Companies must have satisfied employees to satisfy customers. Continental
Airlines is a perfect example of how a company can succeed by putting the
emphasis on the employees and customers. Continental demonstrates remarkable
turnaround from a disastrous performance.
In the early 1980's, the management of Continental believed that the only way to
save the company was to lower airfares, and to reduce all possible expenses. In
doing so, it demolished the product and their quality of service. For instance, in
the early 1990s, pilots could earn bonuses if the fuel burn rate on their airplane
fell below a specific amount. The program motivated pilots to fly slowly, which
often resulted in missed arrival times. Because of the delays, it was sometimes
necessary to divert customers to the competition. Another example of this
horrible "low-cost" approach was the CALite program. Continental replaced all
first-class seats in some airplanes with coach seats to lower the cost-per-seat.
This failed when airplanes were swapped during adverse weather conditions; the
business class seats were not available to the passengers that had paid for them.
Moreover, CALite eliminated all food on flights, all travel agent commissions,
and all corporate discounts. This infuriated many of their very important
customers. After 15 years of this "low-cost" approach, Continental had
succeeded in creating services that nobody wanted. Continental's organizational
culture was terrible. Many of the employees felt ashamed to work for
Continental. Some employees were so ashamed, that they removed the logo from
their shirts. To make matters worse, Continental had put in place a horrible
communication structure: Nothing was told to the employees unless it was
absolutely necessary. Most employees found out about company activities, plans,
and performance through the public press. They did not have ways to share their
ideas nor ask questions. For example, if an employee came up with an idea for
improving service for the first-class passengers, there was a useless form to fill
out. The information was hardly ever collected, and was never used as a source
of possible improvements for the company. Furthermore, there were so many
rules to follow that employees could not possibly do what was the best for
customers. The Department of Transportation ranked Continental tenth out of the
ten largest U.S. airlines in all key customer service. Especially abysmal scores
for on-time arrivals, baggage handling, customer complaints, and voluntary
denied boarding. Continental had been through two bankruptcies and ten
presidents over ten years. It also had not posted any profit since 1978.
The "Go Forward" plan was implemented under Gordon Bethune, Continental's
chairman and CEO, and Greg Brenneman, president and COO. This plan had
four components: (1) "Fly To Win" as a marketing plan, (2) "Fund The Future"
as a financial plan, (3) "Make Reliability A Reality" as a product plan, and (4)
"Working Together" as a people plan. In "Fly To Win", the plan was designed to