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UA employees shocked: (qtrly performance) Bonuses replaced with lottery (on "pause")

UA employees shocked: (qtrly performance) Bonuses replaced with lottery (on "pause")

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Old Mar 5, 18, 5:08 am   -   Wikipost
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Update 5 March 2018 per Chicago Tribune (and confirmed by internal employee memo
United walks back new bonus lottery system that angered employees
United Airlines on Monday reversed plans to begin awarding bonuses through a lottery system that angered employees.

Scott Kirby, president of the Chicago-based airline, said United was “pressing the pause button” on changes that would have handed out larger bonuses to only a fraction of its workers after hearing employees’ feedback since announcing the changes late last week.

Per Chicago Business Journal, 2 March 2018
​​​​​​​United Airlines employees shocked: Bonuses replaced with lottery

United Airlines President Scott Kirby sent shock waves through the employee ranks at the Chicago-based airline today.

Kirby issued an employee memo in which he announced that the Chicago-based airline is dropping the quarterly performance bonuses the carrier had been giving out to all employees qualified to receive them.

Kirby said in the memo, obtained by the Chicago Business Journal, that the bonus payouts are being replaced with a new program called "core4 Score Rewards," which Kirby said would include quarterly prizes like cash ranging from $2,000 to $40,000, luxury cars, vacation packages, and a grand of prize of $100,000 awarded to one eligible employee per quarter.
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Old Mar 5, 18, 1:18 pm
  #166  
 
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Originally Posted by bocastephen View Post
These definitions are fluid - and that's the point. United is a service business, Spirit is a transportation business. Greyhound is a transportation business, Sleep Bus is a service business. The problem occurs when a company like United decides to be like Spirit for 99% of its customers and SQ for 1%, and then fails both. Once upon a time during the CO days, it was like working at Nordstrom, and now it's like working at Walmart. Why? Because the board of directors continually violates the principles of "From Good to Great", hiring the wrong bus driver over and over again. Most of us wanted Alan Mulally as the new CEO before Oscar - what kind of airline would United be today with the right kind of people-centric leadership?.
This is a very insightful comment.

United needs entirely new, fresh management from top to bottom that will manage according to the "From Good to Great" principles. If you got a Mullally, issue would be to get the frontline employees and unions on board who have been burned, over and over, from these guys who couldn't run a corner grocery store w/o consults, et cetera. And, I wouldn't blame them. Still, he is the type of guy the airline desperately needs.
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Old Mar 5, 18, 1:37 pm
  #167  
 
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These jokers on the executive team should be playing russian roulette with their bonuses Double or nothing.
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Old Mar 5, 18, 1:47 pm
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The recovery and win for this would be to announce this was a misunderstanding and say this was *in addition to* the current bonus program. But that will never, ever happen
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Old Mar 5, 18, 1:50 pm
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This is so completely insane. Kirby should be fired.
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Old Mar 5, 18, 2:17 pm
  #170  
 
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This board is hilarious...

"Manage from good to great - that'll fix it" (using a book to run a company...)

then...

"Consultants are bad...need someone who can manage with common sense (because someone who needs a book to run the place is going to do better than one who needs consultants)

and...

"this is a terrible decision - it will ruin the company"

only to see it reversed incredibly quickly

now...

"we can't complain about the policy now that's fixed, so let's make sure they show the guy the door..."

Good grief.

I don't know the guy. Didn't care much for HP or AA as airlines, whatever hand he had in decisions at those places. All I can judge is he's a shrewd scheduling and pricing guy who knows he needs well lubed ops.

Maybe over his head with the front line management / consumer product piece.

But in no place for me to judge his ability to do his job from the outside.

Looks to me they had a cost cut they were trying to solve for. This was the poorly received attempt from HR.

Yet another chapter in the 30+ year UA saga that transcends *every management team that has tried to touch it*.

Even Gerald Greenwald, the epitome of 'good to great' type CEOs that gave them a few good years after the Steven Wolf era was smart enough to know he couldn't keep it up, and left UA at the peak in 1997, only to have it descend into chaos just a few years later.
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Old Mar 5, 18, 2:47 pm
  #171  
 
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That one tweet seems to imply that bonuses were and I suppose now still will be automatic. Automatic bonuses are basically worthless in terms of encouraging good performance because they just end up being considered to be a part of people's salaries i.e. something people feel entitled to regardless of their personal performance. That sense of entitlement certainly came through in a few of the more outraged posts about it.

UA might keep hiring the wrong CEOs, but maybe it's because trying to manage a company with an entrenched union workforce full of 40+ employees that will place their personal benefits and perks above anything else is like trying to catch a greased up pig.
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Old Mar 5, 18, 2:49 pm
  #172  
 
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Originally Posted by cerealmarketer View Post
Looks to me they had a cost cut they were trying to solve for.
Why is it that cost cuts never involve executive bonuses?
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Old Mar 5, 18, 3:06 pm
  #173  
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Originally Posted by rufflesinc View Post
Why is it that cost cuts never involve executive bonuses?
I think we know the answer to that. Cost cuts equal higher profits which in turn lead to higher executive bonuses.
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Old Mar 5, 18, 3:09 pm
  #174  
 
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Originally Posted by jhayes_1780 View Post
The recovery and win for this would be to announce this was a misunderstanding and say this was *in addition to* the current bonus program. But that will never, ever happen
Well, that doesn't really make sense. It's pretty clear if you replace a bonus program with something of less value to employees (as a whole), it was to save money. Putting in a new program on top of the old one would just make that savings goal even harder to achieve. Now it's mainly an employee relations issue.

Originally Posted by cerealmarketer View Post
This board is hilarious...

"Manage from good to great - that'll fix it" (using a book to run a company...)

...

Looks to me they had a cost cut they were trying to solve for. This was the poorly received attempt from HR.
I totally agree with the book comment. Business books are a dime a dozen, and most are fads. Bethune was a perfectly fine CEO, but he didn't have any special timeless insights. People wishing for UA to manage the business in a totally different industry environment just likely have fond memories of CO back in the day, but perhaps haven't managed at a high level within a major corporation. I'm not being critical of anyone here, you can get an idea or two from a book, but you just can't base your whole business model on it in a rapidly changing world.

And of course it was a cost cut goal. Every single decision made in a large corporation is tied to either revenue or cost. Regardless of all the stories (or of wishes by posters here), these companies are not altruistic, concerned about the environment, etc., unless it is first rationalized with a cost or revenue number. Since there would be no tie to revenue by changing the incentive program, by default they had to look at cost savings before announcing the new plan.

Originally Posted by rufflesinc View Post
Why is it that cost cuts never involve executive bonuses?
Because that's kind of an impossibility. When your bonus is based on cutting cost or hitting a specific margin, you can't make that very bonus part of the equation. What you're suggesting is that executive bonuses should be decreased or removed to reach cost goals. But then what incentive does a CEO/CFO/COO etc. have to meet those goals??? They're not like the average employee who cares about keeping their job, as the lifespan of these roles is typically around 5 years anyway, and usually have golden parachutes.
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Old Mar 5, 18, 3:11 pm
  #175  
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Originally Posted by Ber2dca View Post
That one tweet seems to imply that bonuses were and I suppose now still will be automatic. Automatic bonuses are basically worthless in terms of encouraging good performance because they just end up being considered to be a part of people's salaries i.e. something people feel entitled to regardless of their personal performance. ....
The quarterly performance bonuses varied depending on the operational performance metrics set by the company. So there was/is a correlation between performance and the size of the bonus. They were on a regular time schedule.
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Old Mar 5, 18, 3:30 pm
  #176  
 
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How can a company as big and complex as United announce something that has not been well thought out? The effects of this stupid plan - and its "pause" will have an extremely negative impact on United's already delicate public image - just as it was beginning to recover from last year's dragging incident. What stupid self-inflected mess! Not to mention even more CRJ 200!

Why can't this company get it right?
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Old Mar 5, 18, 3:44 pm
  #177  
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Originally Posted by JBord View Post
...
I totally agree with the book comment. Business books are a dime a dozen, and most are fads. Bethune was a perfectly fine CEO, but he didn't have any special timeless insights. People wishing for UA to manage the business in a totally different industry environment just likely have fond memories of CO back in the day, but perhaps haven't managed at a high level within a major corporation. I'm not being critical of anyone here, you can get an idea or two from a book, but you just can't base your whole business model on it in a rapidly changing world.....
I would suggest giving it a read before dismissing it - From Good to Great is not a dime a dozen business book nor a fad, but a common-sense framework for better leadership that has been a staple in many a business school and corporation for many years. Its guiding principles would make a huge difference to everyone's experience at United - and the difference between such leaders as Jack Welch, Alan Mullaly and Herb Kelleher vs Smisek, Immelt and Whitman. Recruiting the best people, treating them well and empowering them to do good things is not rocket science, unless you really only have one customer - someone on wall street who will measure your metrics and help deliver your personal bonus.

It's obvious we have a leadership problem at United, or really a lack of leadership, and the result is obvious everywhere from our plates to our crews, especially when the person we thought would be a leader is now busy hiding under an umbrella and whose only significant public statement as of late is "de nada".
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Old Mar 5, 18, 4:08 pm
  #178  
 
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Originally Posted by WineCountryUA View Post
The quarterly performance bonuses varied depending on the operational performance metrics set by the company. So there was/is a correlation between performance and the size of the bonus. They were on a regular time schedule.
So were these metrics counted per person, per unit or per company?
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Old Mar 5, 18, 4:22 pm
  #179  
 
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Uninspired Move by HR

Might've honestly just been an attempt to reduce the amount of sick time taken by the front line, hard to see what else this would accomplish. The bonus is a nice way of allowing employees to share success given the lack of stock options at a lower level. Lottery chips away at Munoz's attempt to build a culture which has been trying to give the front line more support and reason to feel proud of the work they do.
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Old Mar 5, 18, 4:41 pm
  #180  
 
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They've "paused" the lottery system. Have they actually said they are reinstating the old program?
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