United Airlines made major headlines recently when news spread how it was changing a core component of its employee incentive program. It was scrapping its existing bonus program, one that rewarded workers who helped the company meet operational goals, and wanted to replace it with a high-profile lottery program instead.
While the bonuses under the lottery program were better – cash prizes up to $100,000, free cars, or luxury vacation packages – the odds of being awarded one of these prizes were not. United employees would only qualify for the lottery by meeting quarterly requirements like perfect attendance, and once workers found out, there was such an outcry that United backpedaled quickly on its plans.
Hopefully, United will learn some important lessons from such an incident. But you don’t have to be an airline executive to pull out some teachable moments from this debacle. In fact, here’s what we can learn from United’s poor management choice this week.
United Airlines’ Focus on Cost Cutting Blinded them to the Truth
When it comes right down to it, United’s decision-making process behind the proposed lottery system was flawed from the beginning. Instead of approaching the design of a new incentive program from a team –based perspective, the company’s design philosophy consisted of cost savings first and foremost. While the airline industry is constantly hemorrhaging cash, and cost-cutting measures enable United to flourish as a company, focusing on cost savings exclusively can be detrimental to overall business.
According to a source from the New York Times the original incentive program provides around $30 million in awards to United personnel every year. This program was performance based, with on-time departures and arrivals being a core metric behind who received a bonus under the reward program and who didn’t. Meanwhile, the new lottery program is designed to only cost United around $18 million a year.
The Shift Awa from Team Based Reward Metrics Would Have Cost Them Dearly
The random nature of the lottery system, and the difficulty of qualifying for the lottery, also contribute to the limited number of United workers that would be able to participate in such a program. The requirement for employees to maintain a perfect attendance record shifts the focus to individual workers and actions they are personally responsible for. While this does, of course, have a positive impact on United’s ability to get planes in the air on time – more employees striving to not take days off means more man-hours – the benefit is likely to be minimal.
Shifting employee focus to manage their own attendance means that less attention is going to be paid to team-centric behaviors in airports and aboard planes. Flight crews or support staff need to work together in tandem for best results, and the previous incentive program awarded collective behavior by providing bonuses for the company as a whole meeting operational goals. In essence, United was telling their workers that the only thing that mattered was how many sick days they take, not that they work together to meet those goals.
The Final Takeaway
lt’s obvious at this point that United needs to rethink its approach to more than just employee bonuses. A focus on building effective teams, both on the ground and in the air, should be a priority for airlines that specialize in massive logistical frameworks every moment of every day.
Rewarding good teamwork reinforces that teamwork . Providing training to build that teamwork in the first place is just as important. And ensuring that these teams are recognized for the contributions they make to an organization benefits everyone in ways that speak volumes louder than the bottom line.