United Airlines Reinforces The Deplorable State Of Corporate Management

Forget the idea about trying to contain labor costs by automating front line positions such as installing “robo-flippers”, order taking kiosks, or teller annihilating machines such as the ATM. On a case by case comparison, this may be the equivalent as the old saying goes, “Trying to save the pennies from falling – as the dollars blow out the window.”

For my money the place where automation should now begin is directly in the C-Suite, beginning with a many of the current crop of CEO’s supposedly “running the ship” of the plethora of multi-Billion dollar enterprises with their extraordinary salary compensations, and “parachutes” so elaborate, calling them “golden” is the equivalent of equating the Hope Diamond to cubic zirconia.

The state of the C-suite (and subsequently the Boards that empower them) has now become an abject deplorable situation, ever-growing stain on true business management principles and ideals. It’s disgusting.

Unless you are one of the fortunate who doesn’t have to rely on the air travel for your daily commute or business needs it would be hard to imagine that you haven’t heard, or better yet seen, the now viral video of a United Airlines™ passenger being dragged down the center aisle of the plane like a corpse, with his face bloodied, in full view, not only of other adult passengers, but also their accompanying children. This was all the result of an altercation with security personnel as to extract him from an overbooked plane.

What was his crime? He was the poor unfortunate sole whose sole offense too God and man, was that he purchased a ticket supplied by the airline to travel. However, the airline “overbooked” and needed to make room for stranded “staff.”

In what the airline presumed was an act of “fairness” when their offers of “$800” for anyone wishing to take up the offer went unheeded, they decided to let a computer randomly select the passengers to be removed – then remove them. The above was the resulting fiasco.

Although it was a “computer” that generated what can only be deemed as “the extraction list.” It has nothing to do with any machine or computer, and has everything to do with the management. Here’s just a few examples of the pure idiotic management process which must be presumed took place prior to this altercation.

  1. Assumed this was a viable idea to begin with and probably had 273.5 meetings with stale pastries and endless hours of slide shows to discuss its viability and reasoning. Then, probably, a group hug, and some corporate “vision” chanting.
  2. Concluded passengers (or customers) are to be treated as they feel. e.g., like cattle. Therefore all decisions are to benefit the company and management – forget the customer. After all – there might be an “incentive” bonus.
  3. As long as “they” weren’t the ones to physically have to speak, see, or engage with any passengers (customers) any issues that may result are for the “front-lines” to deal with – not management. e.g., themselves.

The result? The equivalent (all assumed) of unleashing airport security as to extract a legally holding, properly purchased ticket holder with the implied understanding of, “If they don’t want to leave – make them leave by whatever means necessary.” Hence why this fiasco is eerily reminiscent of a special-ops take down and extraction.

Yes, there’s culpability abound as far as the way in which the security detail acted and behaved. But (and it’s a very big but) first and foremost it resided squarely, and prominently on United, its management, along with its CEO, which, I’ll get to as we go along.

Let’s just take the issue at hand for now because I’ve heard a lot of what I can only describe as convoluted reasoning, arguments, and/or justifications. First, let’s talk about the issue of no one volunteering to be “bumped” with the added incentive of an $800 bonus. This is an entirely specious and “red herring” argument.

United™ does not have the right (forget the “legal” we’re talking ethics here) to arbitrarily set a rate it deems as “fair” and if there are no takers – to then extract a paying customer arbitrarily and remove them from the plane because their system overbooked. That’s not the customers fault – that’s United’s. Period.

If for whatever the reason no one was willing, or accepting, of the offer there’s only 2 alternatives. First…

  • Up the incentive amount until you get takers, whatever that price might be.
  • If no one accepts – arrange for that “staff” which needs to get to their destination via other means. i.e., They’re an airline! Either fire up another plane or arrange travel via solely purchased, or “tag-along” on a private or corporate plane. Regardless of the cost. Again, that’s United’s problem not the customers.

An easy assumption is: had the price entered into the “thousand dollar” level the enticement to “take the offer and run” would have been met. The $800 figure was surely arbitrary. And if it wasn’t? Then who made that decision that it wasn’t? After all, they were only $200 shy of that far more easily sellable and enticing level. And yet? See the above.

Another argument was that the passenger (reported to be a Dr.) was in coach as if this was some form of swipe at his ability to acquire “business” or “first class” tickets therefore it was his fault. That insinuation and convoluted thinking is almost as devoid of intellect as the idea that transpired to create this entire debacle. Let me express it this way using myself as the example:

If I am in need of air travel to attend or speak at some event I’ll fly “First Class.” No, not because I’m trying to impress, but rather, I need the space and accommodations to both relax comfortably, as well as, work while traveling. However, purchasing “first class” airfare (especially when it comes to U.S. domestic travel) doesn’t mean there aren’t also “bumps.” No, you usually won’t be asked to give up your seat (although for the right incentive you may) but flights get cancelled for whatever the reason and there are times you need to make other arrangements stat, and, no pun intended, on-the-fly.

If my schedule is running close and I’m, let’s say, speaking at an event. I might need to take any flight available even if the ticket means I’m to be loaded in with the baggage as to make my engagement. Since my speaking fees are well into the 5 figures and the people who hired me, and the attendees that paid to be there, along with all the ancillary charges of venue and more are riding on my arrival? (which now can be easily calculated into 6 or more figures) An $800 “incentive” would do little to entice me. One could say (and I do) an incentive of $10’s of thousands would still not move me. I just couldn’t. Are you beginning to see my point here?

Now forget about me, let’s apply this to the passenger they forcibly removed. What if he was doing the same at a conference? What if he had an important presentation to give to others in the medical profession at some yearly conference where this was his only time to attend? Or, what if he was a Dr. being flown from another part of the country because he was the only one who had any idea of how to read the diagnosis charts of a deathly ill child, maybe, even your child? Think that through. Do you think it would be possible he’d put up a fight? Would you want him to?

Or how about it was your wife, husband, mother, child where all they cared about, for whatever the reason, was to get back home – and no amount of money was worth changing or missing a flight. Only to see them dragged down the aisle, bloodied, like corpse in front of others via the capturing by video becoming today’s “viral” phenom. I guess the only other more repugnant question would be if the social media venues would place advertising within it.

No one knew at the time why, and for what reasons this passenger didn’t want to relinquish his seat. All that was stated was – the computer has picked you – come quietly – or we’ll remove you forcibly.

I will tell you this: Had that situation been me? Trust me, I would have far been the only one with a bloody face once hands were placed on me. And it could have easily been me, or you, your wife, mother, father, daughter, son, grandparent, or others depending on the situation. It’s shameful, disgusting, and a whole lot more.

And what may be even more disturbing is this: And the management of United never contemplated such as ever being possible?

The answer speaks for itself: Obviously, or else this altercation could have never happened to begin with.

This is why I stated in the title the “deplorable state of corporate management.” For this incident (in my opinion) is just as disgusting, and just as insidious as the Wells Fargo™ scandal and its failure of management at all levels, its CEO, and its seemingly complicit inept Board.

Let’s take the easiest point first: over-booking.

What is the difference between a bank opening accounts for nothing more than a “metric” to be reached as to show growth or profitability to Wall Street then switching them out, or cancelling them, all without their knowledge or approval – and – an airline selling tickets to seats they know can not be accommodated without switching them out, or cancelling them outright, all against the wishes or approval of those ticket holders as to show Wall Street “metrics” of growth or profitability?

Hint: Absolutely nothing. The only difference is how the management implements, the C-suite enables via the Board’s complicit oversight.

Think I’m off base? Fair point. However, with what I’ve used to illustrate my argument how does the following sit with what I’ve highlighted. To wit:

United CEO Defends Staff’s Violent “Reaccomodation” of “Belligerent” Passenger

Some highlights from the CEO, again, to wit:

In a letter to employees, United CEO Oscar Munoz said he was “upset to see and hear about what happened,” but defended his staff’s actions because the passenger had been “disruptive and belligerent.

He told staff in the private email that he was “upset to see and hear about what happened” but defended United employees.

“Our employees followed established procedures for dealing with situations like this,” the Associated Press quoted the email as saying.

“While I deeply regret this situation arose, I also emphatically stand behind all of you, and I want to commend you for continuing to go above and beyond to ensure we fly right.”

As one can plainly see by the CEO’s own wording – this type of incident had been discussed, otherwise, why release an internal message discussing what happened in a de facto type message at all, correct?

And remember when I made the working assumptions that no one knows (or knew) the reason why this passenger would not give up his seat. Well, it seems we’re getting a little more about the reasons why. And they are…

It is reported, (paraphrasing) “He needed to be at work at a hospital.”

Why? It doesn’t matter and is a rat-hole ripe for specious arguments. Maybe it was to save a child, who knows, but the computer picked his name – the CEO obviously signs off on this procedure.

And with that decision, for the sum of probably saving a few thousand dollars – millions, upon millions, if not $Billions will be erased in market cap as more and more headline reading, parasitic, HFT, front-running, algo-driven, headline reading computers parse their interpretation of “fair.”

The stock price of United is already showing thse signs of stress.

I wonder how the Board, CEO, and management at United think about “random” computer picking and its subsequent actions now?

Here’s a consulting tip, free of charge to many a CEO if they don’t smarten up…

Your current state of affairs and positions will far less resemble a Wells Fargo debacle and aftermath such as the public humiliation of its former CEO, manager, and Board with its inept clawbacks and other seemingly disingenuous dealings on the matter.

No, what’s coming pretty soon at this pace is the exchange of multi-million dollar salaries and “parachutes” in exchange for something the front lines have been experiencing for years at managements behest:

A computer to replace the entire C-suite, making there no need for a Board other than its “motherboard.”

After all, what better “savings” to show profitability to Wall Street than cutting all the C-suite and board salaries and bonuses. It would probably be the first time in decades the airline sector as whole could actually become profitable, because the “air” they are traveling currently? As longtime investor Jeff Macke used to say…

“If the markets are open, it’s a good time to short the airlines.”

At its current evolution that may be an ever-increasing and applicable statement to a lot of “Corporate America” in the coming future. After all, it would appear to save a few hundred, or even a few thousand dollars the executives at United decided to put a plan in place that could/would damage its reputation and market cap costing hundreds of millions if not BILLIONS of market cap, its reputation, and brand.

You can get a computer to do far better than that and no “parachute” need apply.

© 2017 Mark St.Cyr