Posted on May 27, 2016

Discovering The Lever That Produces Powerful Teamwork

What do you do when you’re tasked with fixing the worst airline in the industry? You build a great team and focus them on a common purpose.

When the CEO of Continental Airlines resigned in October 1994, everyone looked to Gordon Bethune, who only eight months earlier had taken the job of COO. Bethune’s first move was to hire Greg Brenneman to be his right-hand support and help tackle this impossible task.

The Challenge

Here’s what Bethune and Brenneman were up against.

Continental had lived through two bankruptcies and ten presidents over a ten-year period, and was quickly heading for bankruptcy again. It was also ranked the worst of the large U.S. airlines, across all key customer service areas, as measured by the Department of Transportation (DOT), including: on-time arrivals, baggage handling, customer complaints, and involuntary denied boardings.

Of course, the reason for this horrible service was a lot of unhappy employees. There were some who actually ripped the company logos off their uniforms because they were embarrassed working at the company.

Last but not least, the company hadn’t posted a profit outside of bankruptcy since 1978.

The Go Forward Plan

So what did this team of two do? In a period of only one week, Bethune and Brenneman developed a restructuring plan, and presented it to the company’s board for approval. They called it the Go Forward Plan, which included four cornerstones:

Fly to Win. This was the market plan, focused on building up the company’s hubs in Houston, Newark, and Cleveland, plus expanding the customer mix from “backpacks and flip-flops” to “suits and briefcases.”
Fund the Future. This was the financial plan, focused on increasing liquidity by restructuring the balance sheet and selling off non-strategic assets.
Make Reliability a Reality. This was the product plan, focused on transforming the customer experience, specifically on-time arrivals.
Working Together. This was the people plan, focused on changing Continental’s culture to one of fun and action, and restoring employee trust.

To their surprise, these two daring leaders got the board of directors to approve their plan, and make Bethune CEO and Brenneman COO.

Working Together

Of the four elements of the plan, Working Together was arguably the most important one of all. Without everyone working together – around a common purpose – any kind of success would have remained elusive. This is where Bethune and Brenneman spent the majority of their time.

For example, the leaders travelled to the larger hubs and reservations centers a few times a year to share the plan and provide updates with employees. Every month they held an open house in their office where employees could show up to complain or just socialize. Bethune recorded a three-minute voice mail each Friday that summarized the activities of the week, and he produced a video twice a year on the state-of-the-company. They also published a newspaper describing what was happening in the company, and every quarter these were mailed to employees’ homes, which proved to be a great way to engage the families of employees too.

They set up a toll-free hotline to handle employees’ suggestions, which was operated 24/7 by pilots, flight attendants, mechanics, and gate agents. Those answering the calls were required to research each suggestion and get back to the employee within 48 hours with one of three responses: it’s fixed; it’s not going to be fixed and here’s why; or, this requires more research time.

This hotline proved to be a terrific source for meaningful solutions and useful ideas as more than 200 calls per week were received in the first three years it was open.

Building the Right Team

As part of the process of building an effective team, and to restore employee confidence in management, one of the first things Brenneman did was replace 50 of 61 officers with about 20 new people. One reason he started here was because he believed that the team that “managed a company into a crisis” was not the right team to “get it back on track”.

It’s important to note that the process of cleaning house wasn’t done in an inhumane or humiliating manner. That would have only exacerbated the culture problem. Instead, when individuals were let go, the company went out of its way to be fair by honoring all contracts and letting people resign with dignity.

After culling through the senior officers, Bethune and Brenneman then went through the entire organization, from the highest supervisors to the baggage handlers, to ensure they had the right people on the team.

Of interest, the criteria for new hires included three essential qualities:

They had to pass what was called the “raw IQ test”.
They had to be driven to get things done.
They had to be team players, willing to treat everyone with dignity and respect in an extremely collaborative environment.

This last criterion underscored the Working Together part of the restructuring plan.

The Critical Lever

Even with all of the other positive changes going on, Bethune and Brenneman needed to find the right lever that would unite all employees around a common purpose. For Continental Airlines, it turned out to be this:

Getting all the planes to run on time.

This was the lever that would positively impact all four cornerstones of the Go Forward Plan.

Prior to Bethune’s arrival, Continental had the lowest on-time rating of the nation’s top ten airlines. So Bethune and Brenneman developed the ideal incentive plan for employees:

Every month that Continental’s on-time ranking (as reported by the DOT) was in the top five; every employee would receive a check for $65.

With 40,000 employees, that’s an additional monthly expense of $2.6 million. But when a company is bleeding cash left and right, how does such an offer make sense?

For Bethune and Brenneman, the math was actually quite simple.

The chronic lateness of planes was costing the airline nearly $6 million a month in reaccommodation expenses, such as paying rivals to fly passengers who missed their connections or putting them up overnight in a hotel. This new incentive program was actually saving the company money!

Most importantly, this incentive program was the perfect lever to unite tens of thousands of employees, including managers, around a common purpose.

Incentive in Action

Here’s just one small example of how this new incentive program worked.

When a catering truck pulled up to a plane and was ten meals short, the flight attendant was empowered to make an executive decision. Under the old culture, she would have told the truck driver to go get the extra meals while the plane waited at the gate for 40 minutes. But as part of the new paradigm, she told the catering driver not to make this mistake again, and shut the cabin door so that the plane could push back on schedule. What about the missing meals? As Bethune likes to tell it, “She finds a bunch of investment bankers and offers them free liquor in lieu of the meal.”

With this simple, but smart restructuring plan, Bethune and Brenneman managed to engage a 40,000-person team to work together and accomplish the impossible: pull Continental out of a dangerous nosedive and then soar to new heights. Only one year later, in 1995, the company made a profit of $251 million, the first of many to come. By the time Bethune left Continental at the end of 2004, the company’s stock price had risen from $2 to over $50 per share, and the airline was considered one of the best-run companies in the industry.

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Note: in 2010, Continental merged with United Airlines; the parent company now called United Continental Holdings.

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This story highlights the real power of Teamwork, one of the 17 Common Values.