United changes course on employee ‘lottery’ after backlash

After announcing a rewards system in which only a small percent would receive prizes, the airline’s chief executive said he ‘misjudged how these changes would be received.’

Fierce criticism caused United Airlines to put the brakes on a lottery system meant to replace its current employee bonus program.

On March 2, United president Scott Kirby sent an email to employees announcing he was swapping quarterly bonuses for a lottery-based program called “core4 Score Rewards.”

Chicago Business Journal reported:

“As we look to continue improving, we took a step back and decided to replace the quarterly operational bonus and perfect attendance programs with an exciting new rewards program called ‘core4 Score Rewards’,” Kirby wrote.

The core4 program Kirby referenced is designed to make employees at United a more caring lot as they carry out their daily duties at the airline. The hope Kirby expressed earlier this year is that United will build an overall image as a more caring airline as the core4 program gets into full swing across the United network.

The New York Times reported:

Under the lottery system, just 1,361 employees would receive bonuses, according to the United Airlines memo, and only one would be chosen for the top cash prize of $100,000.

Other prizes included the Mercedes sedans (10 winners), a choice between a vacation package or $20,000 (20 winners), a similar choice at the $10,000 level (30 winners) and a variety of other cash prizes. The bonus that employees had the best chance of winning was $2,000 cash, which would have been given to 1,000 workers.

Contrast that with United’s current bonus program which enables employees to receive up to $125 each month—$1,500 each year—paid in quarterly increments if the airline reaches certain goals.

The New York Times reported:

“The employee group that would have been eligible for those bonuses was much larger” than that of the lottery system, Taylor Garland, spokeswoman for the Association of Flight Attendants, said in a phone interview. The bonuses were given to not only United’s 24,000 flight attendants but also its pilots and gate agents among others, she said.

Backlash from United employees was swift and fierce.

Bill Murphy Jr. reported a sampling of employee criticism via Inc, and wrote:

These were posted on the internal United Airlines employee website, Flying Together. Of roughly 500 comments I read, four were positive (and three of those were from the company’s vice president for human resources, responding to the negative comments).

The tone ranged from polite disagreement to apoplectic anger.

“I can’t imagine driving the Mercedes into the employee lot while everyone around me that worked just as hard, or harder got nothing,” one flight attendant wrote. A captain for the airline commented, “If I wanted to play in a lottery, I would just go [to] my local 7/11.”

Here’s how a customer service representative described the program:

It felt like we had just gotten to a place where employee morale was up. It took so many years for people to feel good about what was happening. In one fell swoop, it is crushed again.

Many consumers criticized the move on social media, and both journalists and analysts ridiculed the program.

Business Insider reported:

In a research note, CFRA Research analyst Jim Corridore said United would not be able to increase profitability and close its valuation gap against competitors by cutting compensation.

“In what we see as the latest sign that United’s management still doesn’t ‘get it,’ numerous news reports say United is likely to eliminate its attendance and performance-based bonuses with a lottery system which will give a very few employees cash and prizes,” Corridore wrote.

“We would not be surprised to see UAL’s operating metrics start to deteriorate.”

CNN Money reported:

Experts on compensation and workplace culture said they had never heard of a company of United’s size and stature trying this kind of lottery program.

“I really thought it was a joke when I first heard of it,” said Tom Gimbel, founder and CEO of LaSalle Network, a national staffing and recruiting firm. “It’s very amateurish.”

Based on employee reactions, the program wasn’t inspired by United’s staff needs and requests. Instead, reports suggest the program was a move to save the airline millions each year spent on employee bonuses and incentives.

The New York Times reported:

According to United’s latest earnings report, employees earned approximately $30 million in incentive payments for achieving operations performance goals in the fourth quarter ending in December, and approximately $87 million in earned bonuses in 2017. The report did not break out bonuses for executives and other workers.

The lottery system, with about $18 million in rewards per year available for rank-and-file workers, may have cost the company far less.

On Monday, Kirby sent an email saying he was “pressing the pause button” on the lottery system. The Washington Post published the email, which reads:

Dear United colleagues,

Since announcing our planned changes to the quarterly operations incentive program, we have listened carefully to the feedback and concerns you’ve expressed.

Our intention was to introduce a better, more exciting program, but we misjudged how these changes would be received by many of you.

So, we are pressing the pause button on these changes to review your feedback and consider the right way to move ahead. We will be reaching out to work groups across the company and the changes we make will better reflect your feedback.

Appreciatively,

Scott

Deb Garbor, chief executive of Sol Marketing, says United executives “clearly didn’t think through their how employees might react, and they didn’t hold their own corporate culture in high regard.”

The move tarnished the airline’s already beleaguered reputation, instead of boosting employee morale. Garbor says:

A company’s culture is indelibly intertwined with an organization’s brand. How a company treats and compensates its employees should reflect not only the values and beliefs of the company itself, but should encourage and reward every employee in the business for delivering the company’s brand promise.

How could United have avoided this crisis—and how can you steer clear of similar issues?

“United could have been more thoughtful and strategic about creating a bonus program designed to drive the kind of employee behavior and attitudes with the power to reinforce the company’s commitment to customers,” Garbor says.

Though internal programs should support your organization’s mission statement, vision and goals, this crisis can stand as a lesson for communicators to consider employee needs when implementing a program—not just numbers.

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