Waiting to Board at Southwest

Lately, most airlines have been besieged by irate customers, with Congress threatening to intervene. But Southwest soars above the pack. It has recorded the fewest customer complaints for the past eight years. It ranked at or near the top with best on-time performance and best baggage handling among the major airlines.

Southwest is a perennial "best place to work" company. Fortune ranked it as number four on its list of "100 Best Companies to Work for in America" in January 1999. The firm topped the list in 1998.

Southwest also seems to offer an attractive work environment. The company's Web site lists 1998 "Fun Facts":

• Southwest received 141,710 resumes and hired 4,115 new employees.

• Southwest burns about 74 million gallons of jet fuel per month.

• Southwest has 1,642 employees who have spouses who work for the company.

• Southwest served 8.7 million bags of raisins.

• Southwest gave its customers 86.9 million bags of peanuts.

But don't be fooled by the factoids. For consultants, Southwest Airlines is a tough nut to crack. Could it be that the airline is doing everything right, so why call in outside help? That's not necessarily the case. Consultants do wind up getting Southwest business, but membership in its "frequent consultants" club is hard to come by.

"We are not prone to using a lot of consulting firms, and the reason is that our culture is strong and unique," Libby Sartain, Southwest vice president, people, tells Consulting. "We had many instances when we hired consultants and they just didn't fit in."

Herb Kelleher, Southwest's famous cofounder, chairman, CEO, and president, has a reputation for dynamic leadership, a keen sense of humor, and a deep loyalty to his troops. He has generally worked well with consultants, although some, says Sartain, "have made him sour."

There's the story of a compensation consultant who told Kelleher that Southwest was paying its people all wrong and needed a new salary structure. Yet, all the signs were positive. Employees seemed happy by virtue of the airline's low turnover rate. Sartain contends that the consultant was comparing Southwest to other companies, "rather than looking at what made us successful and what made our compensation structure work."

Specifically how CEO Kelleher reacted to the consultant's advice is not known — other than the fact that he didn't take it too well, says Sartain.

Southwest is known for keeping things simple, not for complex strategies. It competes on price, and on its "no frills" approach to customer service. It flies only Boeing 737s and forgoes the "hub-and-spoke" system common to the other major carriers.

Moreover, the airline prefers to invest in its own people who consistently show high loyalty rather than in consultants. "If it's for a project that will be ongoing, we'd rather build the talent from within organization," explains Sartain.

Consultants who do get to work on Southwest engagements, especially if their specialty is IT, may well find themselves being won over by the attractive corporate culture. "We used a lot of information system consultants because we weren't able to find and hire the talent we needed. We have done a good job of luring some of those people to work for us on a full-time basis," says Sartain.

Consulting projects at Southwest often involve tweaking the company's cost structure. "We hired consultants for different initiatives on costs savings projects," says Sartain. In some cases, those projects have already yielded results. "And in other cases, we found we spent a lot of money and really didn't realize some of the cost savings that we had anticipated, or at least we weren't able to quantify them."

Be forewarned. If you want to make the grade as first-class consultant on Southwest's crew, you've got to be a team player. One of the key attributes that the airline seeks out in both its employees and its consultants is a good attitude that blends in with its culture of high productivity and self-sacrifice.

The company consistently looks for people who look out for the good of the company. That's the loyalty factor that many attribute to Kelleher's management style. "One of the things that happens with consultants that is just the kiss of death is that so often they have their own agenda," notes Sartain.

She has had scores of first-hand experiences with consultants who didn't work out well for the airline. In one instance, Sartain recalls, Southwest hired an ergonomics specialist to evaluate the safety and comfort of its work stations and then recommend changes. The consultant suggested new equipment. Guess what? She later discovered that he owned the firm that manufactured the equipment.

In another case, the airline brought in an HR consultant to assist in creating a new benefits program. The firm indicated that there was only one system available capable of maintaining the data and analysis required to run the plan. "By the way," says Sartain with a tinge of annoyance, "it was their own system."

Libby Sartain is quick to note that flying with consultants isn't always a bumpy ride.

She says that Southwest has had successful projects with such firms as Ernst & Young, Towers Perrin, and Current Assets. But she reserves her strongest accolades for Hewitt Associates.

"We've worked with Hewitt Associates for about 12 years. When we first started working with them, we had a lot of conflicts. So we sat down with them and said, 'This isn't working for us. We want you to be a team player with us and we want your expertise,'" explains Sartain. She goes on to note that the consulting firm began assigning team members who fit the Southwest culture. The relationship has evolved to the point that, says Sartain, "we like to believe that it's become a partnership between Hewitt and Southwest."

The fact is that Southwest has moved most of its employee benefits consulting projects to Hewitt, and includes them in most company activities.

"We view them as part of the team," says Sartain. The airline recently held its big company bash, "Peoplefest." "Hewitt consultants flew in and worked behind the concession stands as if they were our own employees. When someone leaves, we have a going away party for him or her."

Keep Focus on Costs

Consulting firms vying for a share of Southwest's business would do well to focus on cost efficiency as a central component of their proposals. The airline seeks a cost benefit in almost all of its projects.

"We try to cost-justify anything we do, because our objective of being a low-fare airline is to keep our costs as low as we can so that we can keep our fares as low as we can for our customers," says Libby Sartain.

Like most client firms, Southwest thinks consulting fees are on the expensive side. But the company will pay a premium if it receives a bigger payoff in terms of saved costs.

According to Sartain, Southwest is in the process of reviewing its relationships with consultants and all of its professional fees. "We will feature a sort of zero-based budgeting look."

As a rule of thumb, Southwest requires that the consultants it meets prior to the engagement will be on the team it will be working with on the project. Says Sartain: "Some consulting firms will have one person come in and sell the business and then send in a different team to actually do the business. You might have picked the firm based on the people you met on the engagement process rather than the people you are actually working with."

If consultants hope to have a shot at navigating Southwest as a client, they need to study the company and the culture like a flight plan and listen carefully to try to ascertain its unique needs. "I think consultants kick themselves in the foot by thinking that this is just like the last engagement they had and that everything is going to be the same," comments Sartain.

In the final analysis, Southwest will continue to use consultants, in Sartain's words, "where they can create a cost savings or a great value for our customers."

Sidebar: The People's Choice

Southwest Airlines doesn't have a "human resources" department. All traditional HR activities are handled by the People Department. Libby Sartain, who goes by the title of vice president, people, oversees a staff of 200 and directs all human resources functions for over 28,000 employees.

Libby has been an HR specialist for 22 years, half of that with Southwest. She was promoted to her present position in January 1995. She earned an M.B.A. in personnel administration from the University of North Texas after receiving a B.B.A. from Southern Methodist University.

"Why a People Department?" asked Consulting. "To us, 'people' covers all the traditional human resources functions in a company. And because Southwest has a culture that is very strongly people-oriented, using the term 'human resources management' just didn't fit the scope of things for us," says Sartain. "Human resources almost sounds like people are nothing more than a resource, like fuel, engines, or something like that."