How Southwest Airlines Revamped Its Performance Management

For many organizations, performance management has become static and standardized. Robotic processes become another thing for employees to put on their to-do lists. Once the process is complete, everyone goes back to business as usual.

This type of process is also ineffective. 90% of employees report that performance reviews are painful and unproductive.

It’s not effective for management either. Traditional systems often lead to the following: 

• Lower levels of engagement
• Decreased performance
• Higher turnover rates

Southwest Airlines decided to do something about these common performance management issues. They designed a new system based on continuous feedback.

Read on to find out what Southwest Airlines performance management looks like today. Plus, learn how they evolved their old process.

Traditional Performance Management vs. Continuous Feedback

Traditional performance management systems have dominated the review process at many organizations. They’re comfortable and predictable, with a review that takes place once a year.

But this process is frustrating for employees. They want to know how they’re doing, and they don’t want to wait months to find out. 

In a study conducted by Adobe, 80% of the 1,500 employees polled said they prefer immediate feedback to annual reviews. Immediate feedback eliminates the anxiety that’s associated with waiting for a big annual review. Plus, it enables employees to make adjustments. They don’t have to find out that they have been doing things the wrong way for months.

Continuous feedback is a great alternative. It also happens to be part of performance management at Southwest Airlines.

With continuous performance management, you don’t have to wait until an annual review to discuss performance. Instead, frequent, trackable communication takes place throughout the year. Employees and managers discuss goals, correct performance, and discuss challenges in real-time. Everyone knows exactly where they stand. Because performance conversations happen frequently, employees don’t have to wonder if they’re on the right track.

Southwest Airlines Shifts to Continuous Feedback

Southwest Airlines’ principles of management include continuous feedback, but it wasn’t always that way. Southwest Airlines had to make changes to achieve a more effective performance management system. By following their lead, you can too.

Southwest Airlines' recognition of the need for change

Like many businesses, Southwest Airlines was addressing issues after the fact. They realized that feeling like you’re putting out fires isn’t a sustainable way to run a business. It’s definitely not a way to grow a business.

They wanted to address performance challenges before they become issues. To do that, they had to reevaluate their entire performance approach.

Factors that drove the company to reevaluate their performance management approach

You aren’t stuck with a process that isn’t working for you simply because that’s the way you’ve always done it.

You have to be willing to dig into your current performance management approach. Find out what you want it to do for your business, and what you can change to make it happen.

That’s exactly what Southwest Airlines did. Topics that encouraged the Southwest team to reevaluate their performance management approach include:

• Evolving business landscape and the need for agility
• The desire for greater employee engagement and development
• Alignment with the company's culture and values
• Southwest's commitment to creating a culture of continuous feedback

Evolving business landscape and the need for agility

Things change fast in the 21st Century. Businesses have to be able to change fast too to keep up.

This need for agility pushed Southwest Airlines to change its performance management approach. With continuous feedback, changes can happen right away. Adjustments can meet the demands of customers and the market in real-time instead of falling behind and trying to play catch up later.

A desire for greater employee engagement and development

The customer experience is important to Southwest Airlines. They realized that employees have to feel engaged to provide a superior customer service experience.

That means keeping the lines of communication open with continuous feedback. It also means providing employees with opportunities for development.

Alignment with the company's culture and values

Southwest Airlines has a culture of caring—caring for its people, its customers, and the wider community. For this to be true, they have to practice what they preach. That means Southwest Airlines’ performance management has to reflect its values.

A system of continuous feedback aligns with their company culture. The process isn't completely hierarchical. The employee perspective is an essential part of performance development at Southwest.

Southwest's commitment to creating a culture of continuous feedback

True continuous feedback isn’t something you can do sometimes, but not all the time. It requires a commitment.

Southwest Airlines took their time to conduct research and build a solid case approach before trying a pilot program. This enabled them to create a performance management system that serves everyone. It also gave them the time to create a clear approach that outlines expectations that everyone can understand and follow.

Implementation of Continuous Feedback at Southwest Airlines

Southwest's commitment to continuous performance management includes platforms that support real-time feedback. They make providing feedback easy so managers and employees can engage with the system on a regular basis.

Giving and receiving good feedback isn’t an innate skill. It’s one that can companies can teach, which is what Southwest Airlines does. They offer training and education to managers and employees on how to give and receive feedback. This makes the process of giving and receiving continuous feedback more effective—and more pleasant.

They also integrate feedback into regular performance discussions and coaching sessions. That way everyone is always tuned in to what they’re doing well and what needs work.

Benefits and outcomes of Southwest Airlines' approach

Implementing these three aspects of continuous feedback benefits employees, managers, and the company.

They include:

• Enhanced employee engagement and motivation
• Improved communication and collaboration across teams
• Increased agility and adaptability in response to changing business needs
• Higher levels of individual and team performance
• Retention of top talent and attraction of new talent

Enhanced employee engagement and motivation

The new performance management at Southwest Airlines ensures employees know where they stand. They receive feedback regularly. They have closer relationships with their managers, which greatly enhances engagement and motivation.

Coaching and professional development impact employee engagement and motivation too. When employees get support in their efforts to learn and grow, they’re motivated to do their best at work.

Improved communication and collaboration across teams

Teams are already communicating on a regular basis about performance. That means they are familiar and comfortable with each other. It’s easy to ask questions and start new projects that require collaboration. This makes for improved communication and greater collaboration.

Increased agility and adaptability in response to changing business needs

It’s easy to fall into bad habits that take months to change because feedback only comes around once a year. Regular feedback and open communication make it easy to identify potential issues. Plus, teams can make adjustments in weeks or days. That enables the organization to adapt more easily to changing business needs.

Higher levels of individual and team performance

More collaboration and communication make every employee feel like a valued member of the team. They feel more ownership over their work, and they understand exactly how it impacts the team. That means there are higher levels of performance on a regular basis.

Retention of top talent and attraction of new talent

Southwest created more opportunities for the positive feedback. That meant more employees felt valued enough to stick around for a while, reducing turnover.

A work environment with consistent feedback and ongoing support is appealing to new workers. It demonstrates a culture where employees matter, which encourages new talent to take up a role within the company.

Employee Perspectives on Continuous Feedback at Southwest Airlines

Their commitment to continuous feedback is effective, but it's also appreciated by employees. Feedback on Southwest’s performance management system is generally positive.

Employees on Glassdoor are saying,

"Everyone is supportive and welcoming personally and professionally. I feel valued as an employee. The company is open to feedback to improve with action items."

"We do some really cool stuff and we are true to who we are. Even our CEO says the employees are #1. It's a feedback and continuous improvement culture."

"Management is very in tune to their employees. Open door policy for managers, can contact them or meet with them no matter your level or status. They provide positive feedback to employees. For the size of the company, the communication is great."

Key Takeaways and Lessons Learned

Southwest Airlines' performance management had to change for the company to keep talent. The company did it by integrating continuous feedback into its daily operations.

They were able to integrate a new system because they have a strong leadership team. The team was willing to put the time into conducting research. They built a good approach and tried a pilot program. They worked out the kinks before implementing it completely. This ensured that the process was culturally aligned. Plus, it allowed for employee feedback to impact the process.

It’s all about taking things step-by-step, which is something you can do in your business as well. Implementation may take time, but at the end of the process, you’ll create a system that serves your company.