Southwest Airlines proves that our American business system is broken

 Sinclair Lewis said, "I love America, but I don't like it." He meant, of course, that the idea of America is brilliant but our execution of our ideals too often falls way short.

Consider Southwest Airlines, the largest airline inside the US. Forty years ago, Southwest was a brilliant upstart that revolutionized the airline industry. Southwest uses a dispersed point to point system, unlike the "hub and spoke" system the other airlines use. This is great for fliers, because they get more direct flight choices, but it's harder to recover from a major disaster like the recent polar plunge, because flight crews have to be located (and rested) in more locations, under the Southwest model.

And, Southwest's use of an antiquated (1990s!) software scheduling system, which is mostly a manual system, made this issue much worse, and resulted in Southwest's having to cancel most of its flights, days after the weather event had ended. The other airlines use more-modern scheduling systems, and are canceling only a tiny number of flights daily now.

How does this relate to the Sinclair Lewis comment? If Southwest had put its customers ahead of its profits, then any half-decent officer staff at the airline would've long ago implemented a modern scheduling system, and would have extra planes and flight crew staff ready for disasters like this one. This is what's wrong with American business: When "all that matters" is maximizing profits for shareholders, then a company's employees and customers get mistreated, sometimes so much so that we all have to admit we must scrap the system entirely and find a better way.

There is a better way, if only more businesses would implement it:
a. Declare that employees and customers come first--a fiduciary duty to care for them foremost. This means high-level employee training and benefits, and incentives for employees to improve their abilities and to remain with the company.
b. Once employees and customers are well taken care of, only then do shareholders get anything. And the shareholder share is limited to one-third of profits--the rank and file employees, who are the ones most-responsible for a company's success, get 2/3 of the rest, and the customers get the rest as a rebate to reward them for using the company's products/services.
c. Senior officers can't earn (including incentive comp) more than 10x what the least-paid employees earn. (And even that is too much--I've met very few senior officers who are worth 10x more).

If we implement this, we'll quickly see a reconstruction of a healthy, happy middle class, and more-satisfied customers, which means a stronger economy, and we will see senior management doing its job better. It is a sustainable system that will prevent the rising risk of class war. Well worth considering.

(photo credit: istock)