Case Study:
The Importance of Morale
Although he downplays his role in the success of the company, former CEO
Herb Kelleher
personifies the honest and caring leader who is committed to his people and who cares about their
morale. As CEO, Kelleher spent his business day making sure employees believed in themselves and
their company, and he did this in his own unique way. He smoked, arm-wrestled, drank Wild Turkey,
rapped in music videos-and he loved it. His employees loved him, too. Kelleher states, “You can’t just
lead by the numbers. We’ve always believed that business should be enjoyable as well.”
Kelleher’s attention to morale paid big dividends for Southwest Airlines.
When he became
CEO in 1982, the airline had just 27 planes, $270 million in revenues, 2,100 employees, and
flights to 14 cities. By the time of his retirement in 2001, Southwest had become a $5.7 billion
business with 30,000 employees and was flying to 57 cities. At $14 billion, Southwest’s market
capitalization was bigger than American’s, United’s, and Continental’s combined. Most
astounding of all was that, since the company first earned a profit in 1973, it never lost a penny. In
an industry plagued by fare wars, oil crises, and other disasters, this is an amazing
accomplishment-traced primarily to a
caring leader who cared about his people.
It is interesting to note that Kelleher was succeeded by his former secretary, Colleen Barrett, in 2001.
What happened to the company? Its performance got better, additional testimony to Kelleher‘s
leadership ability. Of course, when asked, both Kelleher and Barrett (now “president emeritus”) are
certain to assign Southwest Airlines success to “our people.” It is not surprising that in a 2013 interview,
Kelleher described his leadership philosophy as follows: When employees are having problems, be
there; when things are going well, stay out of their way.
Objective:
Study the value of employee morale as it relates to their level of satisfaction and company success.
Summary:
This is a classic case where the CEO of Southwest Airlines (SWA), Herb Kelleher, set the standard for
raising and maintaining employee morale to the extent that SWA never lost money during his tenure. He
credited his “people” for the success of the company. An integral part of this success was the morale of
the employees since Kelleher wanted SWA to be an enjoyable place to work.
The Importance of Morale
Discussion Questions:
1. Discuss the role of the leader in creating a high-morale, high-performance workplace.
2. What morale-building policies and practices do you recommend?
Teaching Points:
✓ Employee attitudes are affected when they:
o do not have satisfying work;
o feel that no one is listening to their concerns;
o are not being rewarded fairly and equitably;
o lack pride in their work;
o not willing to assist other employees and/or customers;
o do not live by the organization’s code of values (e.g., truth, trust, and respect
in all their interactions);
o not willing to suggest solutions to or act on production and/or service
“opportunities” that will improve the work flow; or
o exhibit irresponsible behavior (what one says or does). Any or all of theses
actions can lead to “Morale Causalities” which can destroy a productive team
environment. pp. 309 – 310, 329, 404 – 407, 427.
✓ Leaders can help in avoiding an employee becoming a contagious morale causality by
being an effective teacher, coach, and mentor and assist each employee in meeting their
mutually agreed upon “personal development plan.” pp. 371 – 392, 375 – 378.
✓ Leaders need to be “change agents” as they assist employees in turning issues, concerns,
and problems into opportunities.
✓ Use Exercise 10.1 – “Leadership Report Card” as a discussion session, pp. 188 – 193.
Students are randomly assigned a discussion item and given five minutes to study it and
The Importance of Morale
then read and explain the stated rationale to the class. Each student rates him/herself or a
current/former leader on the 21 traits of effective leadership.
✓ Assign the students to take The Morale Survey, Exercise 10 – 2, pp.196 – 198 and ask an
essay question on the quiz covering this chapter.
✓ Discuss each of the 10 factors leaders need to address in order to create and maintain high
employee/team morale and performance, p. 201.
✓ Introduce the students to Csikszentmihalyi’s Concept of Flow which is the confluence of
job challenge and skill. See Figure 10 – 3 on pp.201 – 202.
✓ Discuss the leader’s role in living the values of Trust and Respect, pp. 209 – 210.
Related AOL 6 Text Information to Support Your Class Discussion:
o As the class leader, share what actions you take to enhance student morale. pp. 194 –
200.
o Detail the actions taken by leaders in your career who were effective at raising your
morale related to the nine suggested actions on p. 195.
o Discuss the 12 principles of effective human relations and their value to becoming a
quality leader respected by her/his team. pp. 205 – 208.
NOTE: We routinely research the subject of our specific case assignment to determine changes
in vision, mission, leadership team, new product development, financials, current
national/global news events, etc., prior to the class discussion. An example of this is found in
the Introduction section preceding our suggestions for using Case Analyses in your class. We
have used Hewlett-Packard as a sample for all the cases since this form of organizational
information is fluid and possibly time sensitive.