United named Oscar Munoz as CEO today, tapping another insider to head the company. In a letter to employees, Munoz laid out the news and his leadership vision. Here’s my analysis of it.
Dear fellow employees:
No more “co-workers”? The employees all say thanks.
Today we are announcing a series of executive changes, which are effective immediately. I recognize that this news is unexpected, and I want you to hear it directly from me, as United’s new CEO.
New CEO, not Acting CEO. I don’t think Munoz would have jumped ship from his current gig had he only been offered the position on an interim basis.
Jeff Smisek, Nene Foxhall, EVP of communications and government affairs, and Mark Anderson, SVP of corporate and government affairs, have stepped down from their roles. These departures are in connection with United’s previously disclosed internal investigation related to the federal investigation associated with the Port Authority of New York and New Jersey.
Amazing that United is so candid, but this is part of the plan to protect the company. Look for potential indictments and a lot of grandstanding by prosecutors over this, but the Board probably figured that better Smisek go down then the ship go down with Smisek. As I argued earlier, though, this may have just been the convenient way to dump Smisek but not actually the real reason for his departure.
In addition, the company announced Henry L. Meyer III, a current United director and the lead independent director, has been named non-executive chairman of the board.
An independent director is a good thing — Smisek (and Tilton before him) should not have been both CEO and Chairman of the Board concurrently.
As we move forward, let me take a moment to tell you a little bit about myself. As you may know, I have been on the board of directors of United, and previously Continental, for more than a decade.
That’s a red flag if he continues to bring the Continental mindset to United. Continental was a well-run airline, but the merger created a totally different airline and as we’ve seen Team Continental re-introduce many legacy United procedures and protocols, Munoz would do well to surround himself with less of the boys from Texas and more of the team from Chicago, many who have departed the company.
I am also a longtime United customer.
And so? Do you think you get the same treatment as regular flyers or even loyal Global Services flyers when the manifest says you are on the Board? But I don’t mean to disparage this comment — it is better than someone who just traveled by train coming to run the company…
Before today, I was the president and COO of CSX, one of the largest railroads in North America. Prior to that, I worked for several well known consumer brands including AT&T, Pepsico, and The Coca-Cola Company.
Translation: he’s more experienced than Jeff Smisek, who joined Continental in the mid-90s as general counsel and rose up the ranks with no real executive experience prior to his tenure as CEO.
I took this job because I am excited by what we can do together. There is incredible opportunity for innovation, for earnings growth, and for improving an experience that is essential to the vitality of global business and to the personal lives of millions of people.
Actions speak louder than words. This is great sentiment, but you need to give your employees more than lip service. Sit down with them, talk with them, and listen to them. It amazes me how often I know of upcoming news (mostly devaluations) before FAs or reservation agents do. This should not be the case, for employees — the front-line employees should be included in any discussion over customer-facing changes. You must do more than the meet and greet you have planned below.
I will be relentless in pursuing these goals, and I hope and expect that all of you will share that same passion.
Or else what?
In the coming weeks, I will be making my first visits around the system. I want to talk to as many of you as possible because I want to get to know you and what you think about how things are going. How can we operate better? How can we better serve our customers? What support do you need to deliver that? You’ll be seeing me frequently; I intend to regularly travel the system to hear about our operations directly from you – and you can hold me accountable for that.
This is good and I hope he really means this. It must be more than just an introductory visit, it must truly be a frequent conversation with employees. This will make a tremendous difference in employee morale.
In my career, I’ve found that three things are critical to any successful business. First, we must focus on customers and what we can to do help them. In the telecommunications, consumer products and railway businesses, there are very real consequences if you don’t meet the consumer’s needs and desires.
But good sentiment.
There are also substantive rewards for doing so, and especially for exceeding customer expectations. Every day, you win or lose customers based on the slightest change in value and quality.
What I have bolded is is the key line of the letter, the one statement that gives me hope. I don’t think Smisek understood this concept and I hope that Munoz does.
As you know, in the airline business, this is especially critical. Getting people where they want to go, reliably and happily, can make or break their ability to succeed in a work endeavor or to hug a family member at an important moment.
Indeed, that’s the point — operational reliability truly is the most important aspect of any airline beyond safety and United really needs improvement in this area.
At United, I will dedicate myself to making our airline flyer-friendly.
I have some suggestions for you, which I will lay out later.
Second, in any organization, especially a great airline, it’s all about teamwork. I like to refer to this as “shared purpose.” We are in a service business, and the thousands of people who work here are the key ingredient determining our success. To get our passengers where they want to go safely and happily requires thousands of us working together with a shared purpose of supporting each other in serving our customers. To achieve this, we must create and sustain a respectful dialog about our common goals – an ongoing conversation among ourselves. We cannot do this apart.
This is all good. Vague, but good. The key will be in how he inspires his employees to work together. Here’s a hint — Smisek is walking away with a severance package valued at nearly $5,000,000 while legacy United employees all lost their pensions after the company’s post-9/11 bankruptcy. “Common goals” and “respectful dialog” usually means employees lose, but this does not have to be the case. While maximizing value to shareholders, Munoz must realize (as Lufthansa pilots strike for the 13th time in 18 months) that there is a breaking point with employees and record profits signal UA can give back to employees and not just shareholders.
Third, I am excited to be a part of a company and industry that demands innovation. The world around us is changing. There are new forms of loyalty programs and affinity groups, a constantly changing regulatory environment, plus new digital and networking technologies that are emerging on a daily basis. At United, we will embrace this change, and make this an energized and exciting place to work.
Okay, but you need to stop mimicking Delta. Perhaps pull back the revenue-based awarding of redeemable miles to start? Or he’s something more practical — don’t force your new, broken website on flyers who are accustomed to your old site. Until all the bugs are worked out, no one should be forced to use it.
Above all, my career has taught me that safety is paramount. Our passion for the safety of our people and our customers must be at the core of everything we do.
This is a given and hardly merits mention for a U.S. airline.
As we bring this airline forward, I promise to hold true to these principles of customer focus, teamwork through our shared purpose, continual innovation, and of course, safety.
Again, actions speak louder than words.
I want our customers, my fellow workers, and our communities to respect each other and take pride in our accomplishments. Thank you for your dedication to our customers and to United, and I look forward to meeting you soon.
Munoz has this rare opportunity that a CEO only has during his honeymoon period to set a different tone and inspire those under him to not just work, but excel. I wish him the best. United has the ingredients for success — actually better than Delta I think — but Smisek never was able to unlock this potential. I hope Munoz will.