During a recent vacation, I had the opportunity to speak with a flight attendant about her experiences in the industry. The conversation quickly turned to the economics of the industry. In particular, the profit sharing and bonus structure with her particular employer. It turns out that the profit sharing program and bonuses come out of the same pool of money and the metrics for determining the amount of the benefit for each employee is based primarily on things that are beyond the control of the flight attendants, staff, airline executives, airports and air traffic control.
The bonus structure is largely based on the door to the aircraft closing on schedule, the plane taking off on schedule and the plane landing on schedule. So, if bad weather hits either the departure or arrival airport, the employees are immediately penalized in their profit sharing and bonuses. If an unrelated emergency takes place in the air or on the ground (e.g. a runway closed due to a crash or disabled aircraft) causing a cascading effect on air traffic in the area, the employees are immediately penalized in their profit sharing and bonuses. When her Christmas eve flight was canceled due to bad weather and she had to spend three days away from home (including her day off, Christmas Day), the airline added insult to injury by penalizing her bonus/profit sharing for the flight cancellation. Measurement isn’t based on individual capabilities, execution of responsibilities or measured predominantly on one’s ability to deliver good customer service; it’s based on external factors over which noone has control.
It turns out that this is very bad for morale. The airline that employs this flight attendant happily delivered a $76 cheque as her annual bonus. That same airline delivered a $2.6M bonus to its president for his annual bonus.
How is your company’s bonus and profit share program structured?
REVOLUTION!!!
Comment by Richard Bell — January 13, 2009 @ 1:21 pm