Management advice from the CEO who saved Continental Airlines
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Management advice from the CEO who saved Continental Airlines
7 Management Lessons From the Guy Who Saved Continental
Gordon Bethune is a character. He’s also one of the most accomplished American business leaders of the past few decades.
Now retired, Bethune is credited with resurrecting Continental Airlines, the flagging carrier he led from 1994 to 2004 that has since been acquired by United Airlines. Perennially ranked last among major airlines in customer satisfaction, Continental was losing hundreds of millions of dollars each year and fighting insolvency. Bethune, who was promoted from COO to CEO less than a year after he joined the company, successfully transformed the beleaguered airline into a profitable and respected industry leader.
What did he learn during his decade-long tenure at Continental? We recently had the good fortune to interview Bethune, who talked about his background and the lessons in leadership and management he learned during his time at the airline. Here are seven of those key takeaways, in Bethune’s own words.
1. Treating your customers and employees well is the right thing to do—and it’s good for the bottom line.
“I arrived in February of 1994, and Continental was consistently dead last in customer satisfaction metrics. And then, we consistently ranked first. To this day, we have a record for JD Power Awards. We were on Fortune Magazine my last six years for the 100 Best Places to Work in America. We were the most admired airline in the world, according to Fortune. Those are kinds of things that are long-built records. But I didn’t do it. The team did it.
How did we do it? We became America’s most on-time airline. How did we do that? We focused on that every day, and the record still stands. So, it can be done from a dispirited last place. We lost something like $600 million in 1994. In 1995, we made $225 million—with the same people and the same airplanes. So, it wasn’t anything wrong with the employees. It was the management—and it always is.”
2. Don’t forget where you came from.
“I used to be an airplane mechanic—that’s how I started off. And do you know how much faster I could fix an airplane when I wanted to fix it versus when I didn’t want to fix it? That’s where the money is. They don’t teach that at Harvard Business School. But they do teach it when you’re growing up. These are basic things, but I think too many companies forget it.”
3. Make a real effort to get to know your employees.
“I communicated a lot during my time at Continental. I did a voicemail that was 3-5 minutes that basically told everybody what was going on, and what they could expect. The twist was that you could voicemail me back through the phone service, and they could tell me what was on their minds. In any case, it was a secure, frequent, respectful voicemail to employees.
You ever watch a football team when they have a huddle before a play? It’s not just the big shots in the huddle. It’s the team. Everybody’s got to know what we’re doing. That kind of respect for your employees—they notice that.”
4. You can’t outsource employee relations. It’s up to the CEO to create a team atmosphere.
“Your employees and their attitudes are the differentiating competitive edge you have, and I think we utilized that extensively while I was at Continental. You have to gain and earn the trust of your employees. But not only that, you have to make them feel rewarded in order to get your product at a level that it can beat the competition. Everybody’s looking for better fuel burn and all these accounting tricks you can do, and all the cost savings you can do. But having employees that want to do a good job is invaluable.
“WE LOST SOMETHING LIKE $600 MILLION IN 1994. IN 1995, WE MADE $225 MILLION—WITH THE SAME PEOPLE AND THE SAME AIRPLANES. SO, IT WASN’T ANYTHING WRONG WITH THE EMPLOYEES. IT WAS THE MANAGEMENT—AND IT ALWAYS IS.”
When I was at Continental, I would always go to the airport an hour-and-a-half before my flight, and I would visit Continental employees in the crew room or break room or baggage room. It’s the same as going to somebody’s office and thanking them for doing a great job. CEOs don’t normally do that. They try to delegate that to their HR departments, but you can’t. If you want to be the leader, then you have to appreciate and respect your employees. One way to show them that is to get off your ass, go to their office—which might be a cockpit—and say hello and thank you.”
5. If you ask your employees to make sacrifices, then you should make them, too.
“One thing I did that differentiated me was during the holidays. In particular, Thanksgiving and Christmas were tremendously high-stress days because, of course, everyone wants to be with their families and it’s a maximum travel time in America. I would go out to the airport and work on those days—I would load bags, do work behind the counter, greet customers. I’d make an effort to tell them when I was out there that I appreciated them working on Thanksgiving, and that I appreciated their work in general.
“WE TRAIL BLAZED THE INTERNATIONAL NON-SMOKING FLIGHTS BY LISTENING TO OUR CUSTOMERS AND LISTENING TO OUR OWN EMPLOYEES. WE MADE A LOT OF MONEY BECAUSE OF IT, TOO.”
You can’t imagine how much goodwill that you earn when your team knows that you’re willing to give up your holiday because you’re asking them to give up theirs. You become a true member of the team then. You’re not the manager. It’s a team. The quarterback doesn’t necessarily enjoy any more prestige than the right tackle, and if you go to the Super Bowl then everybody gets a ring. That’s just the way it works. You can write notes all you want, but it’s better to get off your ass and get out there.”
6. Listen to your customers, even if your competitors aren’t.
“In 1994, the United States had already passed a law that you couldn’t smoke on domestic flights. But we flew in Central and South America and Europe, and those were smoking flights since international flights were exempt. I would have customers complain about smoking and, of course, if you were a working flight attendant, and you worked the back of the plane, it was a different atmosphere—it was cloudy, grey, and smoke-filled. I was on a flight down to Costa Rica, and I walked back there, and I said, ‘We are going to stop this.’ We had the senior VP of international sales writhing on the ground in my office because they were all convinced that we were going to lose our business.
“THE BEST WAY TO DIFFERENTIATE YOUR PRODUCT IS TO BE CONSISTENTLY RELIABLE AND DEPENDABLE.”
And, you know what? We picked up more business doing that than anything we did. We had so many people ditch Alitalia or Air France to fly on us because we were non-smoking. And while it angered some customers, we got more customers because of the rule. We trail blazed the international non-smoking flights by listening to our customers and listening to our own employees. We made a lot of money because of it, too.”
7. Consumers want one thing—and it’s not what you think it is.
“All good airlines are always looking for a way to differentiate their product. But the best way to differentiate your product is to be consistently reliable and dependable. I think people value that the most. They’ll say, ‘Screw the movie, but don’t lose my bag!’ I’ve seen airlines debate crazy things, like whether the flight attendants should wear Kate Spade handbags or another brand. And I said, ‘Who gives a ****?’ Why don’t you give them their bags? That’s what they want!’ ”
Gordon Bethune is a character. He’s also one of the most accomplished American business leaders of the past few decades.
Now retired, Bethune is credited with resurrecting Continental Airlines, the flagging carrier he led from 1994 to 2004 that has since been acquired by United Airlines. Perennially ranked last among major airlines in customer satisfaction, Continental was losing hundreds of millions of dollars each year and fighting insolvency. Bethune, who was promoted from COO to CEO less than a year after he joined the company, successfully transformed the beleaguered airline into a profitable and respected industry leader.
What did he learn during his decade-long tenure at Continental? We recently had the good fortune to interview Bethune, who talked about his background and the lessons in leadership and management he learned during his time at the airline. Here are seven of those key takeaways, in Bethune’s own words.
1. Treating your customers and employees well is the right thing to do—and it’s good for the bottom line.
“I arrived in February of 1994, and Continental was consistently dead last in customer satisfaction metrics. And then, we consistently ranked first. To this day, we have a record for JD Power Awards. We were on Fortune Magazine my last six years for the 100 Best Places to Work in America. We were the most admired airline in the world, according to Fortune. Those are kinds of things that are long-built records. But I didn’t do it. The team did it.
How did we do it? We became America’s most on-time airline. How did we do that? We focused on that every day, and the record still stands. So, it can be done from a dispirited last place. We lost something like $600 million in 1994. In 1995, we made $225 million—with the same people and the same airplanes. So, it wasn’t anything wrong with the employees. It was the management—and it always is.”
2. Don’t forget where you came from.
“I used to be an airplane mechanic—that’s how I started off. And do you know how much faster I could fix an airplane when I wanted to fix it versus when I didn’t want to fix it? That’s where the money is. They don’t teach that at Harvard Business School. But they do teach it when you’re growing up. These are basic things, but I think too many companies forget it.”
3. Make a real effort to get to know your employees.
“I communicated a lot during my time at Continental. I did a voicemail that was 3-5 minutes that basically told everybody what was going on, and what they could expect. The twist was that you could voicemail me back through the phone service, and they could tell me what was on their minds. In any case, it was a secure, frequent, respectful voicemail to employees.
You ever watch a football team when they have a huddle before a play? It’s not just the big shots in the huddle. It’s the team. Everybody’s got to know what we’re doing. That kind of respect for your employees—they notice that.”
4. You can’t outsource employee relations. It’s up to the CEO to create a team atmosphere.
“Your employees and their attitudes are the differentiating competitive edge you have, and I think we utilized that extensively while I was at Continental. You have to gain and earn the trust of your employees. But not only that, you have to make them feel rewarded in order to get your product at a level that it can beat the competition. Everybody’s looking for better fuel burn and all these accounting tricks you can do, and all the cost savings you can do. But having employees that want to do a good job is invaluable.
“WE LOST SOMETHING LIKE $600 MILLION IN 1994. IN 1995, WE MADE $225 MILLION—WITH THE SAME PEOPLE AND THE SAME AIRPLANES. SO, IT WASN’T ANYTHING WRONG WITH THE EMPLOYEES. IT WAS THE MANAGEMENT—AND IT ALWAYS IS.”
When I was at Continental, I would always go to the airport an hour-and-a-half before my flight, and I would visit Continental employees in the crew room or break room or baggage room. It’s the same as going to somebody’s office and thanking them for doing a great job. CEOs don’t normally do that. They try to delegate that to their HR departments, but you can’t. If you want to be the leader, then you have to appreciate and respect your employees. One way to show them that is to get off your ass, go to their office—which might be a cockpit—and say hello and thank you.”
5. If you ask your employees to make sacrifices, then you should make them, too.
“One thing I did that differentiated me was during the holidays. In particular, Thanksgiving and Christmas were tremendously high-stress days because, of course, everyone wants to be with their families and it’s a maximum travel time in America. I would go out to the airport and work on those days—I would load bags, do work behind the counter, greet customers. I’d make an effort to tell them when I was out there that I appreciated them working on Thanksgiving, and that I appreciated their work in general.
“WE TRAIL BLAZED THE INTERNATIONAL NON-SMOKING FLIGHTS BY LISTENING TO OUR CUSTOMERS AND LISTENING TO OUR OWN EMPLOYEES. WE MADE A LOT OF MONEY BECAUSE OF IT, TOO.”
You can’t imagine how much goodwill that you earn when your team knows that you’re willing to give up your holiday because you’re asking them to give up theirs. You become a true member of the team then. You’re not the manager. It’s a team. The quarterback doesn’t necessarily enjoy any more prestige than the right tackle, and if you go to the Super Bowl then everybody gets a ring. That’s just the way it works. You can write notes all you want, but it’s better to get off your ass and get out there.”
6. Listen to your customers, even if your competitors aren’t.
“In 1994, the United States had already passed a law that you couldn’t smoke on domestic flights. But we flew in Central and South America and Europe, and those were smoking flights since international flights were exempt. I would have customers complain about smoking and, of course, if you were a working flight attendant, and you worked the back of the plane, it was a different atmosphere—it was cloudy, grey, and smoke-filled. I was on a flight down to Costa Rica, and I walked back there, and I said, ‘We are going to stop this.’ We had the senior VP of international sales writhing on the ground in my office because they were all convinced that we were going to lose our business.
“THE BEST WAY TO DIFFERENTIATE YOUR PRODUCT IS TO BE CONSISTENTLY RELIABLE AND DEPENDABLE.”
And, you know what? We picked up more business doing that than anything we did. We had so many people ditch Alitalia or Air France to fly on us because we were non-smoking. And while it angered some customers, we got more customers because of the rule. We trail blazed the international non-smoking flights by listening to our customers and listening to our own employees. We made a lot of money because of it, too.”
7. Consumers want one thing—and it’s not what you think it is.
“All good airlines are always looking for a way to differentiate their product. But the best way to differentiate your product is to be consistently reliable and dependable. I think people value that the most. They’ll say, ‘Screw the movie, but don’t lose my bag!’ I’ve seen airlines debate crazy things, like whether the flight attendants should wear Kate Spade handbags or another brand. And I said, ‘Who gives a ****?’ Why don’t you give them their bags? That’s what they want!’ ”
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Well that sums of it up perfectly .
That is the essence of a well managed company, when the boss works on weekends , public holidays and takes the time to tell the employees that they are valued and appreciated and are part of a team
As he says a job is done so much better by a person that is motivated as opposed to one simply going through the motions in order to get a salary at the end of the month .
When have you ever seen a manager pitch up in flight ops on say Christmas Day pick the worst flight that day and elect to operate it . ? I thought not .
CX. Are operating on the principal that the beatings will continue until moral improves, so unless there is a radical shift in thinking from the top it unfortunately will only continue to deteriorate
That is the essence of a well managed company, when the boss works on weekends , public holidays and takes the time to tell the employees that they are valued and appreciated and are part of a team
As he says a job is done so much better by a person that is motivated as opposed to one simply going through the motions in order to get a salary at the end of the month .
When have you ever seen a manager pitch up in flight ops on say Christmas Day pick the worst flight that day and elect to operate it . ? I thought not .
CX. Are operating on the principal that the beatings will continue until moral improves, so unless there is a radical shift in thinking from the top it unfortunately will only continue to deteriorate
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Management advice from the CEO who saved Continental Airlines
"If you ask your employees to make sacrifices, then you make them too".
Exactly, unlike a certain petroleum CEO who's company made a 2 billion dollar profit, yet sacked 300 workers and took a 2 million dollar payrise, classy.
Exactly, unlike a certain petroleum CEO who's company made a 2 billion dollar profit, yet sacked 300 workers and took a 2 million dollar payrise, classy.
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Maybe have a read of the engagement survey results for cockpit crew, take it to heart, and try to improve said employee relations. I personally think that the survey results were an accurate reflection of general sentiment of the flight deck crew. Then refer to point 4 below, and sit down and think of what we could do better.
4. You can’t outsource employee relations. It’s up to the CEO (and DFO, and GMA) to create a team atmosphere.
“Your employees and their attitudes are the differentiating competitive edge you have, and I think we utilized that extensively while I was at Continental. You have to gain and earn the trust of your employees. But not only that, you have to make them feel rewarded in order to get your product at a level that it can beat the competition. Everybody’s looking for better fuel burn and all these accounting tricks you can do, and all the cost savings you can do. But having employees that want to do a good job is invaluable.
“WE LOST SOMETHING LIKE $600 MILLION IN 1994. IN 1995, WE MADE $225 MILLION—WITH THE SAME PEOPLE AND THE SAME AIRPLANES. SO, IT WASN’T ANYTHING WRONG WITH THE EMPLOYEES. IT WAS THE MANAGEMENT—AND IT ALWAYS IS.”
When I was at Continental, I would always go to the airport an hour-and-a-half before my flight, and I would visit Continental employees in the crew room or break room or baggage room. It’s the same as going to somebody’s office and thanking them for doing a great job. CEOs don’t normally do that. They try to delegate that to their HR departments, but you can’t. If you want to be the leader, then you have to appreciate and respect your employees. One way to show them that is to get off your ass, go to their office—which might be a cockpit—and say hello and thank you.”
4. You can’t outsource employee relations. It’s up to the CEO (and DFO, and GMA) to create a team atmosphere.
“Your employees and their attitudes are the differentiating competitive edge you have, and I think we utilized that extensively while I was at Continental. You have to gain and earn the trust of your employees. But not only that, you have to make them feel rewarded in order to get your product at a level that it can beat the competition. Everybody’s looking for better fuel burn and all these accounting tricks you can do, and all the cost savings you can do. But having employees that want to do a good job is invaluable.
“WE LOST SOMETHING LIKE $600 MILLION IN 1994. IN 1995, WE MADE $225 MILLION—WITH THE SAME PEOPLE AND THE SAME AIRPLANES. SO, IT WASN’T ANYTHING WRONG WITH THE EMPLOYEES. IT WAS THE MANAGEMENT—AND IT ALWAYS IS.”
When I was at Continental, I would always go to the airport an hour-and-a-half before my flight, and I would visit Continental employees in the crew room or break room or baggage room. It’s the same as going to somebody’s office and thanking them for doing a great job. CEOs don’t normally do that. They try to delegate that to their HR departments, but you can’t. If you want to be the leader, then you have to appreciate and respect your employees. One way to show them that is to get off your ass, go to their office—which might be a cockpit—and say hello and thank you.”
It's not rocket science.
We don't need Oxford graduates, we need Leaders, not 'yes men' (women). Swires are so 'died in the wool' they will never employ these modern tactics until somebody realises that they can become even richer if they did.
It's a bit like trying to imagine the Mill Owner rolling up his sleeves and getting down and dirty instead of stopping off for "lunch at the Club". Very rarely happened.
The impact of seeing a Fleet Manager operating a flight over Xmas or CNY would be enormous.
It must, however, come from much higher than that - at least DFO level and probably higher. The higher it started, the quicker the "Yes Boys and Girls" would fall into line. A stonking 'profit share' would be a bloody good start with the emphasis being on the "share" bit. All calculated on a formula?? Change the formula. Make it a cost item like a 'loss leader'. Give the crews a carrot and see if you ever need a stick again....
Back to the top - all after me - IT'S NOT ROCKET SCIENCE!!!
We don't need Oxford graduates, we need Leaders, not 'yes men' (women). Swires are so 'died in the wool' they will never employ these modern tactics until somebody realises that they can become even richer if they did.
It's a bit like trying to imagine the Mill Owner rolling up his sleeves and getting down and dirty instead of stopping off for "lunch at the Club". Very rarely happened.
The impact of seeing a Fleet Manager operating a flight over Xmas or CNY would be enormous.
It must, however, come from much higher than that - at least DFO level and probably higher. The higher it started, the quicker the "Yes Boys and Girls" would fall into line. A stonking 'profit share' would be a bloody good start with the emphasis being on the "share" bit. All calculated on a formula?? Change the formula. Make it a cost item like a 'loss leader'. Give the crews a carrot and see if you ever need a stick again....
Back to the top - all after me - IT'S NOT ROCKET SCIENCE!!!
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Continental airlines
To arfur and all you newbies with such high morals,
Continental airlines were the first of the ' new management' styles that came out to screw Pilots. In fact they were the first to take on scabs! Look at the history but then again you were still sucking mothers milk so what would you know. Arfur? Go do some research before commenting. As they say you can tell an idiot when he opens his mouth! Continental Airlines were ground zero for f...ing over pilots and everything WE stand for. So why do you sport them? Time? Ignorance? Juvenile? Stupid?
Continental airlines were the first of the ' new management' styles that came out to screw Pilots. In fact they were the first to take on scabs! Look at the history but then again you were still sucking mothers milk so what would you know. Arfur? Go do some research before commenting. As they say you can tell an idiot when he opens his mouth! Continental Airlines were ground zero for f...ing over pilots and everything WE stand for. So why do you sport them? Time? Ignorance? Juvenile? Stupid?
Routeman - I started my research in Cathay Pacific in the mid-late '80s my friend so will take no lectures from you. I don't know too much about Continental but the content of 'clear.right's' post has many merits. Inclusion is one of them and if you run an Airline, it strikes me as fairly obvious that you want your Aircrew, Cabin Crew and Engineers (see we love you Spanners) on side and feeling valued. That's all.
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Bethune was a conman of the highest order.
This was a smoke and mirrors act. While performing his magic tricks he reached into his employees back pockets and stole their wallets, calling it quid pro quo.
Cambridge Business Studies Maslow, Herzberg and McGregor's theory states that employees will work harder for less if they feel valued.
This sounds warm and fuzzy but it's not.
Swire, like Bethune, believe in quid pro quo.
The "repect" or "value" will be a trade off with rostering and renuemeration. (The AoA was delusional in '99 with their 3 R's campaign) It's a net zero sum gain. So ask yourself how you prioritize the 3 R's.
Personally, I don't need the respect of someone I've never met. I couldnt identify our CEO or DFO in waiting in a police line up.
Fortunately our managers have neither the ability nor IQ to pull off a similar stunt which keeps me, my family and bank manager happy.
This was a smoke and mirrors act. While performing his magic tricks he reached into his employees back pockets and stole their wallets, calling it quid pro quo.
Cambridge Business Studies Maslow, Herzberg and McGregor's theory states that employees will work harder for less if they feel valued.
This sounds warm and fuzzy but it's not.
Swire, like Bethune, believe in quid pro quo.
The "repect" or "value" will be a trade off with rostering and renuemeration. (The AoA was delusional in '99 with their 3 R's campaign) It's a net zero sum gain. So ask yourself how you prioritize the 3 R's.
Personally, I don't need the respect of someone I've never met. I couldnt identify our CEO or DFO in waiting in a police line up.
Fortunately our managers have neither the ability nor IQ to pull off a similar stunt which keeps me, my family and bank manager happy.
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I have it on very good authority that CX directors were planning on getting their hands dirty "down in the trenches" as it were, in an attempt to generate the kind of patriotism that Bethune managed from his troops.
It was all seen as a bit too hard and was decided that a jolly good hike on Lantau would do the trick. The directors invited staff to join them knowing that the afore mentioned staff would enthusiastically carry their day packs for them, pick up empty water bottles in their wake, and if the going got too tough there would be a conga line of deputy managers and newly recruited trainers who would be stabbing each other in the back for a chance to piggy back one of their idols up the next hill.
Honest!
It was all seen as a bit too hard and was decided that a jolly good hike on Lantau would do the trick. The directors invited staff to join them knowing that the afore mentioned staff would enthusiastically carry their day packs for them, pick up empty water bottles in their wake, and if the going got too tough there would be a conga line of deputy managers and newly recruited trainers who would be stabbing each other in the back for a chance to piggy back one of their idols up the next hill.
Honest!
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Quite, istr that CO pilots ended up with the worst packages in North America. Bethunes genius was to convince enough pilots in shared sacrifice to get away with it without major labour disruption.
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Freehills. Why let facts get in the way of a good story. In FACT, after all the drama in the US airline industry after the financial crash of 2008, Continental ended up having about the best package in the US industry. It's only the recent merger with United that is ruining the company. The attitude of the former United pilots is poisoning the entire company. The Continental pilots have had almost 30 years to adapt to the new reality of the industry, and made it work. It's the ALPA dinosaurs that can't cope with the facts of life as they now are. A more sorry bunch has never existed in this industry. Self centered, myopic and foolish. They played right into the hands of the various managements throughout the US industry. 
Well said MM.
And Bethune was the real deal. I was there in the bad years at Continental and things were as bad as they could get. We'd had, I think it was four CEO's in as many years at that point and were bleeding red ink.
I still remember the day he came into our base and told us how he would turn the Airline around, he was openly ridiculed to which he responded 'just give me a chance'
Well he did it and the transformation was incredible, we became the best airline in the country, the one to fly on if you could and we signed a decent contract in return, it wasn't record breaking but it was considerable better than what United had at the time.
Now there's a sorry operation full of bitter people and poisonous attitudes, shame, they used to be a great airline, I wish we had never got mixed up with them but they didn't ask us.
And Bethune was the real deal. I was there in the bad years at Continental and things were as bad as they could get. We'd had, I think it was four CEO's in as many years at that point and were bleeding red ink.
I still remember the day he came into our base and told us how he would turn the Airline around, he was openly ridiculed to which he responded 'just give me a chance'
Well he did it and the transformation was incredible, we became the best airline in the country, the one to fly on if you could and we signed a decent contract in return, it wasn't record breaking but it was considerable better than what United had at the time.
Now there's a sorry operation full of bitter people and poisonous attitudes, shame, they used to be a great airline, I wish we had never got mixed up with them but they didn't ask us.
