Style

Key Features

Examples

Participative

? Leader involves team in decision-making

? Actively listens to and incorporates ideas and input

? Consensus through discussion

? Increased flexibility and morale

? Time-intensive

Involving the Team in Decision-Making:

? Kelleher was known for his open-door policy, actively seeking input and ideas from employees at all levels of the organization (Kote, 2018).

? He believed in the power of employee involvement and recognized that those on the front lines often had valuable insights into improving operations (Cote, 2018).

? Kelleher subscribed to the leadership principle that open communications facilitated problem solving and decision making, attributes that played a key role in helping him remain effective during the unending series of crises that the company faced during his tenure (Johnson, 2017).

? In addition, Kelleher was also influential in networking with key stakeholders and enlisting employee feedback preparatory to negotiations.

Example 1: Kelleher regularly held Roundtable discussions with employees, where he would listen to their suggestions, concerns, and ideas. These discussions led to important changes, such as improvements in customer service procedures and innovative cost-saving measures (Gittell, 2001).

Example 2: When facing challenging decisions, such as whether to enter new markets or expand routes, Kelleher involved employees in brainstorming sessions and encouraged them to provide input on the potential risks and benefits.

Consensus through Discussion: Kelleher fostered a culture of collaboration and consensus-building. He understood that involving employees in decision-making not only led to better choices but also increased their sense of ownership and commitment (Reingold, 2013).

Example 3: Southwests famous Freedom to Fly program, which allowed employees to suggest new destinations for the airline, exemplified participative leadership. Employees submitted proposals, and Kelleher and his team would review and implement routes based on employee recommendations, enhancing morale and engagement.

Increased Flexibility and Improved Employee Morale:

? By valuing and incorporating employee ideas, Kelleher promoted a sense of empowerment and ownership among the workforce.

Example 4: Employees appreciated the fact that their opinions mattered and that the company was willing to adapt based on their feedback. This led to a more agile organization that could respond quickly to changes in the industry, ultimately contributing to Southwests noteworthy success (Cote, 2018).

Time-Intensive:

? Kelleher's commitment to participative leadership was time-intensive, as he dedicated significant efforts to engage with employees and facilitate discussions; however, he also believed that the benefits of this approach, such as improved decision-making and a motivated workforce, far outweighed the time investment.

? Kellehers participative leadership style at Southwest not only allowed employees to have a voice in the companys direction but also created a sense of camaraderie and shared responsibility that contributed to the companys legendary success in the industry.

? The camaraderie between Herb and the employees at Southwest Airlines was remarkable. Many years ago, on Bosses Day, 16,000 employees of Southwest Airlines chipped in to purchase a full-page ad in USA Today to express their affection for the boss. They thanked Herb for helping load bags on Thanksgiving, singing at the holiday party and singing only once a year, letting them wear shorts and sneakers to work, being a friend, not just a boss, and remembering every one of their names (emphasis added).

? The reason the people of Southwest Airlines have such a strong affection for Herb Kelleher is pretty simple. First, he was an incredible listener. When you were with Herb, he was 100% all theretotally engaged. He made you feel like you were the most important person in the world at that moment, and to him you were (Freiberg & Freiberg, 2019).

Transformational

? Inspires team commitment to collective goals

? Clear visioning and task significance

? Intellectual stimulation and supporter of autonomy

? Leadership through example and integrity

? Risk of unrealistic expectations

? Kelleher inspired team commitment to collective goals: He communicated a clear vision for the company and the significance of each team member's role in achieving it.

Examples:

? Kellehers inspirational vision for Southwest was to provide affordable, convenient air travel while maintaining a fun and friendly work environment all the while placing the best interests of his employees first.

? He intellectually stimulated employees by encouraging innovative ideas and supported their autonomy in decision-making.

? Kelleher led by example, demonstrating integrity, dedication, and a commitment to the companys mission.

Servant-Leader

Empathy:

Servant-leaders show a deep understanding of and compassion for others' needs and perspectives.

In sum, Kelleher embodied the principles of servant-leadership throughout his career as the leader of Southwest. In some cases, his servant-leadership style subsumed other leadership practices into a unique Kelleher leadership brew. For instance, Kellehers empathetic, compassionate approach, combined with active listening and a clear vision, reflective...

…workplace culture. Kelleher decentralized authority, empowered employees, and maintained transparency about company strategy and finances. This built an atmosphere of trust and motivated workers. Under his visionary leadership, Southwest transformed from a small regional carrier into the nation's largest domestic low-cost airline. The company achieved remarkable growth in revenues and market share. Metrics like profitability, customer loyalty, and employee retention were top-tier in the airline industry throughout Kelleher's leadership.

It is important to note, though, that Southwest also become heavily dependent on Kelleher's charismatic persona to drive its culture. In fact, after his departure as CEO, his successors implemented fun time at the company where employees were essentially forced to have fun an unlikely outcome. Likewise, Kelleher was also unwilling to make tough cost-cutting choices to avoid negative impacts on employees which contributed to the companys brand but limited its ability to expand its fleet and routes. Notwithstanding his weaknesses and missteps over the years, it is clear that unlike most business leaders, Kelleher was effective because he was nice nice to his employees and nice to his consumers. Few business leaders achieve sustained success with this mindset, so it is reasonable to conclude that Kelleher was a natural-born leader who intuitively understood what was important to achieve real success in life and in the business world.

Despite this conclusion, it would be a disservice to both Kelleher and OLeary to characterize the entire careers as aviation leaders as exemplary or disastrous, and it is reasonable to suggest that both of individuals exhibited leadership behaviors that were completely contrary to their primary leadership styles and practices. After all, these were just two human beings doing the best they can under extraordinary circumstances. Indeed, Kelleher likely lost his temper on more than one occasion and failed to live up to the very high bar he set for himself and OLeary likely demonstrated leadership behaviors on occasion that were charismatic or transformational in nature.

Nevertheless, the research was absolutely consistently in describing Kelleher as one of te best if not the best leaders of the 20th century, and for good reason. By placing the best interests of his employees first, Kelleher made it clear for all to see that he recognized that success in business required this type of prioritization. In fact, Kellehers approach to leadership is analogous to Finlands successful approach to ending homelessness. For example, while most countries require applicants for housing assistance to pass rigorous criteria such as participation in mental health and/or substance abuse treatment, Finland provides its homeless population with housing first and then they work on the problems that led these people to that unfortunate condition in life. Similarly, by making employees first in his list of priorities, the company was able to effectively respond to the countless challenges that it confronted during his tenure as CEO. The proof is in the pudding, the saying goes, and that is certainly the case with Kelleher who never laid off an employee while consistently remaining profitable, an unprecedented eventuality in the aviation industry then and now.

Alas, Herb Kellehers only come along once or twice in a generation, and any recommendations based on his career at Southwest must be weighed against this reality. Despite this constraint, it is possible to identify a number of valuable lessons that can be used by leaders in any industry and these are discussed further below.

Recommendations

Taken together, Southwests sustained growth, unprecedented low turnover rates and fiercely loyal employees make it clear that Kellehers leadership had multiple positive outcomes, and it is reasonable to suggest that modern business practitioners can learn how truly effective leaders achieve their organizational mission and vision regardless of their respective industries. These outcomes also provide a useful foundation for the following recommendations.

The first recommendation is straightforward. In order to build on Kellehers strengths, successes and legacy as an effective leader, business leaders should focus on nurturing people-centric cultures, servant leadership, and employee empowerment. The research was consistent in showing that the employees at Southwest loved Kelleher because they all knew he loved them an attribute that cannot be taught but which can be learned. Indeed, most Southwest employees would have willingly followed Kelleher into the mouth of a cannon, meaning that Kellehers remained effective even during periods of crises.

In addition, cultivating a sense of community is congruent with Kellehers overall leadership behaviors and practices that created a fun, energetic culture which builds employee loyalty and engagement. Indeed, Kelleher can be regarded as subscribing to the mid-20th century social contract where employees were guaranteed a lifetime of employment in exchange for their loyalty and hard work, something that otherwise went the way of the dodo long ago. Likewise, business leaders should also ensure proper succession planning to transition smoothly from CEOs with strong individual personas such as Kelleher.

Likewise, the second recommendation concerns leadership transitions. In sum, Kelleher provides an inspirational model of principled, values-based leadership, but the findings also emphasize the importance of ensuring seamless leadership transitions that are not overly reliant on one individual to stand the test of time. In fact, this issue emerged as one of the main constraints that are associated with highly charismatic leaders who set the bar so high that it is essentially impossible for anyone to follow in their exact footsteps. This constraint means that misguided attempts to invoke previous leaders behaviors and practices (e.g., enforced fun time at Southwest after Kellehers departure) will most likely backfire and create employee discord and dissatisfaction. In other words, new leaders must shape the leadership position…