United Airlines To Reconsider Controversial Employee Bonus Lottery

Filed Under: United

A few days ago United announced that they would be eliminating quarterly bonuses for their employees, which were up to $300 per quarter when United met their goals (which isn’t an insignificant amount of money, when you consider United has lots of employees making $10-15 per hour).

Instead they planned to replace this with a lottery system that includes quarterly prize drawings, ranging “from $2,000 to $40,000, luxury cars, vacation packages, and a grand of prize of $100,000 awarded to one eligible employee per quarter.” This drawing would happen each quarter as long as United reached at least one of their performance goals.

I think it goes without saying that this was a cost saving measure on United’s part, when you consider that they have 88,000 employees. Many companies seem to assume everyone is dumb, and United’s president spun this change as a positive, suggesting that this was an “exciting new rewards program,” and a United spokesperson said that they believed this “new program will build excitement and a sense of accomplishment as we continue to set all-time operational records that result in an experience that our customers value.”

On top of that, this new program was out of touch. If someone makes $10 per hour and wins a “luxury car,” how are they supposed to pay the taxes, insurance, and maintenance on it?

United employees were livid, partly because they were having a consistent bonus taken away, and partly because management was trying to spin this as a positive. It’s one thing if United were struggling and they needed to cut back, but what this really boiled down to is United management saying “hey, we’re doing as well as we ever have, we’re so proud of you, and to reward you we’re going to cut your bonuses.”

United received thousands of complaints from employees over the weekend, and the unions wrote a strongly worded letter.

It’s now being reported that United is “pressing the pause button” on these changes to their rewards program. Scott Kirby wrote the following in a letter to employees today:

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

Now the airline is reaching out to employee work groups to come up with a program that better reflects their feedback. So it doesn’t sound like the program will remain as it currently is, but rather they’re going to come up with another program that presumably lowers the cost to management.

It’s great that the negative outcry made a difference, though it’s still so ridiculous to begin with that Kirby is suggesting they “misjudged how these changes would be received” by employees. This was indisputably a cost saving measure, so I think what he’s trying to say is “oops, I misjudged the fact that our employees picked up on our attempt at cutting their bonuses.”

I’m not yet ready to give United management much credit for listening, though. As of now they’ve just pushed the pause button on the program. Perhaps they’re just pausing until they can find a different way to spin this, or to acclimate everyone to the idea. Hopefully United management realizes that everyone is going to be watching much more carefully this time around, so they better not try to pull a fast one again.

I’m curious to see what they come up with now, after supposedly consulting with their work groups.

(Tip of the hat to DB)

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

  2. First Polaris and now this. What an incompetent bunch of morons.
    Makes me shudder to get on their planes. What else can they f**k up

  3. What’s Oscar’s role in all of this? Did he sign off on this? Does the buck stop with him?

  4. we misjudged how these changes would be received by many of you.”

    I’ve been in meetings like that. You have folks who haven’t made less than $100k since they graduated from business school 20 years ago not really being able to grasp what making $15/hr is like.

  5. I actually don’t think it’s bullshit . If you’re rich, $300 is chump change, and you might say “Wouldn’t a lottery be more fun?” But for many of their employees, $300 helps them buy a better brand of dog food for their own mealss. I don’t think Kirby and his minions appreciated that.

  6. Hopefully they roll this ridiculous lottery plan back entirely, and then actually find a way to legitimately enhance the old system.

  7. Note to United—delivery on what you promise, listen to and respect your employees and the contribution they make to the company, improve your operation….in other words do exactly what Delta has done….and you’ll make the profits you need to reward your employees and shareholders in a consistent and fair manner. People “play the lottery”. Employees work to receive a pay check. As a company you simply cannot tie the two together and expect to get the results you need.

  8. I would be ok with the lottery plan if the executive team’s bonuses were based on lottery.

  9. Smart thing would be to keep the old bonuses and add in the lottery. After the lottery generates some buzz, you can taper the old bonuses and increase the lottery and eventually have it be all lottery.

  10. Love the comment by Anon – why not right? Let’s put the exec bonus in lottery pool as well and see how far that goes with them……….

  11. How to kill company morale – eliminate bonuses and institute a lottery! Good job, United!

  12. One week with me on a Job site Romney would be the Pres. and the F heads @ United would know how to treat the Good people and get Rid of the Goofs .

  13. I’ll never understand how a company with the size and resources and money available to it could have ever thought this was a good idea. This lottery thing even *smells* bad.

    It’s like they never even surveyed a small group of employees on the kinds of bonuses or perks they value or devalue most. Someone just plugged in some numbers into a spreadsheet to see how much money they could squeeze out of front-line employees, made a bunch of assumptions to “validate” those numbers, and voila! Let’s roll this baby out! It’s a win, amirite?

    They should be embarrassed.

  14. With 88,000 employees receiving $300 per quarter that amounts to $105.6 million a year, they could have had 100 winners of $100,000 each and that would have still cut more than 90% of the cost. Employees aren’t enamored with gimmicks like this lottery when over guaranteed bonuses when the company makes a profit since it removes something they can count on (which really they shouldn’t since everyone should be making a living wage).

    A cut in the corporate bonuses of the “C-suite” would be a nice way to compromise with employees accepting a cut in bonuses don’t you think? But I wouldn’t hold my breath.

  15. @anon

    +1 as long as the odds of the execs winning a bonus are the same 1 in 88,000.

    What an asinine idea. Heads should roll.

  16. I think Lucky hit the nail on the head: United is experiencing record profits. Why do they need to resort to cheap gimmicks to squeeze out a bit more? At what point is billions of dollars of profit enough?

  17. @Ryan

    Good question. I think the answer is that the CEO’s bonus always depends on the results of the next quarter. So record profits this quarter are great, but the next quarter they need to deliver more. So squeezing the employees’ bonus is a way to deliver more and boost the CEO’s bonus. It’s a never ending cycle.

    The modern corporation exists for one reason only: to maximize executive compensation. That’s what is incentivized. Yes, shareholders might do reasonably well, but only as a side-effect of the CEO’s increased compensation.

  18. I mean, lost for words. Does United even have a marketing department? Do they have anyone to review these insane emails for tone? That is a real question.

    I really didn’t think it was possible for this airline to give itself even worse publicity, but this chain of decisions, boy oh boy: firstly to CUT bonuses for front line employees (but not the C-suite apparently?) in a year of record profits.
    Secondly to send that incredible email trying to convince employees receiving a substantial pay cut it was a positive thing….
    Thirdly to send this last email essentially announcing the will put this insane policy on hold because those same employees misunderstood their intentions???

    Chutzpah, is what that is called. Also truly appalling management. Is there a front-line United employee who won’t come out of this feeling patronised and alienated?

    This is how NOT to treat your employees.

  19. I salut AA for masterminding Scott Kirby’s move to UA.

    Well played AA by getting rid of a jerk and also destroying your competitor at the same time.

    Well played AA!

  20. If I were a shareholder, I’d be calling for heads to roll on this one from the corner offices. Clearly, whoever’s running the show are complete amateurs and aren’t capable of running an <100 employee company let alone one with 88k.

  21. Idiocy. Heads should roll. Low paid employee needs vacation with big tax bill. What a wonderful surprise at the end of the year.

  22. Brought to you by the same simpletons that created the United Lottery. I avoid them as much as possible.

  23. While cost cutter duo Kirby+Parker are loved by investor and hated by employees, I think UA is messed up way before Kirby. They really needed Kirby to fix the age old mess.

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