Was Jeff Smisek an Exemplary Leader as the Chief Executive Officer of United Airlines?
J eff Smisek is now the former chief executive officer of United Airlines, as notice of his “resignation” from all of his roles and responsibilities of United Airlines was officially announced yesterday, calling into question as to whether or not he was an exemplary leader.
I have never met Jeff Smisek in person, so I cannot comment on his character; but in order to answer that question, please allow me to first refer you to something about which I learned when I was matriculated in a university executive program where I was earning my Master of Business Administration graduate degree; as well as when I became certified as a managerial coach in a certification program in which I was involved in its development:
The Five Practices of Exemplary Leadership® Model
Ongoing studies consistently confirm that The Five Practices of Exemplary Leadership® model continues to prove its effectiveness as a clear, evidence-based path to achieving the extraordinary — for individuals, teams, organizations, and communities — and are positively related to both the effectiveness of leaders and the level of commitment, engagement, and satisfaction of those that follow, according to this article at the official Internet web site of John Wiley & Sons, Incorporated, where this model was developed.
Here are The Five Practices of Exemplary Leadership® model shown in purple italic type; as well as my comments pertaining to Jeff Smisek immediately following:
1. Model the Way
Leaders establish principles concerning the way people (constituents, peers, colleagues, and customers alike) should be treated and the way goals should be pursued. They create standards of excellence and then set an example for others to follow. Because the prospect of complex change can overwhelm people and stifle action, they set interim goals so that people can achieve small wins as they work toward larger objectives. They unravel bureaucracy when it impedes action; they put up signposts when people are unsure of where to go or how to get there; and they create opportunities for victory.
The supposed firing of Jeff Smisek from his responsibilities at United Continental is reportedly related to ongoing federal and internal investigations associated with the Port Authority of New York and New Jersey, whose former chairman is suspected to have allegedly used his prominent position to demand favorable treatment or personal benefit from United Airlines — such as for a weekly direct flight between Newark and Columbia in South Carolina near the vacation home of David Samson, who resigned from his position as chairman back in March of 2014.
If the allegations are proven to be true, Jeff Smisek had not set a good example of modeling the way — although there are many frequent fliers who will claim without any hesitation whatsoever that he did not create standards of excellence; and numerous reports suggest that many employees of United Airlines had similar sentiments.
Further illustrating the failure of Smisek to model the way, amongst the problems which occurred during his reign included — but was not limited to — the fallout from an integration of the cultures of two airlines after the merger was completed; a barrage of highly-publicized technological glitches which grounded airplanes and angered frustrated passengers who were unnecessarily inconvenienced; and unhappy members of unions and labor groups.
2. Inspire a Shared Vision
Leaders passionately believe that they can make a difference. They envision the future, creating an ideal and unique image of what the organization can become. Through their magnetism and quiet persuasion, leaders enlist others in their dreams. They breathe life into their visions and get people to see exciting possibilities for the future.
If the transition of earning miles in a frequent flier loyalty program from being based on distance to being based on revenue is any indication, United Airlines basically followed the lead of Delta Air Lines last year.
Another example is when frequent fliers who subscribe to the services of ExpertFlyer.com could no longer view the upgrade classes of RU and OU on Delta Air Lines as of Friday, October 18, 2013; and United Airlines followed suit 13 days later when they could no longer being able to view the upgrade class of R and elite award inventory.
Duplicating the efforts of a direct competitor does not exactly evoke envisioning the future; and I would argue that inspiring a shared vision is critical during and after the completion of a merger of two major airlines.
3. Challenge the Process
Leaders search for opportunities to change the status quo. They look for innovative ways to improve the organization. In doing so, they experiment and take risks. And because leaders know that risk taking involves mistakes and failures, they accept the inevitable disappointments as learning opportunities.
The inevitable disappointments — such as a mediocre record of flights arriving at their destinations late — were apparently not taken as learning opportunities but were rather allowed to continue as status quo for whatever reason…
…and the aforementioned lack of innovation only cemented the general status quo. As the top executive for United Airlines, Jeff Smisek should have taken a cue from Gordon Bethune — the former chief executive officer of Continental Airlines who brought Smisek to the troubled airline in 1995 — by learning from what proven policies and procedures Bethune successfully implemented as the architect of what many consider to be an incredible turnaround which happened rather quickly by corporate standards; and emulating similar ones at United Airlines.
In other words: Gordon Bethune dared to challenge the process with innovation; while Jeff Smisek simply did not.
4. Enable Others to Act
Leaders foster collaboration and build spirited teams. They actively involve others. Leaders understand that mutual respect is what sustains extraordinary efforts; they strive to create an atmosphere of trust and human dignity. They strengthen others, making each person feel capable and powerful.
Although it was John D. Rainey — who was then the executive vice president and chief financial officer of United Airlines but is now chief financial officer at PayPal as of last month — and not Jeff Smisek who reportedly said during a presentation at the Bank of America Transportation Conference on Thursday, May 17, 2012 that…
“(W)e also changed our Mileage Plus program, some of the benefits that, uh, accrued to the members. Uh, we, uh, we had certain groups in this group were over entitled if you will. Uh, and now, uh, we have realigned the benefits of that program with what the, the, the customers and, and, program, um, um, the participants are actually providing to the airline, and, and this is a good change going forward…”
…the statement did not connote a culture of mutual respect at United Airlines, which resulted in some frequent fliers being furious and considering that statement as confirmation that United Airlines really does not care about its customers who earned elite level status; as well as a sign that employees in general were indeed working in an atmosphere which was not conducive to being spirited or collaborative.
Speaking of “over entitled”, there is no need to feel sorry for Jeff Smisek. He will reportedly receive a payment in the amount of $4,875,000 just for leaving United Airlines; and he will remain eligible for a pro-rated bonus — as well as receive health insurance coverage until he is eligible for the Medicare program — and maintain flight benefits, parking privileges and even his company car for the rest of his life.
Mutual respect, indeed.
5. Encourage the Heart
Accomplishing extraordinary things in organizations is hard work. To keep hope and determination alive, leaders recognize contributions that individuals make. In every winning team, the members need to share in the rewards of their efforts, so leaders celebrate accomplishments. They make people feel like heroes.
Think about it: unless you count such negative categories as ongoing labor problems, colossal technology issues and generally dismal performance of service, when was the last time extraordinary things were done at United Airlines?
Oscar Munoz Announced as President and Chief Executive Officer Effective Immediately
United Continental Holdings, Inc. (NYSE: UAL) today announced that it has named Oscar Munoz as president and chief executive officer. Munoz will also continue to serve on United’s board of directors. The board appointed Henry L. Meyer III, United’s lead independent director, to serve as non-executive chairman of the board of directors. The company also announced that Jeff Smisek has stepped down from his roles as chairman, president and chief executive officer, and as a director. These changes are effective immediately.
Munoz brings to this role deep and broad experience in the transportation industry and large consumer brands including AT&T, Pepsico and The Coca-Cola Company. He most recently served as president and chief operating officer of CSX Corporation.
Henry Meyer, non-executive chairman of the board of directors of United Continental Holdings, Inc. said, “Oscar’s track record demonstrates that he has the right blend of strategic vision and strong leadership to continue United’s upward trajectory. United is well positioned to continue executing on its strategic plan to further improve performance and the value and service it provides to its customers. I’m honored to have been elected non-executive chairman by my fellow directors. The board thanks Jeff for his service to both United Airlines and Continental Airlines.”
“It is truly a privilege to serve as United’s CEO. United has an incredible opportunity for improving an experience that is essential to the vitality of global business and to the personal lives of millions of people, for innovation, and for earnings growth,” said Oscar Munoz, president and CEO of United. “In my years serving on the board, I have been impressed by the dedication and skill of my new coworkers. Together, we will make United the top-performing airline.”
Prior to joining United Airlines, Munoz served as president and chief operating officer of CSX Corporation, a premier transportation company. Munoz also served as a director at CSX. During Munoz’s tenure, CSX transformed itself into an industry leader in customer focus, reliability and financial performance. CSX was named one of Institutional Investor’s Most Honored Companies for a decade of excellent financial performance, including increasing its operating income by nearly 600%. Prior to joining CSX, Munoz served in various senior financial and strategic capacities at some of the world’s most recognized consumer brands, including AT&T, The Coca-Cola Company and Pepsico.
He has served on the board of directors for United Continental Holdings, Inc. since 2010 and served on the board of directors of Continental Airlines, Inc. since 2004. Munoz is active in several industry coalitions and philanthropic and educational organizations including the University of North Florida’s board of trustees and the PAFA advisory board of Vanderbilt University.
Munoz graduated from the University of Southern California with a bachelor’s degree in business administration, and he received a master’s in business administration from Pepperdine University. Munoz has been named one of the “100 Most Influential Hispanics” by Hispanic Business magazine.
The company also announced that its executive vice president of communications and government affairs and its senior vice president of corporate and government affairs have stepped down. The departures announced today are in connection with the company’s previously disclosed internal investigation related to the federal investigation associated with the Port Authority of New York and New Jersey. The investigations are ongoing and the company continues to cooperate with the government.
The company’s internal investigation and the related circumstances do not raise any accounting or financial reporting concerns.
The Official Message to Employees From the New Chief Executive Officer
This is the official message sent from Oscar Munoz to the employees of United Airlines pertaining to the sudden news regarding changes in some of the executive leadership effective immediately:
Dear fellow employees:
Today we are announcing a series of executive changes, which are effective immediately. I recognize that this news is unexpected, and I want you to hear it directly from me, as United’s new CEO.
Jeff Smisek, Nene Foxhall, EVP of communications and government affairs, and Mark Anderson, SVP of corporate and government affairs, have stepped down from their roles. These departures are in connection with United’s previously disclosed internal investigation related to the federal investigation associated with the Port Authority of New York and New Jersey.
In addition, the company announced Henry L. Meyer III, a current United director and the lead independent director, has been named non-executive chairman of the board.
As we move forward, let me take a moment to tell you a little bit about myself. As you may know, I have been on the board of directors of United, and previously Continental, for more than a decade. I am also a longtime United customer. Before today, I was the president and COO of CSX, one of the largest railroads in North America. Prior to that, I worked for several well known consumer brands including AT&T, Pepsico, and The Coca-Cola Company.
I took this job because I am excited by what we can do together. There is incredible opportunity for innovation, for earnings growth, and for improving an experience that is essential to the vitality of global business and to the personal lives of millions of people. I will be relentless in pursuing these goals, and I hope and expect that all of you will share that same passion.
In the coming weeks, I will be making my first visits around the system. I want to talk to as many of you as possible because I want to get to know you and what you think about how things are going. How can we operate better? How can we better serve our customers? What support do you need to deliver that? You’ll be seeing me frequently; I intend to regularly travel the system to hear about our operations directly from you – and you can hold me accountable for that.
In my career, I’ve found that three things are critical to any successful business. First, we must focus on customers and what we can to do help them. In the telecommunications, consumer products and railway businesses, there are very real consequences if you don’t meet the consumer’s needs and desires. There are also substantive rewards for doing so, and especially for exceeding customer expectations. Every day, you win or lose customers based on the slightest change in value and quality. As you know, in the airline business, this is especially critical. Getting people where they want to go, reliably and happily, can make or break their ability to succeed in a work endeavor or to hug a family member at an important moment.
At United, I will dedicate myself to making our airline flyer-friendly.
Second, in any organization, especially a great airline, it’s all about teamwork. I like to refer to this as “shared purpose.” We are in a service business, and the thousands of people who work here are the key ingredient determining our success. To get our passengers where they want to go safely and happily requires thousands of us working together with a shared purpose of supporting each other in serving our customers. To achieve this, we must create and sustain a respectful dialog about our common goals – an ongoing conversation among ourselves. We cannot do this apart.
Third, I am excited to be a part of a company and industry that demands innovation. The world around us is changing. There are new forms of loyalty programs and affinity groups, a constantly changing regulatory environment, plus new digital and networking technologies that are emerging on a daily basis. At United, we will embrace this change, and make this an energized and exciting place to work. Above all, my career has taught me that safety is paramount. Our passion for the safety of our people and our customers must be at the core of everything we do. As we bring this airline forward, I promise to hold true to these principles of customer focus, teamwork through our shared purpose, continual innovation, and of course, safety. I want our customers, my fellow workers, and our communities to respect each other and take pride in our accomplishments.
Thank you for your dedication to our customers and to United, and I look forward to meeting you soon.
Reaction by Frequent Fliers
The reactions of the majority of frequent fliers participating in this discussion posted on Milepoint and this discussion posted on FlyerTalk are mostly positive, with many celebrating the sudden departure of Jeff Smisek — so much so that gatherings of FlyerTalk members in such places as San Francisco on Friday, September 11, 2015; Cleveland; and Washington, D.C. are either being planned or considered.
Although I had years ago earned the highest level of elite status with Continental Airlines for several consecutive years, I have not flown as a passenger on airplanes operated by United Airlines in several years; so I am admittedly not knowledgeable about the airline and its problems as of late.
However, I would personally caution from rejoicing just yet from the change in executive leadership. Positive changes — if indeed they do happen — typically are implemented at a glacial pace; and there is no guarantee that frequent fliers will benefit from positive changes at this time.
I remember when Leo Mullin was the chief executive officer of Delta Air Lines from August of 1997 to Thursday, January 1, 2004. He had virtually no experience in commercial aviation — other than serving as chairman of the International Air Transport Association — as the bulk of his experience and background was in banking and finance. The very mention of his name is still reviled to this day by both passengers and employees of Delta Air Lines, as many say he drove Delta Air Lines towards bankruptcy and had no business being involved in commercial aviation — let alone be chief executive officer of a major airline…
…but unlike Jeff Smisek, at least Leo Mullin — who reportedly currently serves as a Senior Advisor at Goldman Sachs Group in its Merchant Banking Division — was not under investigation for any questionable activity during his tenure at Delta Air Lines. Although he is credited with some positive technological developments under his reign, he simply did a generally lousy job of leading employees at Delta Air Lines as its chief executive officer.
I would not be surprised if I barely scratched the surface of all of the reasons as to why Jeff Smisek was poor at being a leader — but this article is too long already; so please accept my apologies. I plan on continuing this topic of leadership in a future article — but let me just say that in my opinion, Jeff Smisek did not define and carry out the characteristics of the five practices of exemplary leadership.
In the meantime, I welcome your thoughts about this sudden development at United Airlines.