United Airlines has abandoned a bonus system which rewarded eligible employees with a quarterly cash bonus of $300 if the airline achieved on-time operational measurements - instead replacing it with a quarterly lottery.
Under the new "core4 Score Rewards" scheme - which will significantly cut payouts, one lucky employee will win $100,000, another 10 employees will get to choose between $40,000 and a Mercedes C-Class, while 1,350 more employees will receive various other cash or vacation packages.
The 1,361 lucky winners each quarter will cost the airline $18.8 million per year. This translates to 15,667 employees receiving a $300 bonus under the old structure. While the airline hasn't disclosed how many of their 89,800 employees received the $300 payouts, it's surely more than 17.4% notes JT Genter of the Points Guy.
In short, United Airlines is going to save tens of millions per year under the new lottery program.
But let’s assume that just unionized employees who work as flight attendants (22,676 employees), in passenger service (13,299) and pilots (9,535) are the only ones eligible. Those 45,510 employees would have been eligible to earn a total of up to $54.6 million in bonuses per year under the old $300/quarter system. The new system caps the airline’s quarterly bonus costs at $18.8 million per year. That’s tens of millions less in employee bonuses. -TPG
Moreover, an individual must have perfect attendance to qualify for the lottery, which was not required under the $300-per-quarter program. This, as TPG notes, will incentivize employees to show up sick for work in order to participate.
While the airline says that "this new program will build excitement and a sense of accomplishment as we continue to set all-time operational records," employees aren't buying the program announced last week by United Airlines President Scott Kirby.
"Sources among United's rank and file employees said Kirby's memo has quickly ignited a firestorm within the employee ranks at the airline, which may not help create that caring attitude Kirby is seeking," writes Bizjournals.com.
Next time you want to know why United employees are so grumpy, remember the way its executives gutted the airline's merit-based bonus program and replaced it instead with a luck-based lottery.#dumbanddumber— Steve Pearl (@stevepearl) March 3, 2018