United Airlines Ties Executive Comp to Customer Satisfaction

April 26, 2017

You’d have to live under a rock to be unaware of United Airlines’ recent PR challenges. From a passenger who was violently dragged from one of its planes to, most recently, the death of one of the world’s largest rabbits while aboard a United flight, obstacles abound. While they have done much to repair the damage, a recent development highlights how this is not only affecting their external customer satisfaction policies but their internal compensation policies as well. United Airlines is putting their money where their mouth is to turn things around – executive compensation will be tied to customer satisfaction.

Let’s examine their decision more closely to see what we can learn from their executive compensation plan change.

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Align Compensation to Business Goals

While there are many schools of thought on this topic, the data suggests that their choice to tie executive compensation to customer satisfaction is a great move in the right direction. Here’s why:

It aligns compensation to business goals. Increased customer satisfaction can reverse the recent negative sentiment about United’s brand image therefore, ideally lead to increased revenue.

In the 2017 Compensation Best Practices Report, PayScale shared that most companies do link compensation to performance. We found that 54 percent of organizations recognize high-performing employees with bigger base pay increases. And 64 percent of organizations recognize high-performing employees with bonus or incentive (either goal-based or without a formal plan).

If, like United, you wanted to align your compensation to customer satisfaction, you could:

Develop clear metrics: Make sure you are tracking customer satisfaction uniformly across your organization. Common ways to measure are via NPS surveys, CSAT and CES. Once you have determined what these are in your organization and have baselines, tie the goals for this metric to compensation planning.
Be transparent about the metrics: Once you have defined the metrics share widely with all employees so they clearly know what their goals are. The more information you can provide to your employees the more trust, performance and morale you will gain.

Aligning compensation to business goals can drive increased revenue.

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Be Bold About Pay Strategy

Know what matters most to your organization and align pay to compensate for that. For United Airlines, at this moment in time, it’s customer satisfaction. They are aligning their culture and compensation with their external brand to make the biggest possible impact on both their image and their bottom line.

Compensation should be a reflection and an extension of your culture and brand. It can encourage alignment across many different functional areas as all can have metrics that ladder up into the company customer satisfaction metric.

PayScale’s 2017 Compensation Best Practices Report revealed that 71 percent of organizations either have or are developing a compensation strategy. This can help you connect compensation to the things that matter to your organization.

Develop Your Pay Brand

It’s not enough to have strategic alignment, you have to develop and share your choices in your pay brand. Making this change public is a bold step for United Airlines and ensures their customers know that they are committed to making things right. Having, communicating, and being consistent about your pay brand can help retain and attract top talent, as well as establish or mend your public image.