United Airlines announced last week it would stop giving bonuses to its employees. Individual bonuses would be replaced by a lottery that would give a few big prizes to a few lucky winners. The stated purpose was to increase motivation, build excitement, and provide workers with a sense of accomplishment.
Employees felt they were being played for suckers.
They said it was clear to them United’s real motivation was to cut costs. A closer look at the old and new programs revealed that dumping traditional bonuses in favor of a sweepstakes would save United tens of millions of dollars a year. It might have worked as a part of an above-and-beyond reward system, but not as a replacement for traditional compensation.
Who thought this was a good idea?
To be effective, incentives need to be defined as meaningful and attainable by the recipients, not by the executives. Under the new system, 98% of United’s employees would get nothing. How’s that for meaningful and attainable? Deb Gabor, a brand strategy consultant, said “When a company creates compensation programs without obvious ties to the company’s strategic objectives, it creates friction against the company’s brand. United created a system that rewards randomness rather than consistency.”
United’s reaction to the unexpected backlash was to say they are “pressing the pause button.”
Scott Kirby, United’s president, said “Our intention was to introduce a better, more exciting program, but we misjudged how these changes would be received by many of you.” Forbes says the idea was doomed from the start. A United spokesperson said – with an apparent lack of irony – “Right now we are going to collect feedback from our employees to make sure we create a new incentive program that will be meaningful to employees.”
Wouldn’t collecting feedback from employees have been the smart place to start?
Unintended consequences invariably occur when out-of-touch decision-makers press “solutions” and “rewards” on people who don’t define them as such.