Leaked Memo: Oscar Munoz Tells United Employees Quarterly Bonuses WILL Change

On Monday United Airlines President Scott Kirby announced that they would pause the plan to replace quarterly bonuses with a much less expensive lottery program.

Last Friday they had come up with the lottery that would save the carrier perhaps $30 million per year, replacing bonuses of up to $300 per quarter per employee with big prizes given to just 1-2% of employees. And the backlash was brutal.

Much of the media reported Kirby’s letter as saying United was ‘reversing course’. I suggested that instead they’d be talking to employees about what the new system would look like, but there would be a new system. Employees wouldn’t keep their quarterly performance bonuses that they have today.

United’s CEO has just followed up with a letter of his own to employees (HT: @BrianSumers) where he makes the same point.

Since the first quarter ends in a few weeks, they’re going to pay out the performance bonuses that United employees have expected to see at the end of March. That’s reassuring — that United isn’t going to retroactively pull the rug out from under everyone.

However Munoz says “we will introduce a new plan as soon as possible” in its place. That new plan will be announced after they’ve spent time listening to employees.

Here’s Munoz’s note:

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 »

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  1. Long-term research from Harvard Business School shows over and over, these “incentive” programs do not work. There have to be winners and losers…. and the losers are the ones who get the job done, day in and day out. I would rather have one of those employees wait on me.

  2. Under Bethune at Continental these did seem to work, at least to get the plane doors closed on time when possible. But he also apparently didn’t make less engaged/lucky employees feel like losers. When he flies United the number of staff that come up to give him a hug and say hello is remarkable.

  3. So Oscar finally comes out from hiding behind Scott Kirby just to announce more bad news?
    Shame Oscar, shame.

  4. This is really quite smart by United. Feint with a truly abhorrent, possibly even insulting “incentive” program that was never going to see the light of day. Spend a couple weeks “listening”, then implement the program you always intended after the joke listening sessions.

  5. United Airlines has demoralized the employees over and over most are veterans of airline industry who have taken wage concessions , lost pensions, and changed jobs due outsourcing. The Company Greed Machine never stops to consider who makes the Airline run the Front Line The executives ruined what could be a great Airline you have to treat Customers and Employees like they matter the same Shameful tactics will never make United a great Airline

  6. Typical Scott Kirby move. At AA they have both incentives… sort of. At the quarterly meetings Doug Parker draws like 20 employee names that have been submitted by both customers and fellow employees as performing above and beyond and those winners each get $10k. There are smaller prizes doled out to another hundred or so but Doug only draws the 20 top prizes. This is a US Air thing as legacy AA did not have any such drawings. AA also has the quarterly performance bonus for all employees (which it had pre-merger as well) but it doesn’t amount to a lot. Once or twice a year on average you might get an extra $50. In my view the quarterly performance bonus has always been kind of silly since bad weather generally sinks airline performance numbers in any given quarter and that is something individual employees have no control over. The goals are set very high as well so the goals are rarely met.

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