How Not to Give a Bonus

poor leadershipThere are a lot of ways to give employees bonuses based on individual performance and/or company performance. The way the President of United Airlines, Scott Kirby announced his new lottery system was really “innovative” – and not in a good way.

Apparently, after extensive research (ha!), Kirby decided the old quarterly bonus program which netted the employees approximately an additional $1,200 each per year was not exciting enough. He determined that a lottery – which has absolutely nothing to do with performance – was more exciting than everyone achieving common goals. “The reason for this change goes to the heart of our strategy: offering meaningful rewards will build excitement and a sense of accomplishment with more bang for the buck,” said Kirby.

There are so many things wrong with this I don’t even know where to start? Let’s consider some basic questions. Did he think everyone would be happier with a reality TV style bonus program? Did he think everyone was bored with the old program and would rather give up $1,200 for a chance at “bigger prizes” such as $100,000 – which by the way, only one person out of 86,000 would win? How does giving one person a “meaningful reward” help the other 85,999 employees? The only thing meaningful about it at all is that United gets to keep a lot more money for their shareholders. The new program is called “core4 Score Rewards.” The sole “continuous improvement” of this bonus program is improving Kirby’s bonus based on the money he is saving by stripping the employees of an incentive program.

As if this were not bad enough, he delivered this exciting announcement in a memo. He didn’t even have enough courage to stand in front of the employees and deliver the message at a town hall or broadcast a video communication. He hid behind a memo. The cluelessness of this whole scheme is astounding, and it is shocking that the board would go along with it. And where was HR during this whole fiasco? Last time I checked, most employees go to work and expect fair pay for a job well done and potentially bonuses when they or the company perform at or above goal. They do NOT work hard as professionals to be treated like contestants in a game show.

When asked about the new lottery, the company spokesperson responded, “We believe that 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.” I bet all those employees are going to be so happy to help the company continue to set new “all-time operational records” now and they probably can’t wait to get started.

Bonuses and rewards should be tied to performance – the company’s and/or the employees’ – and should reflect the company’s values. Period. Lottery style rewards are games of chance and useless towards engaging and keeping top performers, let alone motivating anyone to work harder. Performance will slow as a result of this change because something was “taken away” and replaced with nothing. Second, if and when you change people’s pay, bonuses or other compensation, communicate it with care, in person or in a group, but not via a “memo.” If you can’t justify the “why” with something other than “I want to keep more money for myself and the stockholders,” be prepared to face a justifiable negative backlash.

Author note: United Airlines has decided to “press pause” on this program after employee backlash. I am posting this blog because the issues raised still stand. How did any leadership team think this was a good idea? And they should not at all be surprised that there was a backlash. This program was on the wrong track in every dimension from conception to execution and the outcome was obvious from the start.

photo credit: wilco737 United Boeing 747-400 at FRA (N178UA) via photopin (license)

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