United’s New Bonus Plan for Employees Promises More, Will Deliver Less

In March United Airlines told employees that instead of receiving quarterly bonuses they would all be entered in a lottery if the airline met certain performance metrics. While individual employees could win a Cadillac Eldorado or a set of steak knives up to $100,000, most would get nothing.

There was tremendous backlash at the pay cuts, and the airline put off changes. They still planned to change their incentive structure but went on a listening tour to figure out how.

Brian Sumers at Skift reports on United’s new plan.

  • Employees can receive up to $125 per month. That’s $1500 per year potential, which is more than the old $300 per quarter or $1200 per year. But the likelihood they’ll be paying out this much strikes me as very low.

  • $75 per month will be based on customer satisfaction scores. According to United’s executive vice president of human resources and labor relations Kate Cebo, “Our goal for 2019 is to achieve a score that’s at least one point higher than in 2018, and we’ll share monthly goals as we go.”

    [I]f United raises its customer satisfaction scores by one point, year-over-year. United asks customers to rank the quality of their flights on a five-point scale, and it wants to have a certain percentage rank it above four.

  • $50 per month will be based on D0. They have to beat Delta, American, and Southwest to earn the payout.

Instead of meeting defined objective static operating metrics, the new criteria requires (1) beating competitors operationally, and (2) continually improving customer service scores which means it will be harder and harder to earn payouts.

These bonuses will be harder to earn up front, and even harder to earn over time. United should still capture cost savings, while telling employees they are all eligible for monthly bonuses totaling more than the old quarterly bonus program.

The idea that United will beat Delta and American and Southwest month in and month out seems rather unlikely. And if they can’t that alone will net pay savings. Beating two of the three consistently though shouldn’t be hard.

And as we’ve seen at American, though customers value on-time performance and departing on time is more controllable than arriving on time due to the vagaries of air traffic control (and gate availability on arrival) simply demanding that employees privilege on time departures over everything else, without giving them the tools to accomplish all service elements prior to departure, harms customer satisfaction.

At American we’ve seen gate agents skip processing standby passengers and last minute upgrades, and flights leaving without catering, along with employees reprimanded by managers for taking care of customers if it risks being a minute behind on departures. Since American hasn’t gotten the rest of its operation right, simply providing carrots and sticks to front line employees for D0 and clicking heels three times hasn’t yielded strong performance on D0. United’s President was President of American when these plans were put in place.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Pingbacks

Comments

  1. Scott Kirby is such a huge disgrace. He constantly does his best to out-Parker Parker because he wants to be the Parker of United. The Munoz era of United will forever be tainted by the scum of Kirby whose race to the bottom has actually managed to make his tenure worse than Smisek. It will be such good riddance when Kirby retires, whoever comes after him couldn’t possibly worse. Not even Ben Baldanza could make United more of an ULCC than Kirby.

  2. Obviously, Munoz is on-board with every move of Kirby. If Kirby goes, Munoz will pick someone just as bad. Munoz needs to go too.

  3. The new program should be great for morale. Create an exceedingly difficult standard for your people, then penalize them for not meeting the new standard. What could go wrong?

  4. As far as the pilot group goes things are pretty good at United, aircraft growth, route growth, industry leading contract with a new one on the horizon, profits up as well as morale. Kirby would love scope relief but that will never happen. Any comparison with Smizek is complete BS.

Leave a Reply

Your email address will not be published. Required fields are marked *