Ethics and Southwest Airlines

Southwest Airlines has always been devoted to each and every community that we serve. Our Employees, Customers, and neighbors make the Southwest Family the LUVing place that it is, and we are proud to offer our cities more than just friendly and affordable air

service. We offer our hearts! Thousands of times each year, Southwest Airlines and its Employees reach out to individuals, families, and entire communities providing help where it is needed. (Southwest 1)
This statement is the declaration Southwest makes about its social responsibility for all to read on their corporate website. Southwest also earns the distinction of having been listed as one of the top 100 Best Corporate Citizens (Kostigen 2) since the inception of the list by KLD Research and Analytics, INC.

Southwest Airlines started in 1971 when Rollin King and Herb Kelleher joined forces to start an airline and began services between Dallas, Houston, and San Antonio, Texas. By the end of 1976, Southwest had carried its one millionth and the company was given the opportunity to extend its routes across the southwest. It was listed on the New York Stock Exchange in 1977. “In 1984, Southwest was ranked the number one airline in terms of customer satisfaction for the fourth consecutive year (Marketline 3)”. In 1995, Southwest became the first major airline to introduce a ticket-less travel, eliminating the need to print a paper ticket and in 1996, the airline began offering internet ticket-less travel sales. Southwest became the fifth largest major airline in the US in 1999 after 28 years in service. With respect to its stakeholders, Southwest Airlines acts in an ethical and socially responsible manner. Company stakeholders include stockholders, passengers, communities, employees and business partners (suppliers, airports). It does this through a variety of means.

To determine how Southwest Airlines acts ethically one only need to look at what ethics is and how modern business ethics has developed. “ethics in business is simply the application of everyday moral or ethical norms to business”. (De George 4) In the United States ethics seems to focus on the ethical actions of individuals. Most people when discussing business ethics raise examples of immoral or unethical activity by individuals. Included with this is the criticism of multinational corporations that use child labor, pay pitifully low wages to employees in less developed countries and might use suppliers that run sweat shops. “Many business persons are strongly influenced by their religious beliefs and the ethical norms that they have been taught as part of their religion, and apply these norms in their business activities.” (De George 4) Much of the history of ethics can be found in religious contexts. Not only do many historians say the ten commandments of the bible are part of the foundation of ethics but they also reference the writings of Aristotle and other theologians and philosophers throughout the ages. Some historians go as far as to ascribe ethics to very specific groups. “Protestantism made business ethics possible…” (Vogel 5) The religious beliefs during the time of ST Thomas Aquinas was that any sort of money making and profit taking was morally suspect and surely damned the merchant to the fires of hell. In more modern times there is less correlation between what is considered ethical and the thoughts or “concepts of sin, evil or divine judgment. Nevertheless, we remain no less preoccupied with the relationship.” (Vogel 5) There are still people today that think monetary success must be directly related to unethical acts or behavior. Is just doing the right thing for you stakeholders the only part of business ethics? No, not at all, being socially responsible as well as ethical is something most companies including Southwest Airlines strive for.

“Corporate social responsibility (CSR) means that a corporation should be held accountable for any of its actions that affect people, their communities, and their environment…However, being socially responsible does not mean that a company must abandon its other missions.” (Lawrence 6) When it comes to corporate social responsibility, “CSR has many different manifestations. In one way or another, however, its common thread is the goal of integrating the public interest into the corporation’s mission.” (Senser 7) Robert Sensor a activist and frequent author on the topic of human rights and the rights of workers in developing nations asks the questions it corporate social responsibility just a tool for large corporations to circumvent governments and for governments to abdicate their duties and responsibilities to its citizens to the global corporation? Another point of view was expressed at the 2002 World Summit. “…its key message: The private sector has a duty to contribute to the evolution of equitable and sustainable communities and societies.” (Blake 8) Blake also goes on to describe that it is in the best interest of a business to practice corporate social responsibility. “Few companies can succeed in a society—or indeed, a global economy—that fails. By generating economic growth, creating jobs, behaving with integrity, and paying taxes, businesses can contribute to society’s development and play a full role as corporate citizens.” Blake describes a three step process or phase, starting with the first step/phase that is the most basic and may or may not reap immediate benefits but sets the foundation on which a business can build the rest of its programs.

Basic issues such as safety, the effect on the environment and standard employee relations fall into this first phase. Part two, the businesses process pushes the basics to beyond what is regulatory and is a company doing better on its own accord. The company would take initiative to strive to be better than just meeting the standard. This could mean anything from a company going green before government regulations require them to or advancing employee relations with liberal flex time for mothers or offering day care in the work place. The third phase is that of “the innovator” and because of all the previous efforts the company becomes the one that others want to be involved with. At this level a company’s reputation is secure, in fact a company with excellent social responsibility would be more likely to receive sympathy and the benefit of the doubt should trouble or scandal strike. Though great economists and business men of the past felt profit was the only responsibility a company had to its stakeholders, corporate responsibility is here and likely here to stay. The challenge for companies is not just taking care of the people at home but being good global citizens as well.

The definition of global citizenship is different depending on where you are on the globe. The culture of where you are definitely effects the definition of what is a good global citizen. In the case of a U.S. based corporations that “Corporate citizenship in the United State reflects a peculiar mix of U.S. values and ideologies that are both its strengths and its vulnerabilities. “ (Googins 9) According to the U. S. Chamber of Commerce:
Corporate citizenship programs have tended to follow economic investments, not precede them. Increasingly, companies and chambers of commerce are studying how signify-cant social investments may lead to economic benefits. While some companies take great pains to separate their philanthropic activities from their business, other companies find that programs that are related to their company’s competencies, assets, values, and interests are generally more sustainable. (BCLC 10)

Corporate citizenship is putting corporate social responsibility to work (Lawrence 6). The focus is on a total company concept instead of just focusing on profits. While any company worth their salt will always ensure the social and philanthropic avenues they pursue will also benefit them, the benefits are not always tangible but can be seen in improved reputation and customer loyalty which are invaluable to any business in this age of dramatic change and upheaval in all markets.

How does Southwest Airlines embody these concepts, enabling them to be recognized as a top corporate citizen? In regards to Southwest’s treatment of its shareholders you could say the bottom line has always been good. The first quarter of fiscal year 2008 was the one hundred and twenty fifth quarterly dividends that Southwest has distributed. This is over thirty years of quarterly dividends, if that alone is not taking care of shareholders I am not sure what is. On the other end of the spectrum is how Southwest treats those that enable the shareholders the chance of those quarterly dividends, the passengers. The fact that they are the only major carrier to remain profitable in every quarter since September 11, 2001. “In an industry plagued with struggles to make profits and to keep employees and customers happy, Southwest Airlines has been profitable for an industry-record 33 continuous years. It enjoys a total market value that exceeds that of the other Fortune 500 airlines combined.” (BCLC 11) The airline industry has been going through a tough phase over the past few years and some airlines have had to declare bankruptcy. Southwest keeps on generating profits.

There is clear evidence that Southwest acts ethically, socially responsibly and as a good citizen with its passengers. Southwest was so confident of this; they allowed television cameras to record its daily activities and broadcast footage which aired on cable television as the show Airline. Southwest has the passengers in mind when moving to a new airport. “Before Southwest, travelers flying out of Norfolk were paying some of the highest fares in the nation. Norfolk’s average fare was the 18th highest of 83 airports surveyed by federal transportation officials.” (AP 12) Southwest moved in and offered a more affordable product forcing competitors to match it or move out. Providing it passengers a quality product at the very core of what Southwest chooses to do. For those who have ever ridden with Southwest they do not find the usual stuffy navy uniforms of the other major carriers but casual (but nice) clothed attendants that like to smile, joke and generally make the flying experience as positive as possible.

Southwest is committed to provide its customers great service with a twenty eight page “Customer Service Commitment” that details all the services Southwest promises to provide to each and every customer. It encourages customers to ask questions and promises that Southwest will attempt to provide each passenger with a positive experience. The way Southwest shows ethics, corporate social responsibility and global citizenship in regards to its passengers is in the way every patron is treated with respect and that while Southwest makes a profit it is not on the backs of its customers but through smart business acumen.

In reference to how Southwest shows ethical behavior, corporate social responsibility and global citizenship in regards to the communities it operates in is fairly simple. Southwest is usually welcomed with open arms in each community that it moves to. Not only does Southwest bring competition and lower air fares but jobs and community service. Southwest employees participate in numerous charitable drives. Southwest employees build teams and participate in the “Walk for the Cure” nationwide, they support the Sacramento, CA Ronald McDonald House, and paint over graffiti in Dallas, TX. Their efforts are not just limited to the cities they call home. Southwest employees donated over fifty thousand dollars towards Share the Spirit, an initiative to donate thousands of phone cards to deploying U.S. troops so they could stay in touch with loved ones at home. This is just the tip of the iceberg in regards to Southwest giving back to the community. They assist children that are burn victims attend the annual Parkland Burn Camp. (Southwest 13) Their generosity and willingness to help others show the social responsibility and citizenship that all companies strive to achieve. This is a fantastic symbiotic relationship for Southwest. They have a fantastic reputation that has been built on great service and good works.

Southwest attributes much of its success to its employees. The current president of Southwest Airlines, Colleen Barrett started at Southwest as a secretary and moved her way up through the ranks. Southwest currently employees more than thirty three thousand employees across the United States with new hubs and jobs opening almost every month. The Southwest mission statement to employees is as follows
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 14)

Southwest Airlines engenders “fanatically loyal customers who regularly write letters to CEO Herb Kelleher to say “Wow! I’m impressed!”?” By putting its employees first, according to Kathy Pettit, director of customers. By making them feel appreciated and valued…Each employee gets a birthday card from Herb Kelleher on his or her birthday. (HMS 15) Southwest also rewards employees monthly for their hard work and ensures the employees have a vested interest in the companies success. “15 percent of Southwest’s pretax operating income is invested in profit-sharing, and 25 percent of each employee’s account is invested in Southwest stock.” (HMS 15) When the airline does well, so do the employees.

The last but not leased stakeholder in Southwest Airlines is its business partners. Those that do business with Southwest on a daily, weekly, monthly or even yearly basis. Southwest has worked with smaller airports and increase the local business ten fold. In Chicago, IL instead of taking on the overcrowded O’Hare airport it struck a deal with Midway, a smaller in airport. They offered consumers an alternative that resulted in less wait time and an easier commute to and from the airport. They do the same thing in Dallas, TX. Instead of fighting the traffic to the main airport, Southwest is located in the city at Love field and provides a much easier travel experience than the busy Dallas International Airport. This helps all involved with Southwest while also helping to revive or maintain small local airports. Southwest also wants to help its suppliers. It does not just do business with the large brand names like Coke. The Supplier diversity program “…was designed to enable Southwest to extend opportunities to qualified Small, Disadvantaged, HUBZone, Minority, Women, Veteran and Service Disabled Veteran-Owned Businesses (Diverse Businesses). It is the goal of this program to assist Diverse Businesses in their development as competitive suppliers of products and services.” (Southwest 16) Southwest is known for approaching it partners slightly differently. With a make unions your partners, not your enemies and build relationships with your suppliers how could a business not want to deal with Southwest? “The Southwest Airlines Way that success stems from the ability to build and sustain strong relationships among everyone involved in the airline… also unions and suppliers” (Gittell 17)

Southwest Airlines deserves to be on the best corporate citizen list and I believe it will be there for many years to come. Southwest is not about the big showmanship that has sent so many other competitors to bankruptcy. Smart business choices, great relationships with the employees, communities, shareholders and business partners has propelled Southwest into a very profitable enterprise. As the only airline that has made a profit for the past thirty four years I surmise that they are on the right track. One future obstacle that is looming over Southwest and has its competitors ready to pounce is the impending retirement of one of the founders and its president. The challenge for Southwest will be to keep up the good works while still providing a sound product. While it seems simple the act of balancing the desires for profit of the shareholders with being a good corporate steward and citizen can be daunting during times of change and upheaval. I wish Southwest the best of luck and look forward to 2008 when they begin to provide service to Honolulu, HI.

WORKS CITED

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