Don’t Mess With Airline Culture. Scott Kirby Pauses Employee Compensation Lottery Program at United Airlines

Scott Kirby should know by now not to mess with the culture of a workforce at a company in general — especially at an airline — as the negative effects could resonate to the customer; and the unintended positive effects could ultimately work against him.

Don’t Mess With Airline Culture. Scott Kirby Pauses Employee Compensation Lottery Program at United Airlines

As I arrived to volunteer to mentor entrepreneurs with promising ventures for the twelfth consecutive week at a business training accelerator program of the Goizueta Business School of Emory University last night, the program director walked up to me and asked me if I had heard about what happened at United Airlines.

“I wrote two articles about it already,” I replied, as he knows I write articles for The Gate.

As a graduate of the business school and having earned a Master of Business Administration degree himself, he could not believe that executive management at United Airlines actually thought they could pull off what is being called a lottery in place of a quarterly bonus program.

“At least keep the bonus program in place and offer extra compensation for those few who deserve it,” he said.

“It was nothing more than a cost-cutting measure,” I replied — and guess what: if enough costs and expenses are cut, that could mean incentive bonuses for executives who are already earning too much compensation. Pure and simple.

Putting Lipstick on a Pig

Incensed employees of United Airlines were rather intensely vocal about the modified incentive program — which included a petition that was suddenly closed — that on Monday, March 5, 2018, Scott Kirby sent an internal memorandum to employees of the airline:

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

Please allow me to translate the corporate-speak of this message to its perceived real meaning:

Dear Subordinates,

Since announcing our planned changes to the quarterly operations incentive program, we could not help but hear over and over again your incessant whining about the changes we wanted to make to your precious bonuses.

Our intention was to save millions of dollars for the airline under the guise of introducing a better, more exciting program with you in mind — yeah, right — for a chance to put more money in our pockets; but we misjudged your intelligence, as we had no idea that you could see right through what we were trying to do.

So, we are delaying the implementation of the new incentive program until we could figure out a better way to fool you. We will be reaching out to work groups across the company to judge just how smart they are — which is something we should have done in the first place; and the changes we make will better reflect your feedback — whether you like them or not.

Embarrassed,

Scott
Your superior

Did management at United Airlines really think that their employees would be foolish enough into thinking — and actually believing — that the intended changes to the quarterly operations incentive program would actually benefit them?

Not the First Time Scott Kirby Played With Fire Known as Airline Culture

Before being named the current president of United Airlines and United Continental Holdings, Incorporated on Monday, August 29, 2016, J. Scott Kirby served as the president of American Airlines, Incorporated from Monday, December 9, 2013 through Friday, September 2, 2016; as well as president of American Airlines Group Incorporated.

Monday, December 9, 2013 is the day American Airlines and US Airways had officially legally merged and dethroned United Airlines as the largest commercial airline in the world. Kirby served as the president of US Airways Group, Incorporated and US Airways Incorporated since Sunday, October 1, 2006; and prior to that, he served as the executive vice president of sales and marketing — which is the role he had since September of 2001 at America West Airlines before its merger with US Airways.

Douglas Parker was the chief executive officer of America West Airlines; then US Airways; and then American Airlines — all through mergers and acquisitions. Parker and Kirby were a team…

…the same team which attempted to orchestrate a hostile takeover of Delta Air Lines — while the airline was undergoing bankruptcy reorganization since Wednesday, September 14, 2005 — by suddenly bidding $8 billion on the beleaguered airline on Wednesday, November 15, 2006. Thinking that they could take advantage of the perceived vulnerability of Delta Air Lines in 2006, their plans backfired significantly when employees, stockholders, politicians, creditors and customers rallied together under a movement coined Keep Delta My Delta.

Needless to say, the hostile takeover bid was soundly rejected. “Parker wanted to be the chief executive officer of the largest commercial airline in the world when US Airways attempted a hostile takeover of Delta Air Lines back in November of 2006; but his intentions were thwarted by the Keep Delta My Delta campaign”, I wrote in this article pertaining to the combining of the operating certificates of US Airways and American Airlines into one single operating certificate as approved by the Federal Aviation Administration of the United States back on October 17, 2015. “He finally realized his dream officially as of today.”

I was fortunate to witness that unity first-hand when I was aboard the inaugural flight for the airplane which sported the then-new and now-current livery of Delta Air Lines on Monday, April 30, 2007 — the day Delta Air Lines officially emerged from bankruptcy — and most of the passengers were employees of the airline who were chosen to participate:

During the taxi of the aircraft before making its way up the ramp towards the runway, the Delta Air Lines employee sitting in seat 41A suddenly wondered aloud, “Imagine if all this was not here.”

It took me a moment to understand and realize what she was saying. Imagine if Delta Air Lines failed to emerge from bankruptcy and went out of business. What would the airport in Atlanta be like without Delta Air Lines?

I replied, “Even worse: what would all of this be like if all of this was US Airways instead of Delta Air Lines,” referring to the failed hostile takeover of Delta Air Lines by US Airways. However, to derail the seriousness of such morbid thoughts, I then said, “I wonder if Doug Parker is having a drink right about now?” She responded, “You mean while driving?” Laughter once again ensued.

Immediately prior to take-off, the pilot announced that Delta Air Lines flight 9998 was “number one for take-off — as it should be. Flight attendants, please take your seats.”

The pride of being connected to Delta Air Lines — which coalesced since the hostile takeover bid in 2006 — lasted through the remainder of the term of Gerald Grinstein as chief executive officer through his predecessors of Richard Anderson and Edward Bastian. Funny how United Airlines seems to attempt to replicate everything else Delta Air Lines does — implementing basic economy fares and revising the policy pertaining to emotional support animals as two of many examples — except in terms of nurturing something as fragile as workplace culture, which can be a vital part of the successful operation of an airline.

I wonder how many employees of Delta Air Lines should be thanking Doug Parker and Scott Kirby for forcing the airline to solidify its culture and find the inner strength which united — pun intended — everyone to turn a failing airline into a successful entity…

Summary

There are executives who exhibit true leadership — a few of many examples are highlighted in this article

…and then, there are executives who seem to care little about anything else other than attempting to line their pockets at the expense of others and leaving what they believe will be a legacy which will last long after they are gone — and they never seem to learn from their mistakes.

I will leave you to opine as to which group of executives Scott Kirby — and, for that matter, Doug Parker — likely belongs based on past experience…

Photograph ©2017 by Brian Cohen.

10 thoughts on “Don’t Mess With Airline Culture. Scott Kirby Pauses Employee Compensation Lottery Program at United Airlines”

  1. isaac says:

    Brian,the other day when I first heard the news I said what an idiot Kirby is like most folks. Although I dont care for Kirbys game play at AA and now UA, hes anything but an idiot.

    So after some more thought trying to figure what the heck he is up to, I thought he does want cuts in the bonus program, but if he offered say 50% hed get the same reaction or whatever he actually wanted to achieve. So he throws out the full boat fully expecting the reaction he got and will come back with another scaled back plan which isnt as bad and is what he really wanted all along, hoping that the rank and file will buy that happy they get something rather then nothing, and he and the other execs will be smiling all the way to the bank with their full increased bonuses

    1. Brian Cohen says:

      I never said he was an idiot, isaac

      …and if you think about it, isn’t what you wrote similar to how airlines have been treating frequent fliers in recent years: take away a significant amount of benefits and then “give back” some of them to placate members who have been vocal?

      That is the very reason why I never described what Scott Kirby did as “rescinding” the change in the employee incentive program. I believe that is merely a postponement similar to what you wrote: that it is coming, in a watered-down version that he probably originally wanted anyway.

      It really is a sorry way to do business, in my opinion…

  2. Jacob says:

    Excellent Post Brian. Especially for pointing out that this was just a money grab by the top leadership to line their pockets with the employee’s bonus money. Just unbridled greed. A classic example of how power and wealth corrupts people (they never have enough, no matter how much they already have).

    1. Brian Cohen says:

      I appreciate the feedback, Jacob.

      Thank you.

  3. Matthew says:

    Nice article Brian.

    1. Brian Cohen says:

      Thank you, Matthew.

  4. Enjoy Fine Food says:

    I know no one on the ground, but the pilots and cabin crew at United have had an “us versus them” attitude toward management for as long as I can recall. As an MBA grad, you realize how difficult that distrust is to repair. Kirby obviously doesn’t know how to turn it around.

    1. Brian Cohen says:

      Absolutely, Enjoy Fine Food — and I have written about the importance of trust in numerous articles here at The Gate.

      As one example, you might find this article interesting…

      http://thegate.boardingarea.com/trust-and-i-need-to-learn-when-to-keep-my-big-mouth-shut/

      …as I spoke with Stephen M. R. Covey of FranklinCovey on the issue of trust in commercial aviation…

  5. Ryan says:

    I love your translstion of his memo! 🙂

    1. Ryan says:

      I can’t type…”translation” rather than “translstion”

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