Communications Strategies for Integrations

Southwest Airlines Communicates about Its Integration with AirTran

Communication is a reflection of culture

Celebrating its fortieth birthday is the centerpiece in its June 2011 “40th Anniversary Special” edition of its Southwest Airlines “Spirit” in-flight magazine.  Southwest has a very open style of communication and nurtures the idea that it knows how to have fun but at the same time is serious about what it needs to be serious about.  One of the things that it is serious about is providing a certain kind of experience for it stakeholders.  A feature article in the Anniversary Special is “Welcome to the Herb and Gary Show”, a back and forth conversational/banter interview between former CEO Herb Kelleher and current CEO Gary Kelly.  They both were very much enjoying themselves doing the session and it shows in their informal, yet substantial conversation.  The session is a platform to inform its Spirit readers on issues that are both important to the airline and to its passenger/customers.

At one point Kelleher asks Kelly:   “What do you think is our biggest challenge in integrating AirTran – provided the Justice Department approves the acquisition?”

Kelly responds: “AirTran is a  really high quality operation.  They just ranked No. 1 in the annual airline quality study.  They’re not broken in the sense that we have to rush in and fix something.  That allows us to focus on their people and the melding of our two companies.  We’ll want the Southwest Airlines culture to not just survive this but to be the result of this marriage.   And what I think I would ask our Southwest folks to do is to truly and genuinely embrace these new family members, just like they would any new employee, respecting the fact that AirTran brings a lot for us, and we’ll be able to prosper more because of the acquisition of AirTran.  I think we are off to a wonderful start.  We’ll have a lot of exciting new destinations to add to the Southwest route map, and it’ll really position us for some exciting growth opportunities in the future.”

Benefits of a strategic communications approach for all stakeholders

Kelly clear gives credit to AirTran, which has had a troubled past, as not being broken but as a value creating partner.  Also, see how he encourages his current Southwest team employees to extend themselves to AirTran employees as “new family members.”  This is emblematic of the Southwest culture and driving operating principles.  Following this path is making a difference in the integration.  One of the thorniest issues in an airline integration is combining pilot seniority lists.  US Airlines is still working through this issue three years after America West acquired it.  Yet with Southwest, the Southwest Airlines Pilots Association and the Air Line Pilots Association reached an agreement in principle on an “integrated seniority list and transition plan for its pilots.  The agreement governs how AirTran pilots will be place in Southwest’s pilot seniority list, something crucial to pilots since it determines pay and bidding for schedules and routes.  Similar agreements with flight attendants and mechanics will follow.  As Southwest COO, Michael Van de Ven put it, “The unions and company negotiating teams have accomplished a task that is rare in the industry”, resolving seniority issues without going to outside arbitration.

A strategic communications strategy has many benefits, including financial ones that are frequently overlooked.    Southwest demonstrates that as a values based company it can have the edge in carrying out a complex integration, including real dollar value that supports the company’s bottom line.  It is aggressively implementing its communication strategy throughout all dimensions of the integration process.  Creative use of values can cut the cycle time for working through integration issues, increase performance levels and make Southwest a more attractive airline for passengers and therefore investors as well.  Unfortunately, the norm is to ignore this powerful engine and concentrate on the mechanics and cost savings aspects of an integration, often a too narrow approach.  Companies focusing primarily on cutting financial cost cutting synergies and domination of the acquired company are less successful in their integration outcomes, and also tend to be haunted by long term unresolved conflicts that drag on for many years thereafter.

What does this mean for You?

Potentially a great deal.  Find out by comparing Southwest’s communications strategy with its competitors that are going through their own integrations now: United/Continental and Northwest/Delta.  You will see noteworthy differences.  Ask which airline is doing a better job with its integration approach and how it is dealing with its stakeholders.  Then follow up with a comparison of Southwest’s approach with your own corporate communications strategy for implementations.

Pass your thoughts and learnings back to the Newsletter.   We would like to use them to continue this conversation going into the future, looking at different kinds of companies in different sectors, different sizes and different extents of integrations are fashioning and implementing their integration communications strategies.

Managing Internal and External Communications

The challenge of communicating on issues, status, and goals of such a complex undertaking a major integration to multiple stakeholder audiences is daunting.  However, you want your stakeholders to believe that they have a valued relationship with your new company.  You need to ensure that each and every one of them feels that your company has made an honest effort to apprise them of any significant changes that could be of relevance to them.  From the beginning of the integration and onward, you want to show all of these stakeholders that you have a positive story.  At the same time you don’t want to over promise.  Therefore, you must be consistent, active in maintaining contact, and authentic in your communications.

In any large, complex acquisition there will be conflicts of interest among stakeholders.  The new company has to anticipate what these arrays of interests are and be prepared to address them starting on Day One.  Here are a few areas that stakeholders want continuing communications:

• Employees are concerned about employment security and advancement opportunities.
• Customers want to know if they have an assured supply of goods and services, if the service levels will be maintained, and if there will be any differences in pricing or in the products or services offered.
• Suppliers want to know if they will continue to have a relationship with the new company and if there be any changes in demands or terms.
• Financial analysts want know if the acquisition will lead to significant cost cutting and higher profit margins.
• Regulators have requirements that they need satisfied so they need to know that your company can meet those requirements.
• The local communities in which your company operates want to know if your company will continue to operate its business there, what demands may be placed on them by your new company, or what new prospects might unfold.

It has repeatedly been said the secret of success in an integration implementation is that a company cannot communicate too much, too often and through too many vehicles.   If good communication does not take root, poor communication becomes the de facto norm, as was the case during the US Airways, DaimlerChrysler, and Sprint Nextel integrations.  Poorly planned and executed communications lead to distrust, undermine collaboration, and result in low levels of performance.  Your new company can never afford poor communication, but you especially cannot afford it during the stressful and rapidly changing integration implementation period.