United’s Bonus Debacle

I can’t say for sure how many people emailed me a link to a story about United Airlines’ new employee bonus lottery and its subsequent decision to walk it back. Let’s just say it was more than a few.

In case you might have missed it, United announced to employees in early March a plan to replace its quarterly operational bonus and perfect-attendance program with a lottery program whereby a select number of employees would receive cash awards and other prizes, such as luxury cars and vacations. More precisely, the pool of prizes included one $100,000 cash award; 10 Mercedes-Benz C-class vehicles (or $40,000); 20 $20,000 Platinum United vacation packages; 30 $10,000 Gold United vacation packages; 300 $5,000 cash awards; and 1,000 $2,000 cash awards.

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Well, it generated excitement alright, but not the kind United’s leadership was after. If you do the math, 1,361 recipients out of a workforce of roughly 88,000 would reap a reward–or approximately 1.5 percent of the total. (I also imagine the cost-savings inherent in the effort wasn’t lost on employees.)

Crain’s Chicago Business, which broke the story, reported that about 2,000 employees expressed their displeasure on United’s internal website Flying Together, where the program was first announced.

Bill Murphy Jr., meanwhile, noted on Inc.’s website that the tone of the roughly 500 comments he personally was able to review ranged from “polite disagreement to apoplectic anger.” Only four of the 500, he wrote, were positive, with three of them coming from United’s vice president of human resources.

One flight captain commented: “If I wanted to play in a lottery, I would just go to my local 7/11. I recommend United management reconsider this morale-killing program.”

Naturally, the unions chimed in, too.

Upon learning of United’s intentions, Ken Diaz, president of the United Master Executive Council of the Association of Flight Attendants-CWA union, told Business Insider: “The new United has been built on the principle of ‘shared purpose,’ and it only makes sense that the fruits of that united effort would mean shared reward. With this move, there’s no doubt management has succeeded in achieving a united voice with all employees, but that voice is entirely opposed to and offended by this new ‘select’ bonus program. Being ‘caring’ cannot be choosy.”

Apparently, the swift and vocal reaction from irate employees was more than United’s leadership team could stomach. In a follow-up memo to employees, Kirby said the company was “pushing the pause button” on the program and would reach out to “work groups” across the company to solicit feedback and incorporate it into how the company moves forward.

I’m sure United’s employees were happy to hear that. But wherever the airline goes from here, the damage was done. Does the company scrap the lottery idea entirely? Does it modify the plan in some way? Does it try something entirely different? Whatever path it selects, United’s leadership is going to have some serious work to do in rebuilding employee morale. (It probably doesn’t help that this new program was unveiled at the same time others were giving out tax-cut bonuses. See our story on page 40.)

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Personally reflecting on United’s decision to revamp its bonus program, I find it hard to fathom how the company’s leaders couldn’t foresee the outcome here. Did they really think employees would imagine themselves sitting behind the wheel of a Mercedes? More likely, they would just remember all those times they didn’t win the Powerball or that free lunch at the Cheesecake Factory.

To be sure, there are probably more than a few takeaways here for HR leaders. But one of the first that comes to mind for me is the importance, in advance of any new program launch, to do one’s homework in order to get it right, especially for something as critical to morale and engagement as compensation and rewards. The price of not getting it right is far too steep.

In the case of United, I have no way to know with certainty that didn’t happen. But judging from the greeting core4 Score Rewards received upon its release, my guess is it didn’t occur to the degree it should have.

David Shadovitz
David Shadovitzhttp://
David Shadovitz is editor emeritus and former editor and co-publisher for HRE.