POSITION PAPER: POWER, POLITICS, AND CULTURE

Executive Summary

  United Airlines has been a respectable and successful airline for decades. The company employs over 80,000 people and transports over 90,000 people a day from any one of its major airline hubs. Over the years, the company has been receiving competition from different airlines and has therefore focused on revenue generation and collection for the better part of the last two decades. For the company to maintain its profitability, it has had to incorporate an overbooking system where it sells more tickets for a flight than there are seats on the plane. This ensures a full plane (or as close to a full plane as possible) on the date and time that the plane is scheduled to takeoff, and they compensate customers that are bumped from their flights with higher cash backs or better packages for their next flight.

Generally speaking, this methodology works well from a profitability standpoint, but it can cause some consternation for customers who absolutely can’t afford to miss their flight. Recently, one of their passengers refused to give up their seat to a United employee and the scenario resulted in him being injured in the process of forcefully evicting him from the plane. As a result, the company’s culture, diversity management, team work and motivational strategy development was put into question. Their refusal to immediately apologize to the customer brought into questions their insensitivity towards customers, and it demonstrated their commitment to profitability rather than the quality of service they provide. The recommendations on improvement include: United Airlines should change how it views their customers and they should focus more on employee and customer satisfaction. In addition, United Airlines should concentrate on improving diversification and they should redefine the company vision and mission and retrain management and employees on what that means. Their policies should be revised to the extent that their policies and culture are more customer driven than revenue driven in order to prevent alienated any more customers than they already have.

Organization Overview and The Issue at hand

United Airlines is one of America’s “Big Three” major airline carriers (the other two being American Airlines and Delta). They are headquartered in Chicago, Illinois and they are the world’s third largest airline by revenue after American Airlines and Delta Air Lines. United has operated in a large international and domestic route network with its largest presence being felt in the Asia-Pacific region of the world. The airline was the brainchild of William Boeing, and it emerged from a consolidation of numerous carriers and equipment manufacturers (The Star Alliance), from 1928 to 1930 (Garfors, 2013).

The Airline operates out of nine major airline hubs (Chicago, Guam, Denver, Los Angeles, Houston, San Francisco, Newark, Tokyo and Washington DC). The Chicago-O’Hare hub is United’s largest in terms of passengers per year and departures. The airline employs over 86,000 people and their corporate headquarters is in Chicago. United is also a publicly traded company through its parent company United Continental Holdings, under the name “UAL” on the New York Stock Exchange with a market capitalization of over $18 billion as of September 2014.

As discussed, with O’Hare International Airport being United’s largest hub, the airline receives about 33.5 million passengers every year, which translates to over 99,000 people a day. United is the busiest airline in Chicago O’Hare, and with this comes variances in flight planning and logistics. Dealing with a massive number of clients every day, they (along with most – if not all – major airline carriers) developed a culture of allowing for booking of more plane tickets than there are actual seats on a plane. This allows for variances in client turnout and maximizes the number of passengers they can put on a flight. Whenever a passenger checks-in for a flight and discovers it has been overbooked, or their seat was sold to someone else, the airline created a system of compensation whereby they give passengers money, airport food vouchers and paid hotel stays (when necessary) if they are willing to give up their seats to another passenger (or airline employee) and wait on the next flight to their destination. This policy allows the airline to maximize their profits even while awarding some customer cash vouchers that are worth much more than their original flight tickets. If there are no volunteers, they randomly select the people who are required to give up their seats, but generally speaking, this causes little issue once the customer receives their compensation package.

On the second Sunday of April this year, a routine overbooking situation lead to a public relations nightmare for the company when a passenger flying from Chicago to Louisville, KY was randomly selected to give up their seat on the flight for a United Airlines employee. When selected, the passenger refused, and the end result was him being forcibly removed from the flight by airport security. As is the case with almost every incident in today’s society, the event was captured on video by several other passengers, and in the video, the passenger is seen screaming and being dragged through the aisle as security wrestled with him to remove him from the plane. Once the video was leaked to the press, speculation arose the one of the reasons United chose the passenger because of his Asian nationality (Hartung, 2017). As a result, a massive PR attack on United Airlines ensued, and ultimately, it lead to the suspension of some of the company’s staff and a massive out of court settlement for the passenger, who lawyered-up and sued the airline as soon as he reached his destination.

Current Corporate Culture

Generally speaking, United Airlines is all about diversity and inclusion. The company is all about embracing the differences we have and leveraging on these differences to form a genuine community to the communities they serve, and this in turn contributes to many business expansion opportunities. Its culture acknowledges the differences between people, and their mission is to create an inclusive working environment that is characterized by respect and dignity, and that empowers each and every employee to serve in the global marketplace and contribute to the success of the company.

Their vision is to embrace diversity and they follow an inclusion strategy where innovative and effective solutions are used to engage employees from diverse backgrounds and different cultures in taking the company’s flyer-friendly services around the world. United strives to be recognized as an airline where leaders and employees embrace inclusion and diversity as a business advantage, their employees feel highly valued and are actively engaged, and where customers value the inclusive approach in the delivery of flyer-friendly services (United Express, 2017).

Unfortunately, this culture worked against the company in this instance. How so? Well, since their employees are taught to treat everyone equally regardless of race, gender, and professional status, the fact that the passenger in question was Asian, a doctor, and 69 years old didn’t matter. Since no one volunteered to give up their seat, he was randomly chosen, and in keeping with their policy, he had to vacate his seat. Their culture asks for inclusion and diversity, and ironically, even though the identity of the other customers who were bumped off that same flight were never revealed, the passenger in question was treated no differently than they would have treated any other passenger that reacted the way he did; however, the narrative that was driven in the news cycle was that race was a contributing factor in the removal of this particular passenger despite the fact that it couldn’t have been further from the truth.

Areas of Weakness

Despite the onslaught of negative press coverage of the incident, United Airlines’ CEO Oscar Munoz congratulated his workers after the incident saying, “I also emphatically stand behind all of you, and I want to commend you for continuing to go above and beyond to ensure we fly right.” This brings out the company’s major weakness that is Operational Excellence above any other thing. United among other companies are corporates that believe in increasing profits at any cost. An article on Forbes, by Adam Hartung highlights this risk of operational excellence that affects the whole organization. In the incident, the company needed to bump 4 paying clients for the sake of ensuring that United airlines staff get seats so as not to miss their flight in the next town. They mistreated an actual paying customer for the sake of their operations and were not apologetic about it. This demonstrates that United Airlines focusses on keeping costs as low as possible, being efficient, the success of their business operations, while completely disregarding their customer’s satisfaction (or anything else for that matter) (Hartung, 2017).

Management at United Airlines is seen to motivate their employees to stick to operational excellence in an effort to make as much money as possible, regardless of the outcome. United Airlines was ranked last in airline quality in 2013, and for all intents and purposes, the company didn’t seem to care. So long as they lowered operating costs, they were okay with it. In 2016, United fired its CEO after discovering that he had been bribing government officials to gain favorable treatment in New York and New Jersey airports. Reportedly, his stated reason for doing this was because of the pressure he was receiving from the board of directors to lower operating costs. Increasing operational excellence is taken so literally by their employees that they falter in judgement when it comes to doing what’s right (Hartung, 2017).

Proposed Solutions
The first thing I would change is how the company views the customer. When it comes to business, it’s never a good idea to bite the hand that feeds you. In an article on Volkovlaw blog, Michael Volkov mentions in his closing remarks that United airlines needs to work on its’ inability to take responsibility for how it treats customers, and the fact that the CEO did not immediately apologize (regardless of whether they felt they did the right thing) shows that the entire company has a problem taking responsibility for their actions. When people and organizations make mistakes, it is good to take responsibility for those mistakes and correct them as well (Volkov, 2017).

I would also propose that management work towards customer satisfaction rather than operational efficiency. A happy customer is a returning customer, so if you keep your customers happy, it would be hard for them to lose revenue if they put their customers first. The fact that Munoz refused to apologize until the incident became a financial liability highlights a disconnect between the company mission, vision and culture and what they actually do. Instead of embracing diversity and inclusion, the company does the total opposite. They are indifferent to their clients and focus more on the money they feel they should be making. This attitude pushes clients away, and if not remedied, this will ultimately lead the company to bankruptcy if they aren’t careful.

The third recommendation I would make is to redefine the company’s mission and vision. In addition, I would redefine the way they interpret “embracing diversity” and understand that different customers need to be treated differently (if the “random” selection process chooses a 69 year old man, maybe you choose another customer). I would implement quarterly training on customer service and develop a “secret shopper” type of program whereby undercover employees travel on random flights and cause different issues/scenarios to help train staff on how to react to different situations and customers’ needs. At the end of the day, United Airlines needs to train their employees to realize that people are different, and when dealing with people, you need to be able to exercise certain levels of patience and accommodation. I am relatively certain that had they approached the scenario in question differently, they probably could have either convinced the passenger to take a later flight or they could have simply made a concession in this instance and chosen another customer instead. Instead, they opted to follow their policy to the letter, and this resulted in a $1 Billion-dollar loss in revenue after it was all said and done.

Finally, I would implement a policy whereby passengers are not forcibly removed from their seats unless it is a matter of safety or security. While they ultimately implemented something along those lines after the incident, it proved to be “too little – too late”. The over-booking policy is a solid one with regard maximizing revenue, so I would leave it in place; however, I think it would be to their benefit to identify the passengers that are going to be bumped BEFORE they begin boarding passengers so that this causes fewer disruptions and eliminated the possibility of this happening again. While this will not eradicate the possibility of having an irate or angry customer, it will ensure that the angry/irate customer is irate and angry in the terminal rather than on the plane. This will not only streamline the entire process, it will ensure fewer inconveniencing of the passengers who aren’t bumped (Kane & Chappell, 2017).

Garfors, G. (2013). These Airlines Fly to Most Countries. Retrieved from garfors.com: http://garfors.com/2013/03/the-worlds-most-international-airlines.html/

Hartung, A. (2017, April 10). Why United Airlines Abuses Customers: The Risks Of Operational Excellence. Retrieved from Forbes.com: https://www.forbes.com/sites/adamhartung/2017/04/10/why-united-airlines-abuses-customers-the-risks-of-operational-excellence/#3738623cbb10

Kane, J., & Chappell, B. (2017, April 27). United Airlines Settles With Passenger Dragged From Plane. Retrieved from npr.org: http://www.npr.org/sections/thetwo-way/2017/04/27/525845287/united-airlines-will-now-pay-voluntarily-bumped-passengers-up-to-10-000

United Express. (2017). Diversity and inclusion. Retrieved from United.com: https://www.united.com/web/en-US/content/company/globalcitizenship/diversity.aspx

Volkov, M. (2017, April 17). United’s Crisis Mismanagement and Corporate Culture. Retrieved from blog.volkovlaw.com: https://blog.volkovlaw.com/2017/04/uniteds-crisis-mismanagement-corporate-culture/