What is the single most important ingredient in running a successful business? You might say sales, you might say customer service. Both are obviously very important factors. But, when you get right down to it, the one ingredient that's tantamount to a company's success, is arguably, trust.
Whether it's a relationship with your spouse, or a relationship with your customers/partners, is there any more important factor than trust?
Why are companies like Ben and Jerry's, Trader Joe's or Amazon so successful? It's because their customers trust them to do right by them. When you buy a container of Ben and Jerry's ice cream, you know you're getting the best ingredients and that they're doing their best to do right by you, as well as the environment. When you buy a product on Amazon, you can cancel or return anything -- no questions asked -- which creates an air of trust when looking to make an online purchase.
However, when looking at the less-than-stellar job the UAL CEO, Jeff Smisek, has been doing since he took over the reigns of both United and Continental back in 2010, it seems trust plays a key role. As, no one --not his investors, nor his employees, nor his customers -- seems to have any.
Last week, while every other carrier in the business reported profits in the first quarter -- including the three newly-merged airlines: Delta, American, and Southwest -- United was the only one to report yet another loss -- a $600 million loss, at that.
Companies report losses all the time. It's part of being in business. Yet, the one thing that stands out in a recently published article in Businessweek is how the analysts pretty much came right out and said they "can't trust" Mr. Smisek's assurances anymore:
Analysts are growing skeptical of quarter after quarter where United's "many excuses," as Cowen Group's (COWN) Helane Becker put it on a conference call with executives, fail to yield results. "At what quarter can we all agree that it's not working?" Morgan Stanley (MS) analyst John Godyn asked..."
Sounds like a trust issue to me.
Investor concerns aside, take a look at what United's employees are saying:
There's so much animosity toward Mr. Smisek on behalf of United employees, they've created a website where they "air" their grievances and have coined the phrase, "It's all Jeff'd Up!" -- meaning the situation is a complete clusterf**k. (Personally, when your employees invent a term for the Hipster Dictionary to reference what an awful job you're doing, it's at least time for Undercover Boss.)
One obviously frustrated employee who goes by the name CO/HNL-IAH left some particularly scathing comments:
If you went down to the MX shop and took away their tools, how effective would they be at fixing the planes? Likewise, when you remove the resources for providing a good customer experience, how effective will your frontline personnel be? You can't "fake" a blanket for someone who's cold, or "pretend" a meal for someone who's hungry. Lack of foresight on your part doesn't warrant urgency on mine. Welcome to the "new" Continental (SOS United)
R.I.P. Continental Airlines 1934 - 2011 "The Airline That Pride Built."
There are pages upon pages of these types of comments, yet, for me, the capper is to hear it from the horse's mouth. Or, at least, one of its molars.
I recently had a conversation in a New York hotel with a man who we'll call "Kevin." Kevin is a United Flight Services Supervisor and had just gotten back from a long flight. When I saw the wings on his shirt, I couldn't resist striking up a conversation. He had no idea I was a journalist. When I asked how he liked his job, he said he loved it. When I asked him what he thought of Jeff Smisek, it was almost as if he was in a confessional and I became his priest. The next 20 minutes were spent with Kevin outlining, in detail, the love he has for his job and the equivalent disdain he shares for the man chosen to run his company.
Kevin spoke about cutbacks on meals so harsh that breakfast on long flights routinely consists only of an omelet "made of God knows what," a "tiny piece of dried-out sausage patty," and "a flimsy plastic fork." When I inquired as to how many passengers send it back, he added, "By the time we feed them, they're so hungry they'll eat anything." Sounds like top-notch service to me.
Kevin went on and on, talking about how difficult it's become to do his job, how flight attendants are the ones on the "front lines," thus they get the brunt of the passengers' frustrations, firsthand. He said he asked a passenger who their favorite airline carrier was and they replied, "Wow, definitely Virgin." Kevin remarked that he can't even remember the last time someone said "wow" about United.
The funniest/saddest thing Kevin confided, was that, due to all these cutbacks in service, there are now situations where he finds himself alerting his superiors to the fact they're going to run out of toilet paper. He actually mentioned a flight from San Francisco in which a 747 was forced to land in Seattle due to its running out of toilet paper, mid-flight.
After speaking with this gentleman, it's no wonder the rocky merger of United and Continental still has many travelers choosing other airlines when they can. Again, trust.
Saving the best for last, a company simply cannot perform to its highest aspirations without the trust of its customers. Unfortunately, this is where I, and countless others, have personal experience. Everything from flying cross-country on old planes with no power adapters, no personal video screens, Wi-Fi that's been "in development" since Eastern was dismantled, and uncomfortable, cramped seating.
Let's not forget, reading Hemispheres, the United magazine, which states a meal will be served, then being told "There are no meals on this flight, but for an additional $10, you can purchase an assortment of olives or a tapas plate." Just what I want when I'm hungry, three olives and a cracker for 10 dollars.
The above actually occurred on a four-hour flight full of parents with children coming from the Islands, in which we were supposed to be given a meal, but, come game time, the flight attendants had nothing for the hungry kids except over-priced tapas. To make matters worse, the flight was delayed an hour, exacerbating the kids' hunger, yet the attendants were unequipped to even hand out cheese sandwiches.
Probably the worst thing of all for a United customer, is to know you're getting the shaft and to see the CEO's smiling face everywhere you look. Does this guy have a camera fetish, or what? Do you see Richard Branson making movies telling you what a great job he's doing? No. He just does his job and lets a cartoon do the rest.
I could go on and on about my personal gripe with United, its apathetic customer service policies, and the fact that it's gotten to the point I wouldn't be surprised if they put me on a plane with one wing, but, when you put it all together...
The poor earnings, the faithless investors, the frustrated employees, the dissatisfied customers, the horrible job United's PR department's done in failing to create the persona of a CEO who cares -- and, of course, the fact that Smisek recently purchased 20,000 additional shares of United stock when it took a hit, leaving some to suggest he's the real-life Hudsucker Proxy CEO, -- someone has to bear the brunt of that responsibility.
Rumor has it, there are already names being tossed around the airline world as to who will take over if United's summer earnings fall flat.
You know the best way to tell when a CEO knows he's in trouble? It's when he starts acknowledging his mistakes. But, even though we'll give Mr. Smisek credit for finally admitting there's a problem, there's a big gap between a CEO realizing he's made a mess of it -- especially with his customers -- and doing something about it. You could say it's a "Continental" divide.