Southwest Airlines is a well-respected company with a great culture. Late Southwest founder Herb Kelleher believed that happy employees make customers happy, which makes shareholders happy and the company continues in that vein. The HR strategy is to select, develop, and reward people who put that vision into practice, despite challenges like worsening storms and delays in the delivery of new jets.

Even with Southwest’s winning culture that keeps turnover low, there are challenges. Many of their current pilots are reaching the U.S. retirement age of 65, which will result in a shortage of pilots. Another challenge was the grounding of the Boeing 737 Max, which caused cancelled flights and a shortage of aircraft.

Southwest responded to the pilot shortage by launching Destination 225, which offers four pathways to a pilot’s license while teaching Southwest’s values. The cadet pathway is for interested candidates without previous flying experience. The university pathway partners with several universities to prepare students studying for a bachelor’s degree. The military pathway gives military helicopter pilots experience with fixed-wing aircraft. And the employee pathway connects existing employees with pilot training appropriate for their background. Those who complete the training are eligible to apply to fly for Southwest.

Southwest also provides training for its employees. For pilots and flight attendants, training programs are critical and require sophisticated facilities. Southwest recently built a pilot training center in Dallas with 18 flight simulators, as well as a training center for flight attendants. Every year, thousands of employees visit Dallas for training.

In the same year Southwest was dealing with the 737 MAX groundings, it was continuing contract negotiations with its mechanics, who have been worried about outsourcing. Southwest’s management complained that during the negotiations, mechanics were finding minor maintenance issues (say, a missing row number in the cabin) just to cause flight cancellations. In the first half of the year, following a week of mediation, Southwest and the union reached an agreement calling for higher pay and promises to maintain a specified headcount.

While Southwest negotiated with Boeing for the hit to its profits, the Southwest Airlines Pilots Association sued Boeing for the pay lost when pilots’ flight time was cut back. For pilots, the problems with the 737 MAX have been about more than money. Pilots are responsible for getting passengers safely to their destination, and their trust was shaken by what some describe as a failure to provide proper training, which resulted in two fatal crashes.

Questions for Discussion

1. What conditions present challenges to Southwest Airlines as it tries to fill its need for people who give customers a happy flying experience? What conditions help Southwest meet the challenges?

2. Southwest used some of the settlement money from Boeing to increase employees’ profit sharing above the previous year’s amount, even though profits were down. Do you agree that this was a smart HR decision? Why or why not?

3. Besides the examples described in the case, what other HR efforts could enable or encourage Southwest employees to live out the vision of making customers happy?