Southwest Airlines' CEO Herb Kelleher has been saying it for years: "Happy employees make happy customers make happy shareholders." Thanks to an enlightened management, Southwest has made that phrase more than a mantra. Now, more and more home builders are taking up the same refrain, certain that it is an indispensable ingredient in the formula to generate customer satisfaction.

"We've created a new mission statement, and it kind of works along the lines of Southwest Airlines'," says Stephen H. Brooks, CEO of Dallas-based Grand Homes. "Basically, it's to improve the quality of life of our employees and our customers and our trade partners through the Grand Homes homeownership experience."

Toward that end, the company regularly throws parties or takes employees to a ballgame or amusement park. "We really try every single month to have a celebration of some sort to celebrate our team and what we do," Brooks says. "And [we have] just a gargantuan Christmas party at the end of the year."

To further hammer home the importantance of customer satisfaction, all Grand Homes' employee compensation and incentives are now tied to customer satisfaction. "We've just introduced a profit-sharing plan," says Brooks, "where we're actually giving back to our employees for making the effort a percent of our profits to help improve the quality of their lives."

Another Texas-based builder has espoused the Southwest way for an even longer period of time.

"I think, for us, it starts with our purpose as a company," says Mike Brezina, David Weekley Homes' vice president of human resources. "Our purpose simply is to enhance people's lives–enhancing the lives of our team members, enhancing the lives of our customers, enhancing the lives of the people in the communities where we operate."

And all that starts with bettering the lives of employees, according to Brezina. "If we are truly enhancing their lives as human beings and team members, then they are going to be in a much better position and prepared to enhance the lives of our customers. ? Certainly, we are here to make money, but we think we have a little bit more of a noble cause."

And Weekley aims for more than just happy employees. "I'd probably track it a step further," Brezina adds. "It's one thing to have happy team members and happy customers; to me, it's a whole new level when you get loyalty. You can't get loyal customers without loyal employees."

Evidence Anecdotal

But does anybody have any widespread quantitative evidence that employee satisfaction truly tracks with customer satisfaction? No. There hasn't been any study of enough builders comparing the two to decisively prove that this is the case. However, some builders are beginning to chart the two indices side-by-side within their own organizations and are finding definite connections between the two.

"When you plot [customer] satisfaction scores by division with the employee satisfaction scores, there is some absolute correlation," says Bill Frey, vice president of customer care for John Laing Homes. "I wouldn't say it tracks dead on, but, in my mind, there's no doubt that divisions where they do well with customers overall are satisfied with their jobs."

And the opposite is true as well, Frey notes. The company's San Diego division, for instance, lost a division president and was struggling with an extremely tough market at the same time. "Customer [satisfaction] scores are the lowest in our company there," as are employee satisfaction scores, he says.

Standard Pacific Homes, another builder that believes happy and engaged employees do a better job with customer satisfaction, has been tracking employee and customer satisfaction, along with a number of other metrics, for two years.

"In general, those divisions that have higher employee satisfaction scores tend to have higher customer satisfaction," says Heather Breidenthal, vice president of human resources at Standard Pacific. "It's definitely an influencer; we have seen that here."

Standard Pacific also looks at employee turnover rates and average homes per employee or revenue per employee. And those metrics, too, tie into customer satisfaction, Breidenthal says.

If the "Who" Fits

But showing employees the love with parties and pats on the back alone won't translate into customer satisfaction.

"It starts with hiring," according to Jeff Lamb, chief people and administration officer for Southwest Airlines. And finding employees with the right attitude is more important than finding those with the right skills, he adds.

"Hire for attitude; train for skill," says Lamb. "What we look for are three primary values or characteristics that embody the Southwest Airlines way: works hard, puts others first, is a joy to work with. ? Generally speaking, if you focus on people who have a positive outlook, and who are generally respectful of others, then they don't have to be taught how to treat vendors or customers; it's just natural for them."

Standard Pacific focuses heavily on choosing employees whose personalities are a good fit for the job. "While we do need people who are skilled in building homes and know the technical parts of that job, the personability of someone is, we are finding, very important," says Breidenthal. The company has even developed interview templates designed to ferret out those with better customer service skills. "We want a more well-rounded individual. You don't want technical skills to go along the wayside, but they have to be a good person, and they have to relate well to people."

If someone without the proper attitude somehow gets hired at California-based Warmington Homes, they don't last long, says president and COO Jim Warmington Jr.

"We spend way too much time here to not have fun," Warmington says. "If people don't fit into our structure and our mentality, we don't keep them around; they are sort of cancerous."

But the Warmington employees who do fit in seem to stay forever, he says, ticking off the number of years the company's top executives have worked there–with 25 being at the low end of the range. Some of the company's superintendents have worked at Warmington for more than 20 years. And all that longevity translates to loyalty.

"I think, more than most companies out there, we have a tremendous amount of loyalty and love of the company here," Warmington says. "People try to protect the reputation of the company very, very strongly."

Creating an environment where employee turnover is low has its own effects on customer satisfaction, according to Bob Mirman, CEO of Eliant. "When you have a high degree of turnover as a result of employee dissatisfaction ... the grass is greener so they want to go somewhere else," he says. "Customers are not going to be served very well if for no other reason than that, when you have turnover, you don't have much consistency of your staff. It's inconsistency of performance that really drives buyers bananas."

Beyond Lip Service

Every Southwest Airlines employee knows the company's philosophy. Embedding the importance of customer service into a corporation's culture so thoroughly that it becomes second nature to employees is key to making customers happy.

John Laing Homes is one of the most successful builders at translating clearly the importance of customer service through the ranks, Mirman says. "Each division operates with a consistent message coming down from the top, [CEO] Larry Webb, to the people. You can't argue with it. The customer is their first obligation."

At Weekley, too, the message is strong and clear through the ranks, according to Brezina. "It has got to be consistent; it's got to be believable. That is the only way to create the culture."

Morale Combat

Times may be tough, and layoffs are happening, but employee celebrations continue at Weekley, says Brezina. "We have made it very clear to our team managers that we can't stop doing that. We might not be able to spend as much on them, but we still celebrate successes, both big and small."

That's important these days when most builders are laying off staff in droves to downsize to meet demand, Brezina adds. As a result, Weekley's employee satisfaction surveys continue to report high levels of contentedness.

"We did a team member survey right in the midst of this [downturn], and it was by far the best results ever," Brezina says. "Our team members spoke loud and clear that our culture is solid and enhancing their lives."

If anything, the downturn has spurred Weekley employees to new levels of efficiency and creativity as they unite around the cause of cutting costs. "I think the whole rallying cry is, 'We will make it through this. We are going to drive revenue and increase operating efficiencies.'"

At Pardee, employees continue to give high satisfaction scores as well, even after a round of reductions. Of course, there's nothing like continuing to get a paycheck while others have been laid off to make you happier about having a job.

At Standard Pacific, extra efforts are being made to improve internal communications, ensuring that employees have the correct information about layoffs, according to Breidenthal. "At the division level, they do a great job of meeting with their employees face-to-face," she says. "They are being very candid and very careful not to make any promises [of employment]. You give information to people so they understand what reality is rather than reading the blogs or waiting for the quarterly conference call. We communicate that the decisions we are making when we have to cut staff are difficult and, at the same time, we want to maintain the culture."

Still, the week after layoffs, it's pretty quiet in the offices, Breidenthal says. "Then people roll up their sleeves, and they get the job done."