Positioning Southwest Airlines through employee branding

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					Business Horizons (2005) 48, 535 — 545


Positioning Southwest Airlines through employee
Sandra Jeanquart Miles*, W. Glynn Mangold

Department of Management, Marketing, and Business Administration,
College of Business and Public Affairs, Murray State University, Murray, KY 42071, USA

 KEYWORDS                                Abstract As the field of employee branding has begun to unfold, more and more
 Employee branding;                      executives have become interested in how this process can help them achieve a
 Internal marketing;                     competitive advantage for their organizations. This article explains how employee
 Psychological                           branding works and how it can be utilized to position the organization in the minds of
 contracts;                              customers, employees, and other stakeholders. A contextual analysis of its use as a
 Competitive                             source of sustainable competitive advantage at Southwest Airlines is presented.
 advantage;                              Finally, key success factors are identified for those who wish to make employee
 Southwest Airlines                      branding a strategic focus within their organizations.
                                         D 2005 Kelley School of Business, Indiana University. All rights reserved.

1. Employee branding and Southwest                                   desired brand image and are motivated to project
Airlines: A winning combination                                      the image to customers and other organizational
                                                                     constituentsQ (p. 68). The conceptualization pre-
Employee branding as a source of strategic com-                      sented along with this definition provided insight
petitive advantage has been a basis for discussion in                into how organizations could achieve a competitive
recent years. While practitioners focused on the                     advantage by strategically utilizing the employee
importance of employee branding and its positive                     branding process.
outcomes, their discourse often lacked focus be-                        In this work, we extend our previous conceptu-
cause they did not agree on the term’s definition or                 alization by presenting a contextual analysis of
its conceptualization. Clarity was added when our                    Southwest Airlines’ use of the employee branding
2004 Journal of Relationship Marketing article                       process to gain an organizational bpositionQ in the
(Miles & Mangold, 2004) defined employee branding                    minds of customers. Our extension also acknowl-
as bthe process by which employees internalize the                   edges the key role the organization’s mission and
                                                                     values play in the employee branding process, and
                                                                     recognizes that employees must have knowledge of
 T Corresponding author.
                                                                     the desired brand image if they are to project that
   E-mail addresses: (S.J. Miles)8       image to others. This analysis will lead to a better (W.G. Mangold).                        understanding of the use of employee branding as a
0007-6813/$ - see front matter D 2005 Kelley School of Business, Indiana University. All rights reserved.
536                                                                                             S.J. Miles, W.G. Mangold

positioning tool, and will clarify the manner in               benchmark for organizations in which managerial
which the employee branding process can be used                attention is focused on the use of employee branding
as a source of competitive advantage.                          to gain a competitive advantage.
   In the United States, Southwest Airlines has, by
most measures, been the most successful airline in
its industry. This success is largely due to the               2. The employee branding process
competitive advantage Southwest has gained by
effectively positioning the organization in custo-             The employee branding process enables the orga-
mers’ minds. Its organizational position has mainly            nization to consistently deliver its desired brand
been achieved through its human resource prac-                 image to customers, thereby solidifying a clear
tices, most of which fall under the rubric of                  position in the minds of customers and employees
employee branding. The receipt of the 2003                     alike. When done well, it provides a competitive
Kozmetsky Award for Branding Excellence and the                advantage that is achieved through employees,
2004 Performance Through People Award provides                 who have internalized the desired brand image
evidence of the effectiveness of Southwest’s posi-             and are motivated to project that image to
tioning and employee branding strategies. Other                customers and other organizational constituents.
notable achievements and recognitions of South-                   The employee branding process is represented in
west’s success are outlined in Table 1.                        Fig. 1. As the model indicates, the organization’s
   In a personal interview with the authors, Colleen           mission and values are the cornerstones of the
Barrett, President and Chief Operating Officer,                process: they state the organization’s reason for
attributed Southwest’s success to its employees.               being and give insight into the manner in which the
From a conceptual perspective, however, it may be              mission is to be accomplished. An organization’s
more accurate to say that Southwest’s success                  mission and values provide a foundation by which
appears to be largely founded on a complex process             the desired brand image is defined.
by which the company motivates employees to                       Messages transmitted within the organization
internalize and deliver the desired brand image.               should clearly convey the organization’s mission,
This motivational process is principally rooted in the         values, and desired brand image. They should also
concept of employee branding. The outcome is                   communicate the behaviors and attitudes the
readily observed by those who come into contact                organization deems important and expects from
with Southwest employees, and contributes heavily              employees. Perhaps most importantly, the mes-
to the position Southwest holds in customers’ minds.           sages must be proactively designed, and delivered
As such, Southwest appears to be an appropriate                frequently and consistently through all message

 Table 1     Southwest Airlines accomplishments
 Year            Award                                           Sponsor
 2004            Top Performing Companies                        Aviation Week and Space Technology
 2004            Performance Through People                      The Forum for People Performance and Measurement (2005)
 2003            America’s Top Ten Admired Companies             Fortune
 2003            Airline of the Year                             Air Transport Magazine
 2003            Corporate Conscience Award for Community        Social Accountability International
                 Positive Impact
 2003            Brand Keys Customer Loyalty Award               Brandweek
 2003            Most Pleasant Airline                 
 2003            Best Domestic Airline of the Year               Travel Weekly
 2003            World’s Most Socially Responsible Companies     Global Finance Magazine
 2003            Employer of Choice Among College Students       Fortune
 2002—2003       100 Best Corporate Citizens                     Business Ethics Magazine
 2002—2003       Best Reputation among U.S. airlines             Harris Interactive Inc. and the Reputation Institute
 2002—2003       Airline of the Year                             Air Couriers Conference of America
 2002—2003       Top 20 Companies for Leaders                    Chief Executive Magazine
 2001—2004       The 50 Most Desirable MBA Employers             Fortune
 2001—2003       Best Low Cost Airline                           Official Airline Guide
 2000—2003       Hispanic Corporate 100                          HISPANIC Magazine
 1997—2003       Most Admired Airline in the World               Fortune
 1972—2002       Best Performing Stock over the Thirty-year      Money Magazine
                 period from 1972—2002
 Source: Southwest Airlines fact sheet b (Southwest Airlines,
                                                                                                                                                        Positioning Southwest Airlines through employee branding
                                                Sources/Modes                  Employee’s                                              Outcomes
                                                 of Messages                    Psyche

                                              Internal                                                                          •    Position of
                                              Formal                                                                                 Organization and
                                              - Human Resource                                                                       its Offerings in
                                                Management                                                                           Customers’ Minds
                                                                                of Desired
                                                                               Brand Image
Organization’s            Desired             - Public Relations                                          Employee              •    Turnover
 Mission &                Brand                 Systems                                                    Brand
   Values                 Image               Informal                                                     Image                •    Employee
                                              - Culture/Coworker                                                                     Satisfaction
                                                Influence                     Psychological
                                              - Leaders/Managers                Contract
                                                                                                                                •    Customer
                                              Formal                                                                            •    Customer Loyalty
                                              -Advertising & PR
                                              Informal                                                                          •    Favorable
                                              -Customer Feedback                                                                     Reputation


         Adapted from: Miles, S. J., & Mangold, G. (2004). A conceptualization of the employee branding process. Journal of Relationship
                 Marketing, 3 (2/3), 65-87.

                                    Figure 1      A conceptualization of the employee branding process.

538                                                                                S.J. Miles, W.G. Mangold

channels if the employee branding process is to            As previously noted, Southwest Airlines is a
work effectively.                                       highly respected and successful organization. A
   Effective and consistent transmittal of messages     number of companies have studied Southwest
reflecting the organization’s mission and values will   and have met with varying degrees of success
accomplish two things. First, it will enable employ-    as they attempted to replicate its best practices
ees to know, understand, and experience the             in their own operations. Our contextual analysis of
desired brand image. Second, it will uphold the         Southwest’s use of the employee branding process
psychological contract that exists between the          to position the organization and its offerings in
organization and the individual employee. As            customers’ minds is intended to demonstrate how
Rousseau (1995) explains in Psychological Contracts     employee branding can contribute to a sustainable
in Organizations: Understanding Written and Un-         competitive advantage for the organization.
written Agreements, the psychological contract is
a perceptual agreement formed in employees’
minds about the terms and conditions of the             3. The positioning of Southwest Airlines
working relationship. It is a central component of      through employee branding
employee motivation and organizational life, in
                                                        The concept of bpositioningQ relates to the way
                                                        customers perceive products, services, or organiza-
   The psychological contract is also central to the
                                                        tions. Employee branding and positioning are
employee branding process, in that the degree to
                                                        inextricably linked when customers perceive that
which organizations uphold the psychological
                                                        the firm’s employees are closely connected to its
contract influences employees’ trust in their
                                                        offerings. Therefore, employee branding is central
employers and their motivation to serve custo-
                                                        to effective positioning strategies when the goal is
mers and co-workers. It also impacts their inter-
                                                        to position an organization, a service, or a product
actions with others, as well as their day-to-day
                                                        that is augmented with a service component. To
productivity. Even though the formation of the
                                                        clarify this relationship, the use of the employee
psychological contract is an individualized percep-
                                                        branding process to effectively position the South-
tual process, it is important to note that organi-
                                                        west Airlines organization and its service offerings
zations can shape employee perceptions and,
                                                        is discussed, with key success factors italicized.
hence, the foundation on which the psychological
contract is built.                                      3.1. Organizational mission and values
   Organizations build employees’ knowledge and
understanding of the desired brand image and            During her presentation at the 2000 Society for
influence the basis on which the psychological          Human Resource Management International Confer-
contract is built by consistently and frequently        ence, Libby Sartein, Vice President of People at
sending messages with mission- and value-based          Southwest, pointed out that a high level of customer
content. Inconsistent messages may result in con-       service is a key component of Southwest’s mission,
fusion for employees and create a perception of         and the value placed on customer service is virtually
duplicity on the part of the organization. In fact,     unquestioned by the company’s employees (Sartein,
inconsistent messages are likely to result in a         2000). This customer orientation is reflected clearly
violation of employees’ psychological contracts         in Southwest’s mission statement, which can be
and negatively influence employee turnover, pro-        found on their website (Southwest Airlines, 2003):
ductivity, and loyalty. The employee branding           bThe mission of Southwest Airlines is dedication to
process allows the organization to positively influ-    the highest quality of Customer Service delivered
ence and manage this perceptual exchange.               with a sense of warmth, friendliness, individual
   Employees who receive frequent and consistent        pride, and dCompany SpiritTQ (http://www.
messages will understand, experience, and be  
motivated to project the desired brand image to            Interestingly, though, the foundation of South-
others. The position the organization and its           west’s corporate message is not that customers are
offerings have in the minds of customers becomes        number one; rather, employees always come first
a source of sustainable competitive advantage           with the company, with customers a respected
when the desired brand image is consistent with         second. Southwest, in turn, expects its staff to
the image customers perceive. Successful employ-        extend customers the same level of warmth,
ee branding efforts also result in reduced employee     respect, and responsiveness they, themselves,
turnover, enhanced employee satisfaction, higher        receive. This approach stands in stark contrast to
levels of customer satisfaction and loyalty, and a      the bcustomers firstQ approach taken by most
favorable reputation among stakeholders.                service-oriented organizations.
Positioning Southwest Airlines through employee branding                                                539

   The centrality of customer service to the South-   3.2. Desired brand image
west mission has motivated the company to identify
key drivers of customer service and focus its         Desired brand image refers to the conceptualiza-
operational efforts on those drivers. In their        tion organizations want customers to have of them.
California Management Review article, Ford, Hea-      Southwest Airlines clearly articulates its desired
ton, and Brown (2001) pointed out that Southwest,     brand image to employees, as well as customers, on
through extensive research, found on-time flights     a daily basis. In fact, publicly available on its
with friendly service and low fares drove customer    website is Southwest’s formal Customer Service
satisfaction. The company’s leadership then used      Commitment Agreement, which spells out the
those drivers to guide its strategy for positioning   company’s pledge to provide safe, affordable,
the organization in customers’ minds. Thus,           reliable, timely, courteous, and efficient air trans-
breliable,Q bfriendly,Q and blow-pricedQ became the   portation (Southwest Airlines, 2005). It also lets
focus of Southwest’s positioning strategy.            customers know what to expect when things do not
   Southwest’s value system enables the company       go well; for example, the necessity of overbooking
to deliver the high levels of customer satisfaction   is explained, and customers are clearly told what to
promised in its mission statement. These values       expect if they should be bumped from their flights
are articulated in the 1995 Southwest Airlines        due to the practice.
video, bKeeping the Spirit AliveQ, (Southwest Air-        As pointed out in Nuts (Freiberg & Freiberg,
lines, 1995) as well as in the book, Nuts (Freiberg   1996), the desired brand image is brought to life at
& Freiberg, 1996). They include fun, love (or         Southwest through the terms bpositively outra-
bluv,Q in Southwest’s parlance), team spirit, and     geous serviceQ and bSouthwest Spirit.Q These terms
altruism (building warmth and respect among           were coined to communicate what employees were
employees, customers, and the community). Sup-        expected to deliver, and how they were expected
porting values that are deemed necessary to           to deliver it. Thus, the brand image desired of
deliver Southwest’s mission include profitability,    Southwest employees is one of bpositively outra-
cost-efficient operations, family, hard work, indi-   geous serviceQ provided in the bSouthwest SpiritQ.
viduality, ownership, egalitarianism, common              This clear articulation of the desired brand image
sense, and simplicity.                                packages the company’s mission and values in a way
   Southwest’s service-oriented environment is or-    that is easy for employees to internalize and retain.
chestrated by the factors just discussed: the clear   It also defines the manner in which staff members
statement of Southwest’s mission, discovery and       are expected to deliver customer service. There-
articulation of the factors that drive customer       fore, Southwest’s employees know they will be
satisfaction, and the implementation of a value       expected to deliver outstanding service to everyone
system that enables staff members to deliver high     with whom they come into contact, and understand
levels of customer service. Employees working in      what that means in terms of their individual
this environment feel empowered to solve custom-      behavior. They also know they can expect other
er problems, are extremely motivated to do what is    Southwest teammates to treat them just as well as
in the best interest of customers, and know their     they treat their customers, as bpositively outrageous
efforts will be supported and rewarded. Their         serviceQ and the bSouthwest SpiritQ apply to inter-
positive feelings and high levels of motivation, in   actions between employees, too.
turn, lead to operational efficiency. This opera-         The messages communicated through South-
tional efficiency, combined with a service-oriented   west’s organizational systems are carefully
environment, enables Southwest to pursue a posi-      designed to articulate and reinforce the desired
tioning strategy based on the key drivers of          brand image while reflecting the organization’s
customer satisfaction: affordable, safe, reliable,    underlying mission and values. The delivery of
timely, courteous, and efficient air transportation   frequent and consistent messages that reflect the
and baggage handling service.                         desired brand image is a key success factor in
   The articulation and reinforcement of the com-     Southwest’s use of employee branding to position
pany’s mission and values are a key success factor    the organization and its offerings in the minds of its
in Southwest’s use of the employee branding           customers. The sources and modes of those mes-
process to position the organization and its offer-   sages are discussed next.
ings in customers’ minds. Frequent and consistent     3.3. Sources/modes of messages
messages serve the dual purpose of communicating
and underpinning the desired brand image while        If employees are to project a positive image, they
influencing and reinforcing employees’ psycholo-      first need to know and experience the desired
gical contracts.                                      brand image, and understand that it is a natural
540                                                                                 S.J. Miles, W.G. Mangold

outgrowth of the organization’s mission and              and for relaying to employees the things the
values. Furthermore, they must be motivated to           organization deems important. As Jody Hoffer
project the desired brand image to others. At            Gittell (2003) points out in her book, The Southwest
Southwest, careful attention is paid to ensure the       Airlines Way, Southwest’s pay scale is comparable
messages emanating from all organizational sys-          to that of its competitors. However, Southwest
tems align with the company’s mission, values, and       pilots are paid by the flight rather than by the hour.
desired brand image. This alignment of messages          Like other employees, they also have stock options
across organizational message systems is a key           and profit sharing, which serve as incentives and
success factor in Southwest’s use of the employee        create a sense of ownership in the company.
branding process to position the organization and        Consequently, Southwest pilots take cost-efficiency
its offerings in its customers’ minds. The various       very seriously. It is not uncommon for Southwest
message sources at Southwest are highlighted             pilots to ask for runways that are closer to the
below.                                                   hanger or request a different altitude in order to
                                                         save fuel or time. Pilots also share cost-saving
3.3.1. Formal internal sources                           insights in the monthly company newsletter, Luv
Many of the formal messages at Southwest are             Lines. These insights help other Southwest pilots
communicated through the human resource man-             deliver high quality service, while minimizing costs
agement and public relations systems. The mes-           to the organization.
sages sent by the human resource management                 Southwest’s performance management system is
system (i.e., bPeople DepartmentQ) clearly rein-         used to align employee behaviors with organiza-
force the organization’s commitment to its               tional goals. This reinforces the desired brand
employees and to customer service. They also             image and other organizational messages by relat-
reinforce the values of fun, love, and teamwork.         ing to employees that while the company cares for
These themes are also clearly communicated in            them, it expects hard work and high levels of
advertisements and other communications                  customer service. Southwest sometimes lets
designed to attract employees to the organization.       employees know how much they are cared for by
For example, according to Nuts (Freiberg &               stepping in and helping individual employees,
Freiberg, 1996) and the article by Justin Martin         financially or otherwise, in their times of need. In
(2004) in Fortune Small Business, one company            fact, the level of responsiveness and compassion
recruitment ad communicated a desire for                 seen inside Southwest is virtually unheard of today
employees to color outside the lines, or operate         in corporate America.
in a manner that is a bit off-center.                       Like all companies, however, Southwest some-
   Prospective employees are carefully screened          times has employees who hurt the company’s
during the recruiting and selection process to           performance on a consistent basis. Human resource
ensure their attitudes and personal values are           mechanisms such as performance evaluations,
consistent with the organization’s values and            meetings with supervisors, and continuing training
desired brand image. For instance, Southwest does        provide these employees with opportunities to
not hire applicants who are not viewed as team           correct their behavior. Those unwilling or unable
players; those uncomfortable with the company’s          to improve their performance after having been
values are encouraged to self-select out of the          given opportunities to develop will find themselves
recruitment process.                                     displaced.
   Southwest’s training and development efforts             Southwest also uses its public relations system to
are designed to clarify and reinforce the behaviors      help employees internalize the company’s mission
and values the organization reveres. The training        and values. For example, Luv Lines consistently
available through the company’s University for           reinforces corporate values. In one issue, it used
People enables employees to identify with the            the metaphor of geese migration to emphasize the
organization, its culture, and its values, in addition   importance of teamwork. In other instances, it
to providing the basic knowledge and skills needed       relates stories that focus on how individual employ-
for the job. Other training is designed to orient        ees have performed heroic acts of customer
employees to the Southwest Spirit through such           service, or behaviors that are otherwise consistent
videos as bKeeping the Spirit Alive.Q Extensive job      with the company’s values.
training occurring in the employees’ departments
emphasizes leadership, personal development, and         3.3.2. Informal internal sources
the delivery of positively outrageous service.           The importance of the informal messages that flow
   Compensation is also a powerful tool for sending      between employees, supervisors, and friends at
messages that reinforce the desired brand image          Southwest is well known, and efforts are made to
Positioning Southwest Airlines through employee branding                                                  541

ensure these messages support the company’s             Southwest to reinforce the organization’s mission
pivotal values. Southwest understands that the          and values.
formation and reinforcement of appropriate em-             Public relations efforts create a caring image,
ployee behaviors is heavily influenced by organiza-     which is demonstrated through actions. Southwest
tional culture. The culture, in turn, influences and    recently took initiatives to help active duty soldiers
is influenced by the interactions that occur be-        reunite with their families by offering discounts and
tween coworkers. Southwest takes advantage of           waiving advance purchase requirements. The com-
this culture—coworker interaction through the use       pany was also awarded the 2001 Employer Support
of planned, coordinated activities and messages         Freedom Award, which is presented annually by the
that are consistent with Southwest’s mission and        Secretary of Defense in recognition of the nation’s
values.                                                 top companies that provide support above and
   The company’s informal messages are, to some         beyond what is required by law to their National
extent, formalized through its Culture Committees,      Guard and Reserve employees.
which work to foster the Southwest culture and             Like most organizations, Southwest uses adver-
promote company values such as profitability, hard      tising to attract customers. However, it also uses
work, low cost, love, and fun. Culture Committees       advertising to communicate its mission and values
are established in each Southwest location, with        to employees, and to demonstrate consistency
the national committee made up of representatives       between the messages delivered to customers and
from the local committees. In the words of Colleen      those delivered to staff. For example, during her
Barrett, the Culture Committees benhance culture        presentation at the 2000 Society for Human
where needed, fix culture if it is broken, and create   Resource Management Conference, Libby Sartein
culture in new places to help employees learn the       described how the company used an ad campaign
Southwest way of lifeQ (C. Barrett, personal com-       with the theme bSouthwest is a Symbol of Free-
munication, October 9, 2003).                           dom.Q The campaign targeted external audiences,
   Informal messages are also communicated              and communicated that Southwest’s low fares
through the interactions of employees with their        allow people to travel to places they would not
leaders. Great care is taken in selecting South-        otherwise be able to afford and do things they
west’s first line supervisors, as they are seen as      would not otherwise be able to do (Sartein,
the organization’s ambassadors to its most impor-       2000). A parallel internal promotional campaign
tant organizational constituent: its employees.         also focused on freedom. This one, titled bAt
These supervisors are encouraged to make sure           Southwest, Freedom Begins with Me,Q translated
their communications consistently reflect the           the extrinsic and intrinsic benefits of working at
organization’s mission and values, as well as the       Southwest into eight employee freedoms, such as
underlying principles of integrity and caring for       the freedom to blearn and growQ through personal
staff. Southwest’s bopen doorQ policy invites           and professional development.
employees to go to higher levels of management
when they feel that the organization’s mission,         3.3.4. Informal external sources
values, and underlying principles are not being         Informal external messages often come in the form
upheld by their immediate supervisors. This ap-         of customer feedback and word-of-mouth commu-
proach to organizational leadership results in          nications. At Southwest, word-of-mouth communi-
employee empowerment, and appears to contrib-           cation is widely understood, and is even addressed
ute to employees’ personal fulfillment and com-         in the company’s internal communications. As
mitment to the organization. In fact, it has led to     highlighted in Nuts (Freiberg & Freiberg, 1996),
union negotiations that eliminate rigid work rules      mathematical computations were featured in the
and job descriptions, thereby allowing staff mem-       company newsletter to illustrate how many custo-
bers to fix or deal with customer problems as they      mers could potentially be lost as a result of one bad
occur.                                                  service incident, due to the negative word-of-
                                                        mouth that is likely to result.
3.3.3. Formal external sources                             Customer letters, both good and bad, are also
Advertising and public relations are formal mes-        widely shared with employees. When bad service
sage sources normally associated with communi-          events occur and are reported, the employee or
cations directed to external audiences. However,        employees involved are contacted for their insights
employees and other internal constituents are           into the cause of the problem, and possible
also recipients of these messages; therefore,           solutions to prevent such a recurrence. While
advertising and public relations efforts are uti-       complaints are addressed and attempts are made
lized as part of the employee branding process at       to appease disgruntled customers, these do not
542                                                                                S.J. Miles, W.G. Mangold

necessarily come at the expense of the employee.           Consistently communicating the company’s
This manner of responding to and passing on             mission, values, and desired brand image enables
customer feedback sends an important message to         employees to know and understand the vision
employees: employees are first, and customers are       they are to project to others. Upholding employ-
second. It is never forgotten, however, that            ees’ psychological contracts is crucial in obtain-
employees are expected, in turn, to treat their         ing a positive emotional connection that will
customers like the company treats them: as though       motivate them to internalize and deliver on the
they were first.                                        desired brand image. Thus, developing employ-
   In summary, clear communication is essential         ees’ knowledge and understanding of the desired
to building and maintaining employees’ knowl-           brand image while shaping and upholding their
edge and understanding of the desired brand             psychological contracts is key in the use of the
image, and motivating them to project that              employee branding process to position Southwest
image to others. Southwest has been particularly        and its offerings in the minds of its customers.
successful at delivering parallel messages, which
carry the same theme, regardless of the intended        3.5. Employee brand image
                                                        The employee brand image refers to the image
                                                        employees project to those around them. The
3.4. The psychological contract                         employee brand image is likely to be aligned with
                                                        the desired company brand image when employees
An employee’s knowledge of the desired brand
                                                        know and understand the desired brand image, and
image and their willingness to project it to others
                                                        are sufficiently motivated to project it to others.
resides in their psyche. As previously illustrated,
                                                        An organizational position is created in the minds of
Southwest makes a great effort to ensure its
                                                        customers, fellow employees, and other stake-
messages are based on the company’s mission and
                                                        holders when this alignment is consistently
values, and that they are delivered consistently and
                                                        attained. Such positioning is difficult to achieve,
frequently. These efforts effectively develop
                                                        and few organizations are successful in doing so.
employees’ knowledge and understanding of the
                                                        When it is accomplished, however, it becomes a
desired brand image.
                                                        source of sustainable competitive advantage for
   The term bcovenantQ is used frequently at
                                                        the organization.
Southwest, and is fairly synonymous with the term
                                                           As discussed previously, Southwest takes a two-
bpsychological contract.Q Southwest’s psychological
                                                        pronged approach to managing the employee
contracts (i.e., covenant relationships) provide
                                                        brand image. First, it develops employees’ knowl-
guidelines for employees regarding both what is
                                                        edge and understanding of the desired brand
expected from them and what they can expect in
                                                        image by sending frequent and consistent mes-
return. This fulfillment of employees’ psychological
                                                        sages. These messages communicate what beha-
contracts has enabled the company to enjoy an
                                                        viors are appropriate and what responses are
enormous amount of trust on the part of its staff. It
                                                        suitable for a given situation. Second, Southwest
has also contributed to highly motivated workers
                                                        motivates its employees to deliver the desired
who have strong drives to deliver the desired brand
                                                        brand image by ensuring their psychological con-
image to those with whom they come into contact.
                                                        tracts are upheld. The upholding of psychological
   The extent to which the psychological con-
                                                        contracts is rooted in the practice of consistently
tracts of new Southwest employees have been
                                                        basing all organizational messages on the compa-
upheld is assessed through a process that is, to
                                                        ny’s mission, values, and desired brand image.
some extent, formalized. Staff members who
                                                        Southwest’s consistent message-sending (formal
have been with the company 9 months or less
                                                        and informal, internal and external) aligns the
are randomly selected and invited to have lunch
                                                        employee brand image with the desired brand
with Colleen Barrett and other Southwest execu-
                                                        image, and effectively positions the organization
tives. The informal conversations surrounding
                                                        and its service offerings in the minds of its
these luncheons are intended to provide insight
                                                        customers. This use of consistent messages to
into just how well the new employees’ expecta-
                                                        effectively manage the employee brand image is a
tions have been met (i.e., their psychological
                                                        key to Southwest’s employee branding success.
contracts have been upheld). Information is also
sought regarding where the company may be               3.6. The fruits of employee branding labors
going wrong and ways in which the recruitment,
selection, training, and orientation processes may      Effective employee branding programs have several
be improved.                                            favorable consequences. First, they enable organi-
Positioning Southwest Airlines through employee branding                                                 543

zations and their offerings to be effectively posi-     contracts suggest that union employees have a high
tioned in the minds of customers and other              level of trust and confidence in the company and its
organizational stakeholders. Effective employee         willingness to treat them well.
branding programs also result in increased employ-         Southwest’s effective use of employee branding
ee satisfaction and reduced staff turnover. Compa-      has also contributed to high levels of customer
nies engaging in successful employee branding           satisfaction. Southwest’s customer relations de-
efforts are also likely to benefit from higher levels   partment reports that it receives, on average, less
of customer satisfaction and loyalty, and a favor-      than one complaint for every 10,000 passengers
able overall reputation because the desired brand       boarded. The American Customer Satisfaction
image is being consistently reflected by employees.     Index (Transportation/Communications/Utilities
   These outcomes are clearly present at Southwest.     and Services, 2005) indicates that Southwest, with
The company and its offerings have attained a           a customer satisfaction score of 73, has signifi-
favorable position in customers’ minds. bPositively     cantly higher levels of customer satisfaction than
outrageous serviceQ is perceived to be delivered in     the other major airlines reported. Southwest’s
the bSouthwest Spirit.Q The consistency with which      scores are consistent with those of the smaller
this image is reflected among employees was             airlines that are consolidated into the index’s
recognized when the company received the 2003           botherQ category. Similarly, the United States
Kozmetsky Award for Branding Excellence in the 21st     Department of Transportation’s Air Travel Consum-
Century. One member of the panel of judges              er Report (2004) indicates that Southwest was the
indicated Southwest stood out from its competition      number two U.S. airline for the period January
because the brand image was consistently reflected,     through September 2004, with only 0.19 com-
from baggage handlers to executive offices to the       plaints per 100,000 enplanements; ExpressJet Air-
organization’s ethical underpinnings (University of     lines was number one with 0.13 complaints, and
Texas at Austin, 2003).                                 JetBlue Airways was number three with 0.30
   In 2004, the Medill School of Journalism at          complaints.
Northwestern University recognized the extent to           Southwest’s use of the employee branding pro-
which Southwest delivers bpositively outrageous         cess has also contributed to high levels of customer
serviceQ in the bSouthwest SpiritQ with its Perfor-     loyalty. Southwest was tied with JetBlue for first
mance Through People Award. This award is based         place in the airlines category of the Brand Keys
on a number of factors, including service to            Customer Loyalty Award for 2003, and was second
customers, the employer’s human resource initia-        to JetBlue for 2004 (BrandKeys, 2004). The annual
tives, the alignment of internal and external           Brand Keys Customer Loyalty Awards are based on a
marketing initiatives, and the link between people      series of surveys that probe customers’ relation-
performance management and profit.                      ships with 182 brands in 31 different categories.
   Southwest also enjoys the lowest employee               Finally, Southwest enjoys a favorable reputation
turnover rate and the highest level of employee         in the business community, which appears to be
satisfaction in the industry. According to Colleen      largely attributable to its effective use of employee
Barrett, Southwest’s employee turnover is consis-       branding to position the organization. Business
tently under 5%, with 4.59% for the years 2003 and      Ethics magazine rated Southwest Airlines among
2004. In an article in Fortune magazine, Nicholas       its 100 Best Corporate Citizens for the years 2000
Stein (2000) indicates that the average turnover        through 2004; in fact, it is the only airline to ever
rate for the airline industry is 20 to 30%. Jet Blue,   be included on the list. The Business Ethics rankings
Southwest’s closest market competitor, has a turn-      were compiled by KLD Research and Analytics of
over rate of 10 to 12%, according to a Workforce        Boston, with companies scored based on their
Management article by Eve Tahmincioglu (2004).          service to various groups, including employees,
   Each year, Fortune magazine conducts random          customers, and shareholders. Fortune magazine
surveys of employees to compile its list of b100 Best   has also, for the eighth year in a row, recognized
Companies to Work for in America.Q Southwest            Southwest in its Annual Survey of Corporate
ranked in the top five of the 100 best companies        Reputations. The survey identified Southwest as
for the years 1997, 1998, 1999, and 2000. Interest-     number two among America’s most admired cor-
ingly, the company chose not to devote the              porations for 2003. In addition, Southwest was
resources necessary to participate in the bbest         identified as the most admired airline in the world
companiesQ survey process after the year 2000.          for the years 1997 through 2003. Factors considered
Southwest’s high level of employee satisfaction is      in Fortune’s rankings included the ability to
also reflected in the fact that its union contracts     attract, develop, and keep talented people, the
are of very long duration. In general, long-term        quality of the organization’s products and services,
544                                                                                  S.J. Miles, W.G. Mangold

the quality of management, community and envi-           both employees and customers. As previously
ronmental responsibility, and financial soundness.       indicated, Colleen Barrett and other executives
   Southwest, like most other organizations, also        have luncheons with new employees to monitor
assesses its operational performance outcomes            whether their work-related expectations have been
with a variety of productivity metrics that are          met. When this is not the case, corrective action is
specific to the company and industry. For example,       taken to the fullest extent possible. In those
the percentage of departures that are bon-timeQ is       instances where corporate messages have created
closely monitored at Southwest and other airlines.       unrealistic expectations, efforts are made to iden-
Turnaround time, the time between an airplane’s          tify the source of the miscommunication and adjust
gate arrival and departure, is also carefully scruti-    the messages accordingly.
nized. As pointed out in the book, Nuts (Freiberg &         Southwest’s open door communication policy
Freiberg, 1996), efficient turnaround times require      enhances feedback from employees at all levels of
high levels of coordination between boarding             the organization. Staff are allowed and encour-
personnel, flight attendants, baggage handlers,          aged to express their concerns to managers,
and pilots. Southwest’s 20-min average turnaround        regardless of the manager’s level in the organiza-
time is the lowest in the industry by far, with 60% of   tion; even Colleen Barrett has an open door policy
the airplanes leaving within 15 min of arrival. These    for all employees. Corrective action is taken when
high levels of bturnQ translate into financial bene-     managers feel the organization has created an
fits, as they enable Southwest to serve its markets      injustice. In cases where managers feel the
with fewer airplanes and fewer gates.                    employees’ viewpoints are not supported, expla-
   The continuous monitoring of outcomes pertain-        nations are given as to why the organization acted
ing to such variables as employee satisfaction and       as it did. The process of continually using feed-
turnover, customer satisfaction and loyalty, its         back from customers and employees is yet another
reputation in the business community, and its            key success factor in Southwest’s use of the
internal performance metrics has enabled South-          employee branding process to position the organi-
west to build on its employee branding strengths         zation and its offerings in the minds of its
and to identify and address employee branding            customers.
problems while they are in their early stages. Thus,
the continuous monitoring of outcomes is another         4. A final word
key success factor in Southwest’s use of the
employee branding process to position the organi-        Organizations are continually seeking ways to
zation and its offerings in its customers’ minds.        retain customers and build brand loyalty by en-
                                                         hancing their images. A premise of this article is
3.7. Feedback                                            that employees vividly project an organizational
                                                         image to customers and other constituents. Wheth-
The feedback loop is a critical component of the         er the image is positive or negative is critical to the
employee branding process. It allows organizations       effective positioning of most organizations, espe-
to monitor the consequences of the process and to        cially those in the service sector.
identify areas for improvement. Failure to achieve          Our analysis of Southwest Airlines provides evi-
desired consequences suggests that the process be        dence that the employee branding process can be
re-examined for deficiencies in message design           used to effectively position the organization in the
and delivery. Fortunately, many of the conse-            minds of customers and other stakeholders. For this
quences of the employee branding process are             to happen, the mission and values must be carefully
readily observable and measurable. Statistics            thought out, and should give rise to the desired
pertaining to employee turnover are available            brand image. The messages emanating from the
through the organizations’ human resource                organization’s message systems should be proac-
departments. Accolades from the financial sector         tively designed to reflect the desired brand image,
and from industry and customer groups are                as well as the behaviors and attitudes the organiza-
another form of feedback. Validated scales are           tion expects and rewards. Then, the messages
available to assess employee and customer satis-         should be delivered frequently and consistently.
faction, as well as customer perceptions of service         Southwest Airlines’ successful use of employee
quality. Even word-of-mouth communications (ei-          branding to effectively position the organization
ther internal or external to the firm) can be            and its offerings has been described in this
assessed with reasonable accuracy.                       analysis. Other organizations can glean the bene-
   Southwest works very hard to gain feedback by         fits of employee branding by following Southwest’s
monitoring its outcomes, as well as the pulses of        example.
Positioning Southwest Airlines through employee branding                                                                      545

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