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Southwest Airlines, soaring

In a brutal economy, few industries have been more knocked around than the poor airlines. Just take a look at which have either been trotted through bankruptcy court or have frantically tried to stave it off: United, US Airways, American, and more. Then there's Southwest, a perennial thorn in the other carriers' sides. Southwest not only survived the recession, but even managed to turn a profit. The strategies that helped the company through it: a near-fanatical approach to cost-savings, a training structure that instills the unique Southwest culture in every newly hired employee, and a consistent management style through the wildly fluctuating economy.

"It all goes back to [board chair] Herb Kelleher's mantra," says spokesman Ed Stewart. "In good times, manage as though bad times are just around the corner because they're sure to come."

And come they did. Beginning with 9/11, which hit the industry like a sledgehammer, Stewart remembers like it was yesterday. The frantic calls to friends at other airlines, the effort to make sure every Southwest plane got down immediately and safely. He also immediately knew, as other company execs did, that it could be the beginning of financial devastation for the sector. So, Southwest swung into action with a series of savvy fiscal moves.

First, Southwest already had US$1 billion in the bank from its "save for a rainy day" policy. Then it secured a credit line for another $435 million, though the airlines never had to draw it down. "We wanted to get our hands on as much cash as possible," remembers Stewart.

But that was only the beginning. Southwest started scouring for more cost-savings. Capital spending was slowed, including putting off receiving new planes from Boeing that were scheduled to arrive. No new cities were added to the roster of destinations. And hiring plans were scaled back, though there were no mass layoffs as at other airlines. Those strategies added to Southwest's traditional cost-savers, such as using lower-cost airports, flying direct between cities instead of having a hub system, and having only one type of plane, which cuts down on maintenance and parts costs.

But what about the company's training programs? Executives resisted the temptation to slash the budget even when the situation was at its bleakest. The University for People, including the company's famed training facility based in an old Dallas terminal with 40,000 square feet and $3 million in annual expenditures, was able to preserve its funding.

"We actually increased our training budget during that time," says Rita Bailey, university former director and now a consultant with QVF Partners in Carrollton, Texas. "It's our crown jewel, a place to come and feel inspired. I'd put the programs we developed against any others out there."

Hiring in the post-9/11 period slowed, reducing the number of people being funneled through Southwest's orientation programs, but the number of classes needed in the field had to be jacked up--from dealing with new security measures to coping with the emotional devastation of 9/11. "Any [airline] can fly 737s to different cities," says Stewart. "Our secret weapon is people, so we still had to invest in them."

That included keeping up morale in a time when a lot of people were scared to get on an airplane and the industry was under siege. Throw in that the contracts of much of Southwest's 37,000-member workforce were up for renegotiation, a prickly process that can often sink spirits.

"One of the highest demands out there right now is managing morale," says Eric Spanitz, a trainer with Synergest in Chicago. "I'll go into companies to train them on something else, and it turns out what they really want to learn is how to keep their people happier."

The folks at Southwest were still wise about how they spent their pennies. By having trainers venture into the field more often, for instance, the company reduced the funds needed to bring everyone to a central location. When it's necessary to use the main Dallas facility, Southwest is using what it already has, not renting pricey venues.

There was other program tweaking. Training became more targeted by focusing more on front-level supervisors, people with the most influence on the front lines," says Bailey. Leadership training initiatives for executives were scaled back temporarily, though they were subsequently reinstated. Stylistically, Southwest has tried its best to avoid "talking head" training. In keeping with its outgoing culture, it aims for experiences that are "interactive, with people sharing with each other instead of just sitting there," says Bailey.

By the way, Southwest eschews the word trainer. "We prefer to think of ourselves as tour guides," laughs Bailey. Indeed, that's a trend seen not only in Southwest's University for People but throughout the industry.

"These days, you have to engage employees emotionally," says Carter Andrews, a partner with Little Planet Learning in Nashville, Tennessee. "Just stand there and tell people something, and it'll bounce right off them. You have to show a real-life scenario, get them involved. That's what the better trainers are doing--and what the buyers are starting to insist on."

That kind of mutual engagement describes Southwest perfectly, where the trainers are the "keepers of the culture," says Bailey. In the most challenging period that any of its employees can remember, Southwest has been able to marshal the team spirit to get through it.

"We played a huge part in keeping that flame going. Because it's during the hard times that you need to invest in people the most."

Viacom, more than viable

Wall Street is littered with beleaguered media companies these days, including the king of them all, AOL Time Warner. Advertising is often the first to fall in a tough recession, hitting revenues right where it hurts. But through this windstorm, Viacom--owner of MTV, CBS, and UPN, among other assets--managed to come out with its trousers barely creased.

"It wasn't that there wasn't any pain," admits Susan Duffy, VP of corporate relations. "After all, half of our revenues come from the ad world. But we've weathered the storm because we're so well managed. Our management didn't change strategy because of the recession; [these are] the same things we've always been doing."

Staffers attribute the success to those at the helm of Viacom, crusty septuagenarian CEO Sumner Redstone and his president, Mel Karmazin. Though the two are said to share a frosty relationship, the partnership apparently works in running a company.

Viacom did face unique training challenges in recent years related to its merger with CBS--two workforces and two corporate cultures, each with its own way of doing things and developing employees. The merger did lead to some "efficiencies" (a palatable term for layoffs), but the training programs didn't find themselves under siege.

"We haven't stopped any of them, and I think that has been really important," says Betty Panarella, Viacom's VP of employee relations and development. Viacom has even added bits and pieces to its training palette in the past couple of years, including a tuition-assistance program and a College Coach to educate staffers about getting their kids through university.

Chicago-based consultant Eric Spanitz sees that kind of supercharged training as key to companies in organizational flux. "People are being shifted around so much these days, or placed in new positions, and they're expected to get more done than ever," he says. "But if you want people to get more done, you have to be able to show them how." To do that, Viacom has set up distinct divisions for its training programs, including the Manager's Toolkit, a basket of skills and leadership courses for execs, and a speaker series, in which heads of different arms of the business (and outside personalities) chat about their experiences and expertise. So that different divisions can benefit, the program is overseen by a 15-member training council, which meets once a month and shares training modules that are already in place.

"That's a big trend in the business, using your own internal experts," says Nierenberg. "It's both training and teambuilding. There are also major savings because you're not paying someone on the outside."