United Airlines Replaces Bonuses with a Lottery

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.<p>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.<p>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.

Yes this is dumb.<p>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&#x27;s meaningless.<p>I&#x27;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?

You&#x27;ve just got to shake your head and wonder if the &quot;management&quot; who thought this might be a good idea have ever met any actual human beings.

More information on the policy:<p><a href="https:&#x2F;&#x2F;www.inc.com&#x2F;bill-murphy-jr&#x2F;united-airlines-employees-were-shocked-to-learn-about-this-stunning-new-company-policy.html?utm_source=red" rel="nofollow">https:&#x2F;&#x2F;www.inc.com&#x2F;bill-murphy-jr&#x2F;united-airlines-employees...</a><p>TLDR:<p>&gt; 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.<p>---<p>How will this encourage employees to perform admirably? After David Dao&#x27;s beating and forced removal from a flight, this seems like quite a poor decision.

This is a super interesting piece of behavioral economics in action.<p>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]<p>&gt; 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.<p>If I recall, there was a study that showed that people were happier when given a paid vacation than when given an equivalent bonus.<p>[0] <a href="http:&#x2F;&#x2F;www.hbs.edu&#x2F;faculty&#x2F;Publication%20Files&#x2F;08-061_17c22e32-fe06-4b4a-8b5e-e09227fc8104.pdf" rel="nofollow">http:&#x2F;&#x2F;www.hbs.edu&#x2F;faculty&#x2F;Publication%20Files&#x2F;08-061_17c22e...</a><p>[1] <a href="https:&#x2F;&#x2F;www.sciencedirect.com&#x2F;science&#x2F;article&#x2F;pii&#x2F;S0167268114002194" rel="nofollow">https:&#x2F;&#x2F;www.sciencedirect.com&#x2F;science&#x2F;article&#x2F;pii&#x2F;S016726811...</a>

$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&#x27;s an improvement.

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.<p>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.<p>At least that’s what it looks like to me.

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.<p>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.

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?

Dilbert IRL.

It seems tailored for social media. &quot;look at me I won&quot;. A lot of things are going this route. dumb.