The recent labor trouble at Southwest Airlines shows that even the happiest family has woes.
James Parker, Southwest’s CEO unexpectedly resigned from what he calls a “draining” job. He stepped down after the company reported its second-quarter profit plunged 54 percent, which it blamed partly to labor-related charges. A two-year dispute with the flight attendants’ union — which complained of lack of meal breaks, lack of pay for cleaning idle planes and being under-paid — had become “personal” and “off track,” Parker said.
His successor, former CFO Gary Kelly, says he’ll push to offset wage increases with further productivity growth from Southwest’s already productive workers and acknowledges it will “involve hard, hard work.” The new chief executive vows to be accessible to union officials but warns he has “little tolerance for bad attitudes” on either side.
It’s somewhat surprising to see this happening at Southwest, which prides itself on the cozy ties between labor and management. Life at Southwest, like so many other companies, overflows with upbeat talk about “the corporate family.” At Southwest, however, family is more than just an overused metaphor for team spirit and commitment. The company is full of real families — married couples, parents and children, siblings. It’s not known how many of its employees are related, but Southwest says it’s home to about 1,000 married couples, or 6 percent of its total workforce.
Many of them got on Southwest’s payroll as a result of its “hire for attitude, train for skills” model. The airlines believe that the most promising source of new talent is the relatives of talented employees. Recruiters look at energy, humor, confidence, — and above all, team spirit — of candidates.
A glimpse of Southwest’s headquarters in Dallas gives you a sense of what the family is like (Subscription is required to read the article.): The walls are festooned with more than 10,000 picture frames containing photos of employees’ pets, of Chairman Herb Kelleher dressed like Elvis or in drag, and of stewardesses in mini-skirts. Then there are the teddy bears, and jars of pickled hot peppers, and pink flamingos. There is cigarette smoking, and lots of chuckling, and nary a necktie to be seen.
“We have an incredible esprit de corps here,” Kelleher says. “It’s like the Marine Corp. The intangibles have always been more important than the tangibles.”
That’s all good and well. But how about the labor feud. Why hasn’t the management’s rapport with labor translated into understanding and compromise? Have family ties among employees helped to resolve or exacerbate the problem? When the flight-attendant wife went on strike, did the pilot husband talk her out of it or follow suit even if he wasn’t that unhappy about his job? When the steward son complained of long hours and little pay, did the retired mechanic father talk about drinking with Kelleher and say what a nice guy the chairman is? Over the last couple of years, there was probably more talk by the dinner table than that by the negotiation table.
Still, Southwest has something to brag about. While the rest of the industry laid off thousands of people and lost more than $22 billion since Sept. 11, 2001, Southwest didn’t fire a single employee and remained in the black every quarter. Last year the company earned $442 million, more than all the other U.S. airlines combined.
But Parker’s leaving has rung the alarm for the company. The very idea of family at work conjures up worries about conflicts of interest, favoritism and other headaches. If Parker, an 18-year veteran of Southwest, a long-time protégé of Kelleher and a man known as “Mr. Fix-It” couldn’t fix it this time, Kelly doesn’t have an easy task either.
After all, to a rebellious child, it doesn’t help to say, “We are a family.”