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Ann Rhoades – Building Values Driven Cultures That Outperform – EP.199

Ann was the VP of People at Southwest Airlines with founder Herb Kelleher and was a founding executive as VP of People, and eventually a board member of JetBlue Airways.

Episode Description

Ep.199: Alex (@aebridgeman) is joined by Ann Rhoades (@Ann_Rhoades).

I’m thrilled to share my episode today with Ann Rhoades on building values-driven cultures that drive outperformance. Ann was the VP of People at Southwest Airlines with founder Herb Kelleher and was a founding executive as VP of People, and eventually a board member of JetBlue Airways. She has also worked with companies like Doubletree Hotels, P.F. Changs, Restoration Hardware, and countless others through her consulting and research firm, People Ink.

Our discussion focused on building and maintaining values-driven companies from the perspective of the CEO and how they can drive the process forward. One of my favorite takeaways was the importance of tying your values to behaviors, providing real-life examples of how to act in accordance with your values. It’s one thing to announce your core values to your team, but tying them to their everyday roles is crucial. We also talked about how to hire based on values, employee retention, continuous improvement, and how strong values-driven cultures create category leading companies. Please enjoy this fantastic episode with Ann Rhoades.

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Clips From This Episode

Common Obstacles for CEOs in Implementing Values

Retaining A-Players

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(00:00:00) – Intro

(00:03:46) – Why values are so important

(00:14:24) – Ann’s career path and key experiences that led to building a high-performance culture

(00:24:50) – Typical symptoms of a lackluster culture

(00:27:25) – Implementing values

(00:30:22) – The most common obstacles CEOs have in implementing values

(00:32:46) – Having a values-focused hiring process

(00:47:27) – Connecting values to behaviors

(00:50:01) – Tools and systems to measure how an org is living the values

(00:52:50) – Retaining A-players

(00:55:03) – Advice to CEOs looking to build stronger cultures

Alex Bridgeman: As I was researching for our podcast, I loved your story of hiring the bank teller who’s having nice gifts being brought out of the bank. And that really stuck in my mind as a great story for why values are really important.

Ann Rhoades:  It was great. It was one of my first jobs, actually. I was a head of an HR department for a large bank holding company. And I hired a head teller, looking at the resumes, of course, that we received, which was typical then. And actually, as we noticed every day after we hired her, she would go out for lunch, come back, and then go home with these beautifully wrapped packages. It was Christmas time, or holiday time. And eventually we found out what she was taking out in those packages was actually money from the fault. When we did an audit, we realized we were missing an awful lot of cash. Somebody got some great Christmas gifts. But it taught me that I shouldn’t just be looking at past experience. I ought to be looking at the person and what their values are, besides just the competencies from past experience. And if you talk to most CEOs, they’ll tell you that the times that they’ve had to let people go, it really wasn’t for a lack of experience, it was because they weren’t a match for the values of the organization.

Alex Bridgeman:  Yeah, you’ve talked about only firing due to values, not on mistakes. It sounds like that’s a lesson learned through that time period, too.

Ann Rhoades:  It is and it definitely was my mistake, and of course, hers too. But it was my mistake. Because I had some great learnings, I started looking at people very differently in terms of who I hired and why I hired them. And it literally taught me to start looking at something other than what is their experience and what are they telling me, but rather who they are, what the behaviors are around the values of the organization. Are they a complement to our values and behaviors? The behavioral part is critically important. Her behaviors were not a compliment our organization, especially in banking.

Alex Bridgeman:  Yeah, certainly. So, you’ve been a part of some really exciting and dynamic organizations like Southwest Airlines, JetBlue, Doubletree. What led you from that, hiring the teller, to all of these different organizations? What’s the connecting thread across these different experiences you’ve had?

Ann Rhoades:  The interesting thread was leaving banking and then going to Southwest, who is driven by their values and have been. I mean, literally, they were successful because of their values. They only have three. One is a sense of humor, which you notice every single time you fly. And the other one is warrior spirit because we didn’t have a great deal of money for marketing and for so many things, and we counted on people to care and think like an owner in the organization. They were all part of a profit sharing plan that we had. But I learned at Southwest that it really was about the values and the behaviors of the organization. If you want to build a great brand, and you want people to think like an owner, literally they need to be part then of understanding what that entails, in other words, what are the objectives of the company, what are the values of the company, how do I assist them in being successful, all critical components of A players, as I call them.

Alex Bridgeman:  Yeah, certainly. And, of course, a focus on A players and there’s all these different components of the culture model that you assemble, like discipline and accountability or rewarding, continuous discipline and some others. But in thinking more about the model for culture you have today, there’s a couple of components that come into that, things like continuous discipline, rewards, and hiring A players. How did you assemble the pieces of this model over time? Obviously, your direct experience with Southwest and JetBlue helped inform that model. But what were some key experiences that pulled these components together for you?

Ann Rhoades:  Well, again, Southwest is where I developed the model of the five components we believe make up a high performing culture model. And the first was you have to have the right players on the bus. So, hiring after you define your values and the behaviors, reciprocal behaviors, because without the behaviors, which really many companies lack, no one understands what it means. So, if you said warrior spirit, if you didn’t have four or five behaviors behind that, so people understood that were coming in the organization, part of the organization what warrior spirit meant, you wouldn’t get the kind of consistency of behavior. So first of all, you define the values and behaviors, and then you hire people that have those values and that behave in a way that mirrors those behaviors you’ve looked at and want to see consistent throughout the organization. And the third thing that you mentioned, accountability and rewards, accountability is all about holding people accountable for getting the right results the right way, which is by using the values consistently and driving results through the use of values. We can all get- After 9/11, and we were in New York building JetBlue, and what happened was every airline, with few exceptions, wanted immediately to cut team members because people quit flying for a period of time immediately right after 911. They didn’t know what was going to happen. Was this going to happen again? So, we had so many cancellations. Everyone canceled flights. We actually were one of the few airlines that had said to our directors, get us 15% or 10% in cuts, but don’t touch the employee or the customer experience. That was how Southwest- I mean, JetBlue and Southwest took care of it after 9/11. Neither company let people go. Other airlines let people go. That’s how they got their results. So, getting the right results the right way is what you do in a values-based organization and you reward people for getting the right results the right way, not just being there, not just meeting the sales goal. But how did you meet the sales goal? Did you stomp all over everybody else, or make promises you can’t keep? Or did you make the sales goal by doing it the right way, by using the values including integrity and all those things that you hold dear? And last but not least, understand that your people are your brand. And they need to have the metrics that will make you successful. And they need to know what they are on a consistent basis. At JetBlue, we actually have an app, and you can go on the app every day to see if those metrics that we’ve defined are critical, if we met them the day before, red, yellow, and green coding. You’d walk into any office and you’d see a flat screen with those numbers. But all five of those consistently make up a great brand. Those five components, if you look at the great brands that have been around, Chick-fil-A, Nordstrom, think of the traditional and the new brands. If you look at them, you’ll see that consistently, if you ever go to Chick-fil-A, have you seen the back of their calling card? They have their values on it. And if you watch Chick-fil-A employees, they all act like owners. They’re so excited. Have you ever just driven up to a Chick-fil-A? I just, I don’t know. I love it. I love many other brands, Nordstrom, I’ve never had a bad experience at Nordstrom, Zappos. I mean, think that the great brands, FedEx, that have been around for so long and who have such great players. And you ask them the numbers, they’re going to know what the goals are. So great brands understand the five components and they live and breathe them and hold people accountable for behaving in a way that mirrors those values. It starts with the values. And we all have values by the way. It’s really interesting. Some people say, well, we don’t have any values. And I said, well look at your behaviors. Employees know what the values are by watching the CEO and the leaders behave. You don’t have to define them maybe. I like defining and making sure everybody knows what they are. But if you haven’t defined them, you have them. It’s just that they aren’t on the wall.

Alex Bridgeman:  Yeah, you’ve talked a lot about how culture is often described as kind of this squishy thing that’s hard to define and isn’t as hard and measurable. But you’ve been very clear that no, culture does ultimately drive performance in the company. It does result in very measurable outcomes that stem from this culture and these sets of values. Can you talk about that connection and where are you see that happening?

Ann Rhoades:  Sure. One of the things, first of all, we do at JetBlue, the day you start, you actually attend an all day meeting with all the others starting that talks about measuring performance. We tell you how we measure it. We show you the components that are so important to us. CSM is cost per available seat mile in an airline, RSM is revenue per available seat mile. We start teaching you the components of our performance model, on time baggage. Most people will tell you that the surveys show that if you get your bags within 14 to 16 minutes, you’re not upset. Isn’t that interesting? So, we make sure that we measure how quick can we get those bags out. All those components of performance that are defined by both the customers and the people in the organization, I literally believe every employee should know what those are when they start. But you will hear employees from other airlines tell us they never even knew what it meant, CSM and RSM. I mean, it’s crazy. But we start telling them the metrics and the numbers so that they can help us achieve them. I have always been a believer that if people know what the goals are, they will help you achieve them if you’ve hired the right players. So, at Doubletree Hotels, we wanted our housekeepers to clean two more rooms. And so we asked them, we put them in a room and said what would it take to clean two more rooms. And they said, we have terrible vacuums and we have terrible mops. And they said, if you will help us get new ones, we can clean two more rooms. Guess what, they got new ones, and they cleaned two more rooms. They went from 14 to 16. And all they did was want new equipment. But when we told them what the goal was, they helped us achieve it. My whole point here is people have to know the goals, they have to know how you measure success if you expect them to help you achieve it.

Alex Bridgeman:  And you mentioned that culture exists, there are values even if you haven’t defined them. If you haven’t done all this work to outline your values and teach them to your team or help your team collaborate to create the values, how would you go about trying to figure out what the values of your organization are today, so you have this point of time that you’re going to improve on in the future?

Ann Rhoades:  Ask your people. They will be glad to tell you what the values are. Our belief is that you sit in a room with people from all areas of the organization with different seniority, different positions, very diverse group, age, seniority, I mean, different groups that- We’re doing one right now for a laboratory here. And we have a big diverse group of people. Texas Tech did it. They had 200 people in the room. They define what they thought their values were now, but what values do they really want to have that high performance model- to achieve the high performance model. And we sat in that room and they helped design it. Your people will help you design the values and behaviors that will take you forward and improve performance. And I don’t think there’s been a time we haven’t seen that happen. And when your people are involved, and they help you describe the values and the behaviors, the values probably exist, to a large extent, but they also define those values that maybe are missing, that they think would help them achieve a higher level of performance. When they get to do that with you, they will help you make it happen, literally. But you have to ask them for their input. Don’t just- I very much disagree with CEOs who sit in a room and define the values they want in an organization when they have an organization that’s already performing, but they want to get a higher level of performance, so they said, well, we need these values. And all of a sudden, it’s an edict, instead of having people participate in describing that. It just isn’t as effective.

Alex Bridgeman:  Yeah, that’s a really important point, that the CEO cannot, in a vacuum, decide the values and have the organization buy in and lead them on. It needs to be this collaborative process across all levels of your company in order to get values that have this buy in from your team.

Ann Rhoades:  And once you get them, what you can do then is take it out to the rest of your employees, your teams, and you can actually ask for their feedback before you start communicating. And what you’ll find out is people have a real interest in helping define the behaviors and they have a real interest in making you successful if you’ve hired the right people. And so they really will give you input that would be very helpful as you communicate the final draft of those values and behaviors. And again, you get them on board and you get them then to participate. And you also set up committees after that that make sure because many of us have over a hundred locations, for instance, JetBlue, Southwest has more. And Doubletree, we had, at the end of the time because of mergers, we had 85,000 people, and we had to find the values and the behaviors. And literally, we had to communicate it across brands. So, you have people participate, you have people engage, and they will help you be successful in participating and making sure they’re alive. That’s why we believe you also set up values committees. They call them culture committees at Southwest, and they have people in every location that are part of that. And they make sure to keep those values alive and well. And they keep telling stories. Great leaders are great storytellers. And the stories they tell in values based organizations are around people living the values, which I love.

Alex Bridgeman:  Yeah, I love that. You’ve talked in your book and different speeches and talks you’ve given around different stories from your time at Southwest or JetBlue. But at lots of different organizations, everyone’s tracking stories of how employees are living their values. I love the JetBlue example of that weekly email where in each email, there’s some call out to a certain employee who went above and beyond for a customer and lived that company’s values.  That tool of reward and showing and recognizing people is really powerful.

Ann Rhoades:  Yes, there’s even a tech solution that we have created. We have 26,000 employees now, JetBlue does. And we actually have a tech solution where leaders get copies of stories because, as you can imagine, on an airline, a lot of stories occur in the aircraft. And so, it’s more virtual to the leader; they aren’t there with them. So, we have a way to collect the stories, which I encourage every company to do, to figure out how best to collect the stories. Regardless of your size, it is feasible, and you should have a process in place to collect them, so you can repeat them. But the stories you tell should be about what happened, what was the value, and what was really the action the employee, the behavior the employee created as a result of a customer solution, internal or external, so you can tell the stories about values and behaviors, not just a story for the sake of a story.

Alex Bridgeman:  Yeah, I wonder if for small companies, if there’s some sort of like stories at company or something like that, that you could put together that would be that feeder system for those stories to come into the executive team and like one place they can all be shared.

Ann Rhoades:  We actually have contests between directors trying to get the best stories. If you set up a contest in a small company, they will forward the stories to you. So, tell the leaders you want to have their best story of the month. So, we would have best story of the month, and we would highlight values. Echo, a really very large, they’re in like 150 countries, I think. It’s a virtual, a physicians get together and discuss issues they have on cases they have. And it’s a tech solution to getting out some of these invaluable, literally great cases studies and then solutions that other physicians around the world have found, especially in rural areas where they don’t have specialists. It’s called Echo. And what they do is they highlight a value every six months. And they collect stories from people from all over, their employees and their team members living those values. And they have great stories, oh my gosh. They even have an individual who in the hallways of some of their buildings, they literally have done pictures. They have an artist that’s one of their employees. And he has a picture of one of the stories, and they change out those. It’s really cool.

Alex Bridgeman:  That is really cool. I love that. That’s fantastic. What a great way to incorporate folks in your team to come up with the artwork and draw and all that too. That’s really neat. When thinking about designing the right set of values, I could imagine coming up with a value like profitability or something like that. But outcomes like that might be downstream of some other core value that’s actually causing all of these things. So how do you come up with a set of values that are the root source or root beliefs that performance and all these other things stem from?

Ann Rhoades:  Well, for example, a lot of people want profitability. CFOs typically want profitability. Profitability is a result of the right behaviors. We say the same thing. Some people that wanted it and didn’t give the end to not having it, they might have sustainability and then they can include other things about excellence of the product and various other behaviors. It’s not- But profitability we always say is really an outcome. The same thing, now that DEI is so common, and people are participating in those programs around diversity, which I think is the right thing to do, one of the things that we found out is they wanted diversity as a value. In our belief, diversity is an outcome of doing the right thing. So, JetBlue has won many, many awards on diversity. It’s amazing because they have always gone out of their way to make sure that the population inside mirrored the population outside in terms of everything you can imagine – religion, race, sex. We always made sure that we had a representative population, which is the right thing to do. You have customers in New York; it should mirror all the various groups that are in New York. And we do at the airport. If you ever walk through it, you’ll see a very diverse workforce. We are at JFK and some of the others; now, we’re at the other airports, too. But I think that those are outcomes of having a values led and really behaviorally oriented around the values organization. Culture is a collection of behaviors. That’s our definition. But if you get the right people with the right behaviors that mirror the values, you’re going to get the outcomes of diversity, of really, I think, financial outcomes you want, profitability, sustainability. Again, I’m an idealist and I’m a Pollyanna, but I’ve seen it work. And I literally believe it is the right way to do it. And many companies would agree to that because they’ve seen it work. And there are people who still don’t believe it, but if you look at the research, and I would tell people to get the latest, it only came out a month ago, OC Tanner’s 2024 Workforce Study. It talks about how young people coming out of school and young people that are in the Gen Z, Gen X, and millennials, they want to work for a company with the right culture and that is based on the right values. And they want a company that mirrors their values. So I think it’s great. So, if you look at the data, you should see the hundreds of thousands of people they collected data from. It’s incredible, and it’s consistent. And we want to work in a great place. And if we aren’t in a great place, they aren’t treating us right, we don’t have the right values and behaviors, they can go somewhere else. A players have a lot of options.

Alex Bridgeman:  Yeah. So, what would be typical symptoms of a culture that isn’t as good as it could be?

Ann Rhoades:  First of all, never asking employees to participate in anything. So, we believe in peer hiring. So, we think peers should hire the people that work with them. We have great examples of that. We believe that you should do employee surveys to find out how people feel. Companies that don’t do any surveys, that just guess at how people feel, one of the indicators, a huge indicator is high turnover. If you don’t have the right culture and the right, frankly, work environment, you will get high turnover. It doesn’t matter what you’re paying, by the way. People will leave. I have an example in our family, a niece, who went to work for an organization right out of college, great GPA, great, very enthusiastic, energetic person. I’m a little prejudiced. I will say that. But she’s a great employee and has been since she started working when she was 16 and has had some great jobs but went back, got her degree, and literally worked for someone for six months. And never would they talk to her and ask her how she’s doing. Never did she get feedback on her performance. They kept loading things on her because she got things done. And she would work long hours. And she asked periodically to meet with her manager so they could go over how she’s doing. She wanted feedback, which is not unreasonable. And they wouldn’t do it. So, she called one of the- she had four offers. And she called one of the others and she went to work for them. She’s working 10 to 12 hours a day. She is loving her job. The CEO constantly comes in. She’s gotten two promotions in six months. He constantly comes in and says, how’s it going? It’s a small lab. It probably will have a couple hundred people this year. But the workforce is engaged. They don’t have high turnover. They’ve hired people, and while they can’t pay the highest that anyone pays at the top of the scale, but they’re paying reasonable. It’s reasonable pay, reasonable benefits, but not off the charts. She didn’t go for money; she makes less. But she chose it because she wanted to work in a great environment. She talked to people that worked there. She looked at the feedback that was online on people who had been there. And she chose to work there because of the culture. And now she gets to help create it and maintain it.

Alex Bridgeman:  That’s exciting. Good for her. Once your team has this collection of values that they want to become the core set of values that the company lives by, I’d love to talk about hiring A players and we’ll certainly get there, but with the team that you have today as a CEO, how do you take these values and move them forward within the company and encourage people to live them and start tracking things and focusing on that continuous improvement? How does that start?

Ann Rhoades:  Well, it starts with picking the right people. So, our team, we only have 10 people but we picked them, I hand picked them. They were all people that had worked with me in prior organizations. We’ve had the same team for 24 years. And literally what we do is we meet. We’re virtual, so they live all over. But I will meet them during the year on one of the projects and we will make presentations together to CEOs. We will talk about the project on an ongoing at least weekly basis. And we over communicate rather than under communicate. So, we make sure that we have also diverse opinions on how we work with a customer. And then I send thank you notes throughout the year, and I purchase myself, I send gifts to them on their birthdays, on an anniversary. I love my team. It’s not just your average team. These are A players, I mean A plus players. And we’ve been together a long time. We respect and really, really like each other. And over the years, some have been with, well, 24 years, and some were with me 30 years because they worked with me in other environments six or seven years. And we see each other, we talk to each other, we have no- we support each other’s families. When they need to have family time, someone else will go in and work around. If someone can’t show up with a client, because we travel to our clients for the most part, someone else will do it. We’ve never, that I know of, have not said yes when someone asked us to help each other. We’re a very close team and very supportive of one another. I’ve never heard one say a negative thing about the other one when I talk to them, never. It’s just amazing. But it comes over years and building respect. Respect is huge for one another. And when I don’t do the right thing, they’re quick to tell me if they think I’ve done something wrong, and I encourage it. So, it’s just really great. You know when you have a great team, and I don’t care how large it is, I’ve had huge teams to work with. And respect was critical. I think trusting one another is really important. We trust each other to show up. I don’t call them the day before and say are you going to meet me there? They meet me there. We have it on the schedule. It’s a very simple one on one leadership model. And it starts with trust. And it starts with having- we all have the same values. We have huge integrity. We have huge value of fun. We play jokes on each other. We love fun and sense of humor. So we’re very much alike.

Alex Bridgeman:  What are the most common obstacles that CEOs you work with have in implementing these values and getting their organization to this point that it sounds like you’ve reached with People Ink?

Ann Rhoades:  We have had occasions where CEOs thought they wanted it. And we went in, I can think of one in particular over the many years, but that person wanted it, but when they saw the kind of work it took, this isn’t a sit in a room for a day process. You can define them in a day to a day and a half, depending on the size of the organization. But then you have to implement and you have to live them. And it starts with you as a CEO. If you don’t have integrity, you can’t expect others to have it. We had a CEO of a large hospital systems say, I’m going to go back to work. These are fabulous values and behaviors. I’m going to make everybody below me behave this way. I thought you got to be kidding. It starts with you. If you can’t do it, then you can’t ask others to do it. So one of the issues is sometimes people will think this is easy, and they just want to put words on a wall. That’s not what we want to be part of. We want to be part of organizations that really live and breathe these. And it starts with the top, the management team. We always tell people after the exercise of deciding what values they want and behaviors, we tell them to go back and live them for 30 days first as leaders before they send them out to everyone else. So the real answer is they have to be willing to live and to have other people see them behave this way. And otherwise, it does not work. And we don’t encourage it. We tell them don’t put it on the wall. Don’t put it anywhere because you’re not living it. We definitely don’t want you to ask others to do it.

Alex Bridgeman:  You’ve talked about how important it is for the CEO to live those values because everyone is going to watch every little move that the CEO does, any little behaviors. They’re going to pick up on so much more than you realize. And so, making sure you live it is super important first.

Ann Rhoades:  And really, they don’t exist. I tell people they don’t really exist. You can put them on the wall, you can do anything, but they really don’t exist if you don’t live them. So, don’t do it.

Alex Bridgeman:  Yeah, certainly. And a core part of this, too, that you mentioned is hiring A players and making sure that your organization is composed entirely of A players. What does a values focused hiring process look like that’s looking for A players to join your team?

Ann Rhoades:  So, the piece on competence, when you go to hire someone, you usually review their resume online or however they’ve sent it to you, and you make sure they have, A, the competencies you need for the job. They have the experience. Now they may be right out of school so they don’t have the experience level you want. They may be a finance major but they haven’t been working in that area. They understand it, they know it, but they may need time in job. So, you hire a lot of B players too. They just need time in job. But the critical part is asking questions around their values. And what you want is to give them situations like you might have and encounter in the organization. So, give me an example of a time when you broke a rule for an employee because it was important. And if it’s a leader, I ask that question every time because I want them to tell me there was a time when one of our people needed to have a week off, and yet we had a policy during this time, the end of the quarter, that no one got to take vacation, but I gave them vacation because it was critical. That’s what I want to hear. Because their value is obviously caring, and that’s one of the values in many organizations we think is critical. So they will give you the situation, they will give you their action, and they’ll give you the result. It’s called behavioral hiring. And it’s action oriented. And it’s about past experience because past experience is over 90% predictive of future experience. So if someone had empathy in the past, the likelihood of they’re having it for another good employee is very high. If somebody had integrity and told the truth, regardless of the consequences in the past, they’re going to continue to do it. So another question we ask when integrity is the value, give me an example of a time when you knew by telling the truth, you could lose your job. We had a mechanic at JetBlue, an applicant, and it was a very tough job to fill. People that had those competencies and that experience were hard to find, difficult to find in a very tough environment. We only had 3.5% unemployment in New York when we started JetBlue in 1999. We asked the question, when did you know that you could be jeopardizing your job by telling the truth, and he told the truth. He would not release an aircraft, he’s an A&P mechanic, he wouldn’t release an aircraft to go overseas because he felt that it wasn’t capable. There were some issues with it, even though they were minor. But he did not sign off on it. And he was fired. And he was fired for insubordination. So, for two years, he looked for a job in New York and couldn’t find it. And he could not move because his wife took care of her parents. He couldn’t find a job. He went back to the A&P school and taught because he’s such a good mechanic, came out of that school with such high grades, they let him come back and speak, I mean, teach. And we hired him. We couldn’t wait to hire him. When he told us he wouldn’t sign off on an unsafe aircraft, potentially unsafe aircraft, that’s exactly what we want. That’s the right behavior. So by getting those examples, you know that in the past, they have behaved in a way that mirrors those values that you hold near and dear. So the chance of they’re doing it going forward is very high. So, you ask behavioral questions around the values like you do ask questions around the competencies. It’s a two-part interview, though. It’s not one or the other. It’s both. You have to have the competencies, and you have to have the right behaviors.

Alex Bridgeman:  You’ve talked about too how the team that does these interviews isn’t just one person. There’s a collection of peers who that person will be working with. Can you talk about how that team is assembled?

Ann Rhoades:  We ask the managers to find, let’s just take an example in healthcare, nurses in the ER. So, we ask the manager for two of the nurses that are A players, really good players, to be on a team of three hiring. Now if the manager wants to be on it, that’s fine, or if they want an HR player, but there are three people that interview, and typically two will be peers, and then the others are elective. So, you can, again, have someone who is a supervisor, you can have a leader there, or you can have an HR player, or you can have someone from another department they would interact with. But three people typically, and you can do a very strong interview in 30 minutes. Everybody has the questions. They later on then get together and say what do you think. By doing individual interviews instead of group interviews, A, the person feels much, much better about it. People don’t like group interviews for the most part when you see the results and the data coming out. They prefer to have one on one interviews. And the other thing one on one interviews does is they will tell the truth. It’s very interesting. When they have to give you an example of one of their past behaviors, it’s very difficult to make it up on the spot. So, they will tell you how they behaved, and many times it’s not a behavior you want or often. And so that will tell you that isn’t a person you want to hire. But having peer interviews really helps. It also helps once you hire them because they don’t want their other peers back in the ER department to see that you hired someone that can’t do the job. So they will even make sure that they’re trained by them. Many cases we’ve seen that. They will go back and make sure that person they hired is successful by helping train them.

Alex Bridgeman:  And there were a couple great onboarding examples you’ve given for that first day or two or a couple of weeks in the company of fully explaining the values of the organization and getting them up to speed on everything else that they need to. What have been some favorite onboarding examples that you’ve studied for? Once that great employee is hired, how do you get them up to speed on the business?

Ann Rhoades:  A lot of people have peer assignments. So a lot of companies now have someone who they have as their partner when they first come on the first 30 to 90 days. And we call it by various titles, different companies call it various titles. They call them team partners. They call them all kinds of things. I’m trying to think of the name we used at Southwest. But it was someone who had the same job, who was a very good player, and they became their partner. And sometimes it’s in their department, sometimes it’s outside. And then, we required them to go to lunch with them once a week while they were going through this to find out what was working for them, what wasn’t working for them. In healthcare, we assigned younger nurses with some of the older nurses. And we even put them on the peer interviewing together. And all of a sudden, they quit talking about each other. The older nurses always criticized the young ones. And the young ones always criticized the older ones. Well, what happened, longer term, I should say not age, but longer term. And it was really funny because they quit doing it. When they became partners in hiring and then later were assigned to make those people they hired more successful, all of a sudden, you quit hearing the criticism. It was hysterical. And they enjoyed each other. We saw friendships build. Before they were criticizing each other, but we saw them become friends. We were at Loma Linda Hospital, and we tracked it. It was really interesting. But partners are assigned in a lot of companies. You assign someone to make sure that first 30 days that someone is there to answer their questions, someone’s there to show them the right way to do something. And we do it with mechanics. We do it with most of the entry level people, the people that service our customers. I just think it’s a great thing to do. And most organizations, I hope, are doing it because it’s certainly been more successful. And we’ve had to hire a lot of junior players because if you look at applicant flow, people haven’t had the applicants they had before, not in same numbers.

Alex Bridgeman:  Yeah. How do you have that patience to wait for the right person, even if you have a role that urgently needs to be filled? That patience can be really difficult.

Ann Rhoades:  Well, I will tell you, JetBlue, when we started, 3.5% unemployment, and we could not get applicants. A lot of airlines had gone broke in the prior, I think it was 18 months, over 10 was the number they used to use. I can’t validate that, but that’s what we used to use. And so, people didn’t want to work for an airline because they weren’t very successful, many of them, a lot of startups in the airline world, world of aviation. But what’s interesting is we found that it took over 20 applicants for us to hire one because we would not give in to hire someone that didn’t have our values. And we defined the values before we ever flew. So, we sat in a room and said, this is what most airlines are doing, and this is who we want to be in the world of aviation. How do we get there? What are the values and behaviors that will cause the customers, especially in New York who are pretty critical of a lot of things or were, and we said, what would cause them to want to fly JetBlue versus someone else? And we came up with the five values that today are still alive and well there. All the employees will talk about it to you if you want to talk to them about it because they know, they hear the values and behaviors the first day. They hear from the CEO and from someone in finance. They hear what the expectation is in terms of values and behaviors and in terms of the metrics. It’s a combination. But it’s lethal, in my opinion, because people really, either want- We always said, you can walk out of this room today on the first day of orientation. We will send you home if you can’t behave in this way and if you don’t think it’s important to help us achieve these metrics, we will be glad to pay you to go home. And they see the values and behaviors the minute they interview. We give them to them. Well, they are online, and they see them through the interview process too. So, they know before they get there. But it took over 20, to answer your question, it took over 20 people, and they tell me it’s still the same number. Because we’re very clear it has to be someone with the values and behaviors, not just a great pilot because he’s a great pilot. We had one who called me once and said, how come you didn’t give me an offer? I want to know. I am the best. I have flown for so many great airlines, and I also work for Fox Studios doing stunts. I want to know why you didn’t hire me. And so I said, I’ll call you back. I’ll poll the interview guides and call you back, because we had an interview team. So, I polled them, the three guides. All three said, arrogant, arrogant, arrogant. Well, we don’t hire arrogant pilots, hopefully, because in a difficult situation, arrogance will get in the way of doing the right thing. So, we try not to hire arrogant people in general. And so, I told him, when he called me back, I said, it looks like you were so arrogant, that you thought you’re better than anyone else. And we try not to hire arrogance because that is not one of our values. Arrogant people, it’s not one of our values. So, he hung up, slammed the phone down. And then he called me back the next day, because I was willing to tell people, as long as I knew who it was, why they weren’t hired. And he said, I have to tell you something. I talked to my wife and told her that you told me I was arrogant in the interview. And she said you’re right. And I said, later on, I told my team, I think I saved a marriage.

Alex Bridgeman:  That’s amazing. You mentioned that the CEO is often involved in onboarding, especially for if it’s a large group of new hires where the CEO can be involved. What are some effective ways the CEO can be directly involved in that onboarding process?

Ann Rhoades:  So what he does, and what we’ve done in JetBlue, is the CEO or his second, we have a CEO and president, one of them talks the first day. One half of the day is all about the values and behaviors, customer impact, why these things are important to us. It gets them to understand who we are. If someone just comes in and reads the literature or goes online to see the mission and values, you never feel it like you do when you hear a CEO say, I care about our people, and here’s some examples. He gives examples. He talks about some of the stories. He always talks about why the values are important and how it came about. He gives a history of the company. So many companies onboard people and leave them. Their first day, they’re even all alone. They’re out there trying to talk to a customer and they don’t have the experience and they don’t have that love of the organization, which I think is so critical. And I guarantee you, if you walk through JetBlue, and you talk to employees, or you talk to Southwest employees, you will feel that they really care about that organization. It’s rare. And I do it without their ever knowing I even work there because many of them don’t know. It’s been a long time. We have 50,000- Southwest now has 54,000, I believe is the latest number. And JetBlue has 26. That’s a lot of people. They don’t know all the people that were around at any given time. And so, when I ask them, they just rave. I was in St. Louis catching a flight a couple of weeks ago. And I went up to the counter at Southwest to change my flight because I was there early. This guy was raving with this other lady. He had just come out of training. He had met the senior players at Southwest. He was so happy. He said, oh my gosh, I’ve worked several places, but this is the place I’m going to stay forever. I said, really, well what makes you want to do that? He said, I just have loved since the first day I went into training, I’ve loved it. And it wasn’t easy. He said it was hard. But he said I learned so much, and everybody’s happy here. And I’ll never forget it because I just thought this kid is brand new, and he’s young. But he said he had had several jobs before and that this was his favorite. He said they cared about him from the first day. His supervisor walked over and she said, we love our new employees. She said, and I’m here to walk him through and make sure his first week is really good and he learns everything he has to learn. And she said, I’ve been here 22 years. She was still at the counter working.

Alex Bridgeman:  That’s a critical piece of this too is you have these sets of values or these five to seven core values, but you need to connect them to that behavior. You need to help folks understand, okay, here’s what we believe, here’s what we focus on as a company. But here’s what that means in practice throughout your job, as you interact with customers or your teammates, here’s what that looks like. Can you talk about a little bit more, on that connecting to behaviors concept?

Ann Rhoades:  That’s really why I think that you need to tell stories, because the stories will cause people to see the behaviors that you’re bragging about or the behaviors they need to emulate. And I really think storytelling is critical to very successful CEOs that I’ve known all my life, but it reinforces the values and the behaviors, and then you also put them into their reviews each year. So, the reviews just aren’t about the goals that you set for, let’s just say you’re a sales rep, that you set for sales and that you achieve. The goals are about okay, what would you- give me an example of a tough customer you had. How did you behave with that customer? How did you turn them around? How were you successful in addressing that customer’s needs? It’s how you got there, it’s not just the number you achieved. And so we put it into reviews, which I should have said before. We do 360s in a lot of companies where the peers tell us, give us an example of a peer living the values. And you will see the peers really love to talk about their other peers that live those values. So, they’ll give us examples of behaving in a way that mirrors the values, and they’ll give us peer examples. Not only will their leader give examples of seeing that employee behave that way, but the peers will offer examples and stories, if in fact, they are living the values. Obviously, if they aren’t, they won’t be having great stories. But we ask for people to give it to us that work with them. Because in the airline world, you’re flying, you’re not with the manager all day or probably even at all during the day or during a week or a month. And so your peers are the ones who get to see how you behave. And that’s why we ask for examples from peers. And the employee agrees on the peers that would be evaluating them. And they give us names of people they work with frequently or all the time. Sometimes it’s someone who works side by side with someone. And then we have them agree along with the manager on their reviews to give us feedback on their living the values. Another way to reinforce it.

Alex Bridgeman:  Yeah, that 360 review sounds like a phenomenal tool for monitoring and measuring how the values are being lived. What are some other helpful tools and systems that help measure how well the organization is living the values?

Ann Rhoades:  Well, we actually do focus groups throughout organizations. We talk about with the field and with focus groups and with the leaders, how are these values being led, these are all part of the follow up and part of the evaluation each year on the values that leaders will meet and talk about. Leadership development classes all have the values examples in them, our leadership, we have JetBlue U, which is a university where the leaders go each year. And part of that training is all about how are we reinforcing the values? What do you think? Are we achieving the levels we want? How can we, in fact, be better at it? How can we be better at our interviewing? How can we be better about our hiring and retaining people? And how are we, in fact, living and breathing those values? The values committee helps. I mean, we have a whole systematic approach to it. It’s not a one time event, as I keep saying, but we actually, annually, people, including employees, will be trained. They have an annual training requirement. And in organizations with any kind of leadership and training, we make sure that that’s part of the training and leadership development is about the values and how can we do a better job of it? Are we doing a good job? What do we need to fix? We do two or three employee surveys each year, and the questions are around the values. It’s not just about the benefits, it’s not just about the pay. It’s about the values. My favorite question on it is, how long do you intend to stay with JetBlue? We try to move it. So, everybody tells you over five years, nobody thinks about staying, a new employee about staying somewhere. So, if it’s a new employee, the new employees get a six month, I believe it’s a six month survey, three month and six months survey. And if they say two, if they check, the majority check two years, up to two years, what we try to do the next time we do the survey with the same group is move it up higher. How about you thinking about staying here five years? Are you happy? Would you consider thinking five years? And after five years, they’re going to stay. It would take a significant event for many of them to leave after five years. They have ownership. Remember, they have profit sharing. They can take it with them, but they have profit sharing. They’ve seen the value of their work and how we value it by their bonuses and their profit sharing.

Alex Bridgeman:  Yeah, absolutely. So strong cultures, values, ownership mentality across the team. What other tools contribute to really good retention for those A players, that team that you want to hold on to?

Ann Rhoades:  Communication. We believe you communicate on a more frequent basis. So we have town halls. We have questions you can send to the CEO. All of our leaders are required to be in the field once a quarter to get very real information from both customers and employees. And they come back and tell us, what is one thing you learned from the employees that we need to improve upon? What is the one thing you learned from customers we need to fix or improve upon? And what are they like? What should we retain? What should we, in fact, think about changing? So, in JetBlue, we do NPS, Net Promoter Score. We also have been doing it with our employees, which is we do random surveys of how well they’re being treated, are the leaders living the values, what is the one thing you would change. What we found out at JetBlue, they didn’t like our Seattle coffee, which was very expensive. And they wanted, get guess what they wanted in New York. Dunkin Donuts. And we serve Dunkin Donuts now. So, we constantly ask the employees and we constantly ask the customers. I think we ask 30% of everyone flying us on every day on every flight to fill out the NPS, would I recommend Jet Blue to family and friends to fly. That’s the one question. And what one thing would I change? So, we do continual surveys, and our managers look at those. And then in their plan for the following quarter of the following year, they look at how do we need to fix this, if it’s something we need to fix. We saved six figures, we saved over 100,000, which for a new airline was a lot. We learned that in the second or third year and we changed to Dunkin, and we’ve been Dunkin ever since. But think how much we’d be saving now with the millions of people who travel us every year.

Alex Bridgeman:  Oh my gosh, yeah, tons. The scale of JetBlue is certainly a lot larger than it was in the late 90s, early 2000s. What are some final pieces of advice that you offer to CEOs who are looking to build stronger cultures?

Ann Rhoades:  I would tell them to look at the values and the behaviors. If they don’t have the behaviors, just sit in a room with your people and define the behaviors, if the values are working for you. And the reason, the behaviors then become the roadmap, and they become the DNA. And consistency of brand is consistency of behaviors. So, when people, when I sit in a room and talked to the CEOs last week in Fort Lauderdale, there were 82 of them, I believe. And they were in the room, and I said if I say Southwest, what would you say? And they all said fun. Isn’t that funny? It’s the brand. Sense of humor is part of the brand. When I asked them about JetBlue, they always tell me that they love the airline, they love the employees and happy employees. They’ll tell me that every time. But that’s because it’s consistency of brand and behaviors. If you think of Nordstrom, I have never been there that somebody hasn’t been helpful and, in many cases, really helpful. And Chick-fil-A, I have fun driving through because they’re such a kick, they’re smiling, they’re laughing. I will tell you Zappos, I’ve never had a bad experience. I’m just using the same ones, but there are lots of them. FedEx has been terrific. What I would tell CEOs is look at the great brands and look at the consistency of those, and you will find in the behaviors that when you experience that brand, you have a similar behavior each time. And that comes from the values and the behaviors they’ve defined and they’ve hired to. It’s a one-on-one model on leadership. Look at the best practice, and the best practice that you’re going to see in a lot of the brands, and people tell me this all the time, is really that they have values and their employees live and breathe it. Apple, I love their stores. Have you ever gone in and three people haven’t come up and said, are you okay? Are you still waiting? Can I help you? I was just there last week, got a new iPhone, of course, because I love them. The service is terrific. And knowledgeable. I mean, when I said to one of them, I said I don’t like this code on my Apple Watch. How in the heck do I get it off? I’ve gone online. I’ve gone everywhere. It took them two seconds to fix that. I love it. Consistency and performance is consistency of behaviors.

Alex Bridgeman:  I love that. Ann, thank you so much for coming on the podcast. It’s been phenomenal to chat with you a little bit more. So, thank you for sharing your time.

Ann Rhoades:  Thank you. It’s so much fun. I’m so glad we met.

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