Herb Kelleher Management Style - Essay Example

?Introduction People consider Herb Kelleher as brilliant, friendly, charming, funny, unassuming, cunning, and tough. He likes referring to himself asMetternich of the Metroplex. Furthermore, he is hard working, fun loving and has the ability to identify and implement business opportunities. He has insatiable appetite for better and larger opportunities. He also discovered that combination of law and business opportunities was going to bring about good results. His high energy drive gave him the ability and stamina to handle challenging public life. DuBrin (2008) explained that a charismatic leader lead and influence others using personal charm, inspiration and emotion. This defines Herb Kelleher who was energetic, action oriented, visionary and inspiring. A number of leaders have emerged in the business realm to inspire and motivate employees in their organization to work hard and produce enviable results (Takougang 2004). True leaders are hard to come by because they are in short supply (Finkelstein et al 2007). Some of the outstanding leaders include; Jeff Bezoz, chief executive officer Amazon.co; Richard Branson, chief executive officer Virgin Group; Steven Jobs, chief executive officer Apple Computer; William Gates, who is chairman of Microsoft; and Herb Kelleher, chairman of Southwest Airlines among many others (Mockler 2002). The above leaders appeal to the hearts of their employees. Herb Kelleher is an outstanding leader who through years has demonstrated great abilities running Southwest Airlines. The success of Southwest Airlines is largely attributed to exemplary leadership of Herb Kelleher. To understand who Herb Kelleher is, it is important to state part of his autobiography. Herb Kelleher Herb Kelleher who is a last born in the family of four, a husband to Joan Negley and father of four children was born on 12 March, 1931 to Harry Kelleher and Ruth Moore. He went to Haddon Heights High School and further proceeded to Wesleyan University for Bachelors of Arts degree in English literature and New York University for a Law degree. While he was a little boy, he spent six summers working at Campbell’s Soap factory where his father was a general manager. Kelleher worked as a warehouse foreman, soap chef and analyst. He became an associate of Lum, Biunno and Tompkins between 1959 and 1961. Between 1961 and 1969, Herb Kelleher was a partner at Nowlin, Macfarlane and Barrett. He became a senior partner of Oppenheimer, Rosenberg, Kelleher and Wheatley between 1971 and 1982. In addition, he worked as a legal counsel for Southwest Airlines Company from 1966 to 1982. In the years that followed from 1982 to 2001, Herb Kelleher was appointed chairman, chief executive officer and president of Southwest Airlines Company. In 2001, he stepped down as chief executive officer and president of Southwest Airlines Company but retained his chairmanship. In 2007, Herb Kelleher steeped down as a chairman. He further resigned from board of directors of the company in 2008. However, he was to be an employee of the company for five years from 2008. This is because though he was advancing in age, his services were needed. Herb Kelleher was appointed chairman of Federal Reserve Bank of Dallas in 2010 for 2011-2013. Herb Kelleher is a distinguished leader who has been awarded for his exemplary leadership performance by chief executive, Texas monthly and Fortune. In addition, Franklin Institute awarded him Bower Award for Business Leadership in 2003 (Reference for Business). Herb Kelleher management style Herb Kelleher leadership skills and style was acquired when he worked at soaps factory where he learned the value of hard work. Furthermore, his work ethics was shaped by his mother who developed a special bond with him. For example, he sat with his mother in the kitchen until wee hours of the morning discussing business, politics and ethics. His mother (Irish woman) instilled him with the importance of treating people with respect. His mother also taught him to be egalitarian and judge people on merit rather than appearance. As he grew up, he acquired leadership skills which were applied when he was still learning at high school and college. He became a president of his junior school, letterman in basketball and track and football team captain. Furthermore, he became Philadelphia’s Bulletin branch manager at a tender age. This is the age when he acquired and practiced leadership skills that became important in his future life and career. Ryan (2007) stated that Herb Kelleher used entrepreneurial management style to lead Southwest Airline, which has been unique and highly effective in its own way. He promoted three key believes in the work place which include; work should be fun; work is important; and people are important. Kelleher received a lot of support from his vice president Colleen Barrett. It is very absurd if customers of Southwest Airline failed to hear flight crews sing and crack jokes over the speaker system of the plane. Pilots assisted other crew to load and clean cabins if that was important to keep the plane on schedule. Kelleher promoted job revelry, laughter and individuality at all times. In addition, headquarters of Southwest Airline was like a massive scrap book. The walls of the headquarters are covered with letters, cards, employee photographs that included their family members and pets taken and made at the expense of the company. Kelleher had crafted and nurtured a wonderful corporate culture beautified by humor, kindness, good old-fashioned straight talks and altruism (Eugene n. d.). Kelleher set up a local culture committee headed by his vice president that was responsible for explaining and implementing company’s egalitarian values to each employee when a new location was created. Characteristics of Herb Kelleher Conger and Kanungo (1998) stated that Herb Keller was an entrepreneur who built Southwest Airline to $1.5 billion from nothing. He possessed entrepreneurial tendencies or characteristics. He is a moderate risk taker. This is evident when he took out some loans to purchase 1.8 percent shareholding in Southwest Airline when it was being started. He is also creative and innovative. He chose to fly between pairs of cities that are closer (about 375 miles only) unlike other companies. It also chose uncongested airports such as Love Field and Detroit City airports. To show a different mindset, Herb Kelleher’s company did not provide assigned seats and food as compared to other airlines. It only offers peanuts or crackers to keep passengers busy. The company has developed some ingenious ways of keeping their customers engage when there is some problem in the company’s processes. For example, when there are some delays at the boarding gate, employees may award a customer with largest hole in his socks with a prize to amuse and make customers feel at ease. Kelleher is extremely detailed oriented and understand every aspect of the airline business. He monitors every significant action in the company. For example, he must authorize expenditure above $ 1000 to remind employees that he is in control and sends message to all employees that they are being watched. To remain price competitive, Keller monitors airline’s key performance indicators and align all its activities and actions to meet the needs of the industry. This is evident as Kelleher monitor’s cost per available seat mile and adjusts its prices just below that of the industry. He is fun loving. Kelleher is always at the centre of festivities that are common in company’s headquarters party deck. In such parties, he can be seen in the middle of a crowd with cigarette and drink often at hand. Festivities are celebrated on special occasions such as sending off a retiring employee, rewarding employees and celebrating employee birthdays among others. In addition, he likes alcohol and is unrepentant about it. This is evident because he loved parties and public stunts. At times, he dressed like Elvis and the Easter Bunny. He always created fun in the work place. Furthermore, he loved cigarettes and bourbon. Kelleher was a good communicator. He was a good orator who used his words and body language well every time he was communicating with people, either as individuals, group or team (Finkelstein et al 2007). He was always applauded as he shared his jokes with crowds. For example, he once told the employees at a meeting that he was a project vomitor. Kelleher was a positive thinker. When he was diagnosed with prostrate cancer, he was not worried and he believed that he was going to get well and continue leading productive and active life as usual. He even joked that the growth of cancer was too slow to allow him live additional years and let him retire before he dies. As a result, Kelleher fully recovered from the devastating disease and he is living a productive life. Herb Kelleher is an avid reader and spends much of his free time reading. He likes reading autobiographies of great people such as Winston Churchill whom he regards as personal heroes. Herb Kelleher is tough and aggressive (Hulsing 2008). Kelleher likes old-fashioned dog fight if attacked by competitors. He not only warned competitors not to try any fight, but he also promised them big and terrible rivalry because he can also attack unprovoked. He can wage serious rivalry against its competitors bearing in mind that his fleet can fly 1400 miles without stopping. He further revealed that if competitors try to eat into his short flight market size, he will acquire 737-700s fleet capable to transcend beyond continents. If competitors strike his market, he promised to enter into longer and lucrative Houston -Newark route and compete against Continental airlines. If United Airline tries to compete, Kelleher may launch low cost service from New York to San Francisco. Leadership strategies Herb Kelleher takes cost cutting seriously. Southwest Airline sells about half of its tickets directly to its customers saving about $30 million annually. Furthermore, the company chose to fly 737 aircrafts because the plane is simplified and does not warrant extensive flight-crew training. In addition, the aircrafts are cheaper to maintain (Salvendy 2001). This enables the company to save millions of dollars annually. To ensure that funds are disbursed for worthy causes only, Herb Kelleher approves all expenditures above $1000. He always hired people with the right attitude. Kelleher recruits and selects employees who can offer spontaneous humor. The people who wish to be employees of the company should have the ability satisfy themselves and deliver results in a collegial environment. Southwest recruitment and selection does not regard education and expertise as important because they can always train their employees well in their areas of operation. This is because the company is keener on individuals’ attitudes. Therefore, for one to be employed in Southwest Airlines, he or she must be humorous, enthusiastic, optimistic, self-starter, good communicators, confident and decision-maker. Furthermore, a person should be in a position to work as a team and value team results more than his or her own. He developed Southwest Airlines Training Centre at it headquarters to train its new employees on people’s skills. Employees are taught about body language, good communication skills and positive reinforcement. He is rewarding. The company developed employees oriented reward system (profit sharing) whereby 15% of net profit of the company is distributed to all its employees. All the monies from the reward system arrangement are contributed to 401 (k) plans. Kelleher has ingenious ways of developing and nurturing human spirit and kindness (Thompson and Martin, 2005). Some observers of the company have likened the strong bond existing between employees and the company as a religious cult. Kelleher respects his employees and stay with them when they experience troubles and difficulties in their lives. He understands fully that people are critical resource in the company and has never lost sight of it. Implications for organization effectiveness When Herb Kelleher was the chairman, Chief Executive Officer and president of Southwest Airlines Company for over 30 years, the company made profits all through. In addition, during his Tenure, Southwest Airlines Company produced highest returns to shareholders as compared to other companies in the S&P 500. Some analysts revealed that since inception, the company’s earnings grew by over 25 percent annually. As a result, a number of investors have been attracted to invest in company’s shares. Southwest Airlines transformed domestic air travel. It has become dominant and driving force behind all changes occurring in the airline industry. Through Kelleher’s leadership, employees in the company are more productive as compared to employees of other players in the airline industry. Kelleher get the best out of his employees and this has given the company a competitive edge. This is because it has allowed the company to utilize its assets accordingly. Furthermore, employees of the company are willing to go an extra mile in their jobs when the situation demand without complaining because working environment has been made extremely conducive. For example, pilots may go an extra mile to man the boarding gate if ticketing delays than necessary while ticketing agents may help process clients’ luggage. The employees offered unmatched customer services. This is because employees find their jobs in the company satisfying and rewarding. To employees, working has been an adventure. The employees of the company are more loyal than before to the company and the bond between them is the strongest as compared to other companies. Herb Kelleher has been recognized and awarded a number of awards for his exemplary leadership, which has enabled the company to compete with other larger airlines in the industry effectively. The company has been able to differentiate itself from the other players in the airline industry. It has provided fast, lower cost and high quality services to its passengers. It values its people and has developed a corporate culture that inspires and motivates its employees to give their best. The company has also improved its operations manifold. The turn around time for each aircraft is between 15 -20 minutes, which is less time as compared to one hour average of other airlines. Due to improved operations, the company’s aircrafts makes up to ten flights daily each as compared to 5 flights average each of other airlines. Therefore, the company demonstrates on time flights, highest customer satisfaction and best baggage handling due to improved operations. The management under the captainship of Kelleher has maintained good labor relations and celebrated every labor related issued settled. For example, an analyst from Wall Street witnessed a time when Kelleher leapt to his feet and kissed one of the female employees of the company who surrounded him when they were having lunch at company’s cafeteria to celebrate a settled agreement between the company and its flight attendants. Because of good labor relations that the company has maintained with its employees, it has only experienced one minor employee strike (day walk out) involving mechanics that lasted for six days only. The company has also maintained a record of never laying of any single employee. Kelleher’s labor relation talent has enabled labor unions to identify itself with the company (Kuratko and Hodgetts, 2008). Kelleher made his employees to be receptive and accommodating. Immediately Southwest Airline acquired Morris Air, many employees of Southwest sent cards, company T-shirts and candy spontaneously to Morris employees to welcome them into their company. Kelleher has trained its employees to surprise, amuse and entertain their customers to some degree of satisfaction. Challenges he encountered and how he solved the when he was in leadership Every entity has it own challenges that make it extremely hard to manage. Southwest Airline Company faced a myriad of challenges especially when it was being formed. The biggest challenge experienced by Herb Kelleher was furious legal battles with players in the aviation industry. When Southwest Airlines decided to enter into the aviation market in the United States, there was a lot of fighting waged by airline companies. He fought over 30 different court battles and injunctions filed by players in the industry. In fact Braniff and Texas International airlines were able to delay entry of Southwest Airline into the market for mo re than five years through litigations. In 1969, Southwest Airline was running out of money and its board of directors was intending to close down the company but Herb Kelleher asked them to persevere a little while. Finally, the company won court battles and started operations on June 18, 1971. Changing legislations was a headache to Herb Kelleher. Wright amendments impacted on the company significantly. It was a legislation crafted by United States Representative James Wright to counter the action of Kelleher to venture beyond Texas in 1970’s. This hampered company’s growth prospects. Wrights legislation (amendment) prohibited airlines flying out of Love Field airport from transporting passengers from states that did not bordered Texas. This is because Texas Airline felt that Southwest Airline will infringe on its market. Under his leadership, Kelleher experienced extreme rivalry from its competitors. The competitors include United, USAir, Continental and Delta airlines. They decide to launch low cost short haul carriers and tried to reproduce Kelleher operation style. However, it became extremely difficult for competitors to adapt to its operational and cultural cohesiveness of reliability and standards of service. Kelleher had to deal with edgy Morris pilots who where concerned of losing their seniority but were awarded temporary cash bonuses as a strategy to shut them up until they attain seniority position as per company’s standards. Herb Kelleher is just like any other individual and has suffered some serious illnesses. In 2000 aged 69 years, he was diagnosed with prostrate cancer and underwent series of 42 radiation successful treatments (Brooker, 2000). Though the revelation of his sickness bothered stakeholders of South West Airline, it did not make him despair. He considered prostrate cancer as a normal issue that he had to pass through and often joked about it. Herb Kelleher continued working when he was undergoing treatment and never missed a single day at work. At the old age, his eyes are a bit rheumy. Conclusion Kelleher has trained its probable successors. He has institutionalized company’s crucial operating systems, especially financial and human resource controls to ensure that the company lives on even if he ceases to exist. However, stakeholders worry that when Kelleher leaves the company, the company may face leadership crisis. This is because Herb Kelleher was talented and gifted in leadership. He is inspiring cheerleading and kind. Since leadership skills can be acquired through learning, it will be possible for succeeding persons to borrow one or two skills from Kelleher. However, some characteristics such as charm may not be learned and therefore, succeeding leaders may find it hard to fit into Kelleher’s shoes. References Brooker, 2000, Can Anyone Replace Herb? [SOUTHWEST AIRLINES NO. 339] Kelleher's manic stamp is all over Southwest. If he goes, what happens to its famous culture? , April 23 2011, . Conger, AJ & Kanungo, NR 1998, Charismatic leadership in organizations, 2 edn, Sage, California. DuBrin, JA 2008, Essentials of Management, 8th edn, Cengage Learning, Mason. Eugene D. n.d, Southwest Airlines and the Succession of Herb Kelleher, University of Notre Dame, April 23 2011, . Finkelstein, S, Harvey, C & Lawton, T 2007, Breakout strategy: meeting the challenge of double-digit growth, McGraw-Hill Professional, New York. Finkelstein, S, Harvey,C & Lawton, T 2007,Breakout strategy: meeting the challenge of double-digit growth, McGraw-Hill Professional, New York. Hulsing, R 2008, Leadership and Entrepreneurial Success: The Relationship of Leadership Factors and Economically Successful Entrepreneurial Endeavors, Russell Hulsing, Florida, Kuratko, FD & Hodgetts, MR 2008, Entrepreneurship: Theory, Process, and Practice, 8th edn, Cengage Learning, Mason,USA. Mockler, JR 2002, Multinational strategic management: an integrative entrepreneurial context-specific process, Routledge, London. Reference for Business, Herb Kelleher 1931— Biography, April 23 2011, . 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