'Doing good,' for customers and investors


In last week's issue, I noted a disjunction between the rules-based thinking that governs the way airlines maintain safety, move people and manage their businesses vs. the service ethic that produces great guest experiences.

So, how can a genuine service ethic be created and instilled in a space as entrenched and static as the airline industry?

Leland Pillsbury
Leland Pillsbury

It's not a merely academic discussion: A recent study demonstrated that, over time, there is a direct correlation between public airlines' levels of guest satisfaction and their stock prices.

By "doing good" by its customers, the airlines really can do well with investors, the public markets and other stakeholders.

The four tasks of good management

A starting point is evaluating the context of service, identifying all the guest touchpoints, then hiring for talent: picking the right people to serve as customer-service ambassadors for your brand.

Hiring for talent often means awarding positions to candidates who have less experience than your longest-serving, most highly recognized internal personnel. It might mean hiring from outside the airline industry altogether.

At a time when the airline industry is growing and hiring is robust, it would be well worthwhile to cast a broad net to recruit from industries that have nothing to do with aviation. Who knows what great service innovations service managers from the entertainment, restaurant or retail industries could provide?

Second, it's crucial to set standards. If an airline wants to win hearts and minds, it needs to set measurable goals tied to doing just that.

This might require a change in organizational structure or on-plane staffing, perhaps having a single employee on each flight designated as the "guest satisfaction agent," responsible for solving problems and keeping people happy. That person should report up the corporate structure to a senior executive whose single job is to ensure guest satisfaction and the guest experience. The executive should report to the CEO, all in a separate chain of command from pilots and others who focus on the logistical requirements of safe, efficient travel.

 This discrete line of reporting will ensure adherence to guest satisfaction as Job 1, without competing revenue, logistics and other issues getting in the way.

The new guest satisfaction standards must be translated into measurable goals, and performance must be monitored constantly.

Commenting on the physician dragged from a United Airlines plane last spring, Ohio Gov. John Kasich noted a "breakdown throughout the company."

He was right.

The only way to ensure measurable performance enhancement is to set strict standards for employee behavior and incentivize meeting and exceeding those standards while measuring performance every step of the way.

The best way to ensure measurement and follow through?

Set up a standing committee of the board on guest satisfaction, just as there is an Audit Committee and a Compensation Committee. Unless and until the board makes passenger satisfaction, and the monitoring of it, an important goal of the company, it will not happen.

That leads me to the fourth management principle: rewarding excellent performance.

I'm not sure if there is a public study on employee morale in the airline industry, but it's evident to anyone who travels that many airline employees do not feel rewarded or energized by their work.

A system of publicly acknowledging excellent performance and holding it up as an exemplar to peers and the traveling public would be a great place to start.

There are plenty of ways to do that without busting the corporate budget.

First, to some degree, tie everyone's compensation at the company, including the CEO's, to passenger satisfaction. Align the goals of the company's personnel with the goals of the company's guests, and you are sure to get results.

Second, use technology and innovation to improve the experience of the employees as well as of the guests.

For example, JetBlue innovated a program to engage and reward employees on a social media platform that recognizes great behavior and service.

More recently, the company has pioneered the use of texts and social media to gather feedback and address customers' needs.

Leland Pillsbury, a longtime entrepreneur in the travel and hospitality, suggests that one way for airlines to improve guest satisfaction is to hire talent from outside the aviation industry.
Leland Pillsbury, a longtime entrepreneur in the travel and hospitality, suggests that one way for airlines to improve guest satisfaction is to hire talent from outside the aviation industry.

ID90T, a startup company in which my venture capital fund, Thayer Ventures, invests, has created a new platform for improving employee (nonrevenue) travel by bringing the benefits of advanced technology and market intelligence to the more than 2 million-plus airline personnel who travel around the world on free or reduced-rate tickets. It claims substantial increases in airline employee satisfaction.

Some might argue that the poor relationship between management and the unions will prevent any substantive change. I think it's more likely just the opposite.

The workforce has been at the "tip of the spear," so to speak, taking the "hits" from passengers for years. Building a culture in which they are empowered to solve problems and make passengers happy and have the authority to deliver passenger satisfaction cannot help but improve labor/management relations. Airline personnel are just like the rest of us: They want to contribute to something important and make a difference, and they want to be recognized for their contributions.

Similarly for travelers, more should be invested in technology to make sure flight arrival and departure information is communicated accurately, in real time and without the need for outside services such as Flight Aware. When you give out bad or inaccurate information, you lose the trust and respect of your passengers and your employees who feel misled and lied to.

Level with customers, keep them updated and keep your information accurate, and you will regain their trust.

There are a million ways to innovate, monitor and steadily improve employee performance, but the impetus to do so needs to start at the top. And the results need to be quantified, institutionalized and tracked over time.

Seeing around corners at 35,000 feet

In last week's issue, I referred to anticipating guests' needs, the growth and changes in a marketplace and how a company needs to respond, by "seeing around corners."

Most information that flows to management is about the past, not even the present and seldom about the future. It's outdated and not actionable when it is received.

It's not that different from the way a race car driver needs to be looking down the track to the next bend, to the situation as it unfolds ahead, anticipating tight turns, keeping eyes trained behind, ahead and to the sides of the car. The driver makes split decisions in real time, with the benefit of finely tuned instincts and a deep understanding of the context of decision-making.

It is not easy, and it's not for the faint of heart. But it's required if decision-makers are to stay ahead of today's steadily rising consumer demands, not to mention the technology that reinforces and accentuates them.

Years ago, before the internet, the doctor dragged off his plane in Chicago would have been a sad but self-contained episode between the passenger, the airline and perhaps his lawyer and local newspapers.

In 2017, it became a searing indictment of an entire industry, seen worldwide and condemned from every quarter.

As every company has learned, you can't control your brand image. At best, you can hope to curate it, and you curate it by reacting appropriately and individually, in real time, with responses and actions that reflect the company's values and goals, not "rule number 138."

The time is now for airlines and other travel providers to take a long hard look in the mirror, focus on guest satisfaction and the principles and modalities for producing and maintaining it.

Leland Pillsbury is managing director at VC Thayer Ventures and a lifelong entrepreneur and innovator in travel and hospitality. He was a senior executive at Marriott, where he headed strategic planning, then executive vice president. He co-founded Thayer Lodging Group, which over a quarter century achieved a compound annual return of over 26%, placing it among the best performing real estate investment companies in the U.S. With his wife, Mary, he founded the Pillsbury Institute For Hospitality Entrepreneurship at Cornell University. He lectures frequently at colleges and universities in the U.S. and Asia.

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