crazyincanton
Advanced
- Jan 10, 2003
- 151
- 1
Posted on Sat, Apr. 17, 2004
Southwest CEO talks about success
Executive, speaking in Fairlawn, says employee ownership helps airline stay profitable
By Jim Mackinnon
Beacon Journal business writer
About a quarter of the publicly traded shares in Southwest Airlines, the nation's largest low-cost carrier, are held by the company's 35,000 employees.
That large percentage of employee ownership helps make Texas-based Southwest Airlines the kind of profitable and fun-to-work-for company it is today, James F. Parker, the company's vice chairman and chief executive officer, told an audience of more than 300 people Friday morning in Fairlawn.
Despite its low-fare, high-quality customer service business plan, Southwest has been profitable in each of the past 31 years. That's even as other higher-fare major airlines have been losing money from the aftermath of the Sept. 11 attacks, rising fuel costs and other industry turmoil.
Employee stock ownership and profit sharing play an important part in motivating Southwest employees and in meeting business goals, Parker said. He gave the keynote address at the 18th annual Kent State University-sponsored Ohio Employee Ownership Conference at the Akron Hilton West in Fairlawn. The event is aimed at helping employee-owned businesses throughout the state.
But having employees own significant parts of a business does not ensure success, Parker said.
The most important thing is to have leaders at every level in the company who understand the business's values and mission and who communicate regularly with employees, he said.
``It doesn't mean giving everybody everything they want. It does mean treating everyone with respect,'' Parker said. ``At Southwest Airlines we're all owners and we're all workers.''
It also helps to be creative.
Parker told a story about Southwest's early days, when it was struggling against larger competitors for flights just within Texas. Its only profitable route at the time cost travelers $26 one way, Parker said. Another airline decided to charge $13 for the same route, he said.
Southwest couldn't afford that, but took out newspaper advertisements saying that if people wanted to pay $13 for a flight, they would meet that price, Parker said. But if Southwest passengers paid $26, they'd each get a bottle of whiskey when they landed, he said. That promotion temporarily turned Southwest Airlines into one of the largest liquor distributors in Texas, he noted.
Southwest works to identify future leaders in the company and then provides them with a one-year training program.
The biggest mistake a company can do in troubling times is cut back on training, he said. (He quipped seconds earlier that the biggest mistake for a company is to cut back on travel.)
Southwest pays industry-competitive salaries and compensation, and about 80 percent of its employees belong to unions, Parker said. Members in all but one of Southwest's 11 unions get stock options, he said. The company has been negotiating nearly two years with the flight attendants' union, and a federal mediator has been called in to help.
The company's efficiencies keep it profitable, Parker said.
Southwest did not slash any jobs during the latest recession, Parker said. No one took a pay cut except for himself and the company president in 2002, he added.
The company takes care of its people, and the people take care of the company. ``It's just that simple,'' Parker said.
Southwest CEO talks about success
Executive, speaking in Fairlawn, says employee ownership helps airline stay profitable
By Jim Mackinnon
Beacon Journal business writer
About a quarter of the publicly traded shares in Southwest Airlines, the nation's largest low-cost carrier, are held by the company's 35,000 employees.
That large percentage of employee ownership helps make Texas-based Southwest Airlines the kind of profitable and fun-to-work-for company it is today, James F. Parker, the company's vice chairman and chief executive officer, told an audience of more than 300 people Friday morning in Fairlawn.
Despite its low-fare, high-quality customer service business plan, Southwest has been profitable in each of the past 31 years. That's even as other higher-fare major airlines have been losing money from the aftermath of the Sept. 11 attacks, rising fuel costs and other industry turmoil.
Employee stock ownership and profit sharing play an important part in motivating Southwest employees and in meeting business goals, Parker said. He gave the keynote address at the 18th annual Kent State University-sponsored Ohio Employee Ownership Conference at the Akron Hilton West in Fairlawn. The event is aimed at helping employee-owned businesses throughout the state.
But having employees own significant parts of a business does not ensure success, Parker said.
The most important thing is to have leaders at every level in the company who understand the business's values and mission and who communicate regularly with employees, he said.
``It doesn't mean giving everybody everything they want. It does mean treating everyone with respect,'' Parker said. ``At Southwest Airlines we're all owners and we're all workers.''
It also helps to be creative.
Parker told a story about Southwest's early days, when it was struggling against larger competitors for flights just within Texas. Its only profitable route at the time cost travelers $26 one way, Parker said. Another airline decided to charge $13 for the same route, he said.
Southwest couldn't afford that, but took out newspaper advertisements saying that if people wanted to pay $13 for a flight, they would meet that price, Parker said. But if Southwest passengers paid $26, they'd each get a bottle of whiskey when they landed, he said. That promotion temporarily turned Southwest Airlines into one of the largest liquor distributors in Texas, he noted.
Southwest works to identify future leaders in the company and then provides them with a one-year training program.
The biggest mistake a company can do in troubling times is cut back on training, he said. (He quipped seconds earlier that the biggest mistake for a company is to cut back on travel.)
Southwest pays industry-competitive salaries and compensation, and about 80 percent of its employees belong to unions, Parker said. Members in all but one of Southwest's 11 unions get stock options, he said. The company has been negotiating nearly two years with the flight attendants' union, and a federal mediator has been called in to help.
The company's efficiencies keep it profitable, Parker said.
Southwest did not slash any jobs during the latest recession, Parker said. No one took a pay cut except for himself and the company president in 2002, he added.
The company takes care of its people, and the people take care of the company. ``It's just that simple,'' Parker said.
