How's your fiction writing? I think you have the basis of a dystopia where AI replaces management and nobody notices they're robots until it's too late.
The execs probably hope to leverage irrationality around games of chance. This will provide net morale at a lower program cost. It's good that this innovation will be nipped in the bus before it spreads across corporate America.
This seems right out of the "Undercover Boss" playbook. With the cameras rolling, a lucky few get their college/student loans paid for and nice vacation, while the vast majority of employees get nothing.
> A new report says [United Airlines] plans to do away with quarterly employee performance bonuses--and replace them instead with random drawings for prizes like like cash, automobiles, and vacations.
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How will this encourage employees to perform admirably? After David Dao's beating and forced removal from a flight, this seems like quite a poor decision.
This was done to try and boost morale and make United a more caring airline? It looks like an attendance and compliance program in disguise.
How could people at the top be so inept at such basic principles of human psychology? The only explanation is that Oscar Munoz is a complete sociopath and cares nothing about his employees, or company for that matter. Makes absolutely no sense at any level and will only lead to long term damage to the company.
The net effect is that those people who actually tried harder in their job because of the bonus will feel no such desire after the first few times they don’t “win”. Those that do win will know it was pure luck and nothing in their actions or performance contributed to the winning, so it won’t change their performance either.
Moreover, it is a very dim-witted program. sub-2% chance of a reward? Take a sick day and lose elgibility? Welcome to an environment of malicious compliance, UA.
> in order to be eligible for the lottery, employees would have to have perfect attendance during the time period. Employees took that to mean no sick days.
>"I can't imagine driving the Mercedes into the employee lot while everyone around me that worked just as hard, or harder got nothing. I would feel like such a jerk. It's quite telling about the people who thought this up. I bet they would be gloating happily if they won." --Flight Attendant - Domestic
This is a super interesting piece of behavioral economics in action.
We know from Prize Linked Savings Accounts that people prefer a really small change of winning a lot to a really high chance of winning a little. [0] [1]
> The new program replaces that system with a lottery. If United meets its goals, all employees would have a chance to win prizes, including Mercedes automobiles and cash up to $100,000. About 1.6 percent of employees would win something.
If I recall, there was a study that showed that people were happier when given a paid vacation than when given an equivalent bonus.
The replication crisis most associated with psychology also appears to extend to many behavioral economics results. There's good reason to be skeptical of many of these studies.
Behavioral economics research in some respects has more in common with psychology research than other areas of economics. It is also associated with a particular ideological bent that seeks to undermine the traditional assumption in economics that people can be approximated as rational actors. While there is value in recognizing where that assumption can break down, behavioral economics is often used to justify policies or interventions that traditional economics would not recommend on the basis that people can't be trusted to act in their own best interests so their preferences should be ignored or overridden by benevolent experts who somehow are miraculously immune from the same failures of rationality that the rest of us proles are prone to.
A low-odds, high-reward gamble may still be preferred to its complement, but we must also consider aversion to loss of the bonus to which employees are accustomed. The new program could--but probably still wouldn't--make sense if it were an incentive in addition to the bonus.
$100,000 is way better than $1,500, right? Knowing the airline industry, this is a cost-cutting measure designed to try to trick you into thinking it's an improvement.
Not to mention a $100K bonus is enough for some people to quit, and take their lives elsewhere, so theoretically, there’s probably a motive of attrition as a subtext to force out a cross section of expensive veteran employees.
Brain drain is a factor in this, but probably some brutal downsizing is in the picture, and on the table already. Hold on to your butts.
But how does the previous bonus based solely on company profit incentivize anyone? In the grand scheme of things, most individuals at a company have very little affect on the company profit and the affect of one person is so diffuse it's meaningless.
I've never worked for a company that emphasizes perfect attendance, but my wife has. Why would any company want to encourage any employee to come to work sick and maybe contagious? Especially when they are confined to small quarters like an airline?
> Why would any company want to encourage any employee to come to work sick and maybe contagious?
I noticed such policies at some companies which had a very high sick leave percentage. Sometimes it's difficult to determine if someone is faking being sick. I guess one way of to try and solve that is giving people money. I hope nobody does this when the sick leave percentage is average due to mentioned working while sick is bad result.
I use to think why have sick leave at all and just give everyone a PTO bucket. Instead of having 10 sick days and 10 vacation days, split it and give everyone 15 days PTO. It would give people more flexibility and management would have to worry about if someone was really sick.
But then there are still issues...
1. People come in sick to save their PTO and spread what they have if it's contagious.
2. It works well for most salaried employees. We can work from home, claim we are working even if we aren't being productive and catch up over the weekend or when we feel better (I don't see an ethical problem with that.) A lot of hourly jobs can't time or place shift like that.
3. Salaried employees, usually don't have to call in sick for a sick child (we work from home), or for doctors appointments. We can usually make our time up.
We are engineers. So we think in terms of what you'd need to do, to achieve effectively statistical certainty that you'll be able to send a plane on it's way in almost all cases, while minimizing costs.
Such a process would involve a set of actions that you'd have to execute, as a management team, using a set of employees, so that everyone is in the correct place at the correct time, and the odds of anyone getting into trouble is minimal, and this gets planned out over time, optimized by a scheduling algorithm.
Then, if things go wrong, you simply re-run your algorithm to deal with the new situation and you do the best that can possibly be done. Of course, such a program is very hard to write.
The stories I've heard about management actually doing this are VERY few and VERY far between, and even then only about very specific things (and only things that would apply to multiple airlines, e.g. optimizing flight plans and fuel tanking). Instead, management layers simply threaten the layer below them into perfect attendance (which works for a while when employees are desperate for jobs) and when things inevitably go wrong they go into full panic mode and spend 50x what is really necessary to fix things. During such panics, even basic events seem to come as total surprises to management. For instance, there was a news message about a problem in Amsterdam Schiphol due to the weather. The problem was understandable, a re-frozen ice layer on the tarmac prevented safely taking off. 10 or so flights got canceled for one airline, for close to 2000 passengers, and there were 2 customer service representatives that, obviously, had a rather hard time dealing with this (there were 20+ doing ticketing for flights that weren't going to happen ... but using those ... nope). Management eventually provided hotel rooms for about 800 of those passengers and put beds in a terminal at around 6am for the rest. Lots of court cases are underway, and are unlikely to go well for the airline).
The point of this is clearly to reduce their bonus expenditures. Doing so directly would be seen as an attack on the unions, so they pull this harebrained lotto system out of their hat and pretend they are trying to innovate.
When it fails in a year or two, they’ll make a show of listening to their employees and bring back a bonus program similar to the old one but with significant cuts to the amounts and focus on attendance for qualification.
I wonder if United’s president (Scott Kirby) would be OK with his own performance compensation being determined via a lottery system? You know, would he feel sufficiently incentivized by a 1.6% chance (say) of getting his millions in stock options?
26 comments
[ 0.20 ms ] story [ 72.0 ms ] threadhttps://www.inc.com/bill-murphy-jr/united-airlines-employees...
TLDR:
> A new report says [United Airlines] plans to do away with quarterly employee performance bonuses--and replace them instead with random drawings for prizes like like cash, automobiles, and vacations.
---
How will this encourage employees to perform admirably? After David Dao's beating and forced removal from a flight, this seems like quite a poor decision.
How could people at the top be so inept at such basic principles of human psychology? The only explanation is that Oscar Munoz is a complete sociopath and cares nothing about his employees, or company for that matter. Makes absolutely no sense at any level and will only lead to long term damage to the company.
The net effect is that those people who actually tried harder in their job because of the bonus will feel no such desire after the first few times they don’t “win”. Those that do win will know it was pure luck and nothing in their actions or performance contributed to the winning, so it won’t change their performance either.
> in order to be eligible for the lottery, employees would have to have perfect attendance during the time period. Employees took that to mean no sick days.
>"I can't imagine driving the Mercedes into the employee lot while everyone around me that worked just as hard, or harder got nothing. I would feel like such a jerk. It's quite telling about the people who thought this up. I bet they would be gloating happily if they won." --Flight Attendant - Domestic
We know from Prize Linked Savings Accounts that people prefer a really small change of winning a lot to a really high chance of winning a little. [0] [1]
> The new program replaces that system with a lottery. If United meets its goals, all employees would have a chance to win prizes, including Mercedes automobiles and cash up to $100,000. About 1.6 percent of employees would win something.
If I recall, there was a study that showed that people were happier when given a paid vacation than when given an equivalent bonus.
[0] http://www.hbs.edu/faculty/Publication%20Files/08-061_17c22e...
[1] https://www.sciencedirect.com/science/article/pii/S016726811...
Behavioral economics research in some respects has more in common with psychology research than other areas of economics. It is also associated with a particular ideological bent that seeks to undermine the traditional assumption in economics that people can be approximated as rational actors. While there is value in recognizing where that assumption can break down, behavioral economics is often used to justify policies or interventions that traditional economics would not recommend on the basis that people can't be trusted to act in their own best interests so their preferences should be ignored or overridden by benevolent experts who somehow are miraculously immune from the same failures of rationality that the rest of us proles are prone to.
Brain drain is a factor in this, but probably some brutal downsizing is in the picture, and on the table already. Hold on to your butts.
But how does the previous bonus based solely on company profit incentivize anyone? In the grand scheme of things, most individuals at a company have very little affect on the company profit and the affect of one person is so diffuse it's meaningless.
I've never worked for a company that emphasizes perfect attendance, but my wife has. Why would any company want to encourage any employee to come to work sick and maybe contagious? Especially when they are confined to small quarters like an airline?
I noticed such policies at some companies which had a very high sick leave percentage. Sometimes it's difficult to determine if someone is faking being sick. I guess one way of to try and solve that is giving people money. I hope nobody does this when the sick leave percentage is average due to mentioned working while sick is bad result.
But then there are still issues...
1. People come in sick to save their PTO and spread what they have if it's contagious.
2. It works well for most salaried employees. We can work from home, claim we are working even if we aren't being productive and catch up over the weekend or when we feel better (I don't see an ethical problem with that.) A lot of hourly jobs can't time or place shift like that.
3. Salaried employees, usually don't have to call in sick for a sick child (we work from home), or for doctors appointments. We can usually make our time up.
We are engineers. So we think in terms of what you'd need to do, to achieve effectively statistical certainty that you'll be able to send a plane on it's way in almost all cases, while minimizing costs.
Such a process would involve a set of actions that you'd have to execute, as a management team, using a set of employees, so that everyone is in the correct place at the correct time, and the odds of anyone getting into trouble is minimal, and this gets planned out over time, optimized by a scheduling algorithm.
Then, if things go wrong, you simply re-run your algorithm to deal with the new situation and you do the best that can possibly be done. Of course, such a program is very hard to write.
The stories I've heard about management actually doing this are VERY few and VERY far between, and even then only about very specific things (and only things that would apply to multiple airlines, e.g. optimizing flight plans and fuel tanking). Instead, management layers simply threaten the layer below them into perfect attendance (which works for a while when employees are desperate for jobs) and when things inevitably go wrong they go into full panic mode and spend 50x what is really necessary to fix things. During such panics, even basic events seem to come as total surprises to management. For instance, there was a news message about a problem in Amsterdam Schiphol due to the weather. The problem was understandable, a re-frozen ice layer on the tarmac prevented safely taking off. 10 or so flights got canceled for one airline, for close to 2000 passengers, and there were 2 customer service representatives that, obviously, had a rather hard time dealing with this (there were 20+ doing ticketing for flights that weren't going to happen ... but using those ... nope). Management eventually provided hotel rooms for about 800 of those passengers and put beds in a terminal at around 6am for the rest. Lots of court cases are underway, and are unlikely to go well for the airline).
When it fails in a year or two, they’ll make a show of listening to their employees and bring back a bonus program similar to the old one but with significant cuts to the amounts and focus on attendance for qualification.
At least that’s what it looks like to me.