A Change in Direction at Continental Airlines Essay

This essay has a total of 2891 words and 11 pages.

A Change in Direction at Continental Airlines



What words come to mind when you think of Continental Airlines? Successful company,
preferred airline, good service, on-time airline, top carrier, financially solvent, happy
employees. These are all true; however, this was not always the case. Just six short
years ago, probably not one of those descriptions would even be said in the same breath as
Continental Airlines. In fact, in 1994, Continental was facing its third bankruptcy; that
bankruptcy would have been the final blow to take this airline down for the last time.
Employees were disgruntled about their work environment, their pay, and their airline;
they had even taken pay-cut after pay-cut in an effort to keep the airline afloat.
Customers did not think much more of the company, as Continental was considered simply the
worst among the nations ten biggest airlines. Continental Airlines is now recognized as
one of Fortune Magazines 100 Best Companies to Work for in America, even moving up from
the 40th position to a very respectable number 23 on the list in 1999 (a particularly
satisfying award for a company of over 50,000 employees). Continental is also now
considered to be a respected airline and company, not only in the airline industry but
also across all industries both nationally and worldwide. This metamorphosis came about
because of a team of individuals who took a hard look at the condition of the company.
They considered where the company had been and where it could go. At that point in time,
the possibilities were two; Continental could continue on the road it was on (and probably
end up in its third bankruptcy and possibly the end of an airline) or undergo some major
changes in the hopes of creating a really great airline. As the story goes, the Board of
Directors of Continental Airlines went out on a limb and hired a gutsy, plain-speaking
ex-Navy aircraft mechanic who was armed with a few commonsense notions about good
management and who possessed the courage to look past the bottom line, managed to motivate
his people to bold new heights of excellence and win back this companys long-lost
customer base. This person, armed with a down-to-earth basic recipe for turning a company
around, was and is Gordon Bethune.

Change does not come about overnight, nor does it come easily. As stated by
Merriam-Webster, change is to make different in some particular fashion; to give a
different position, course, or direction to; to replace with another; to make a shift from
one to another; to exchange for an equivalent sum or comparable item; to undergo a
modification of. Management is defined as the act or art of managing; the conducting or
supervising of something (as a business); judicious use of means to accomplish an end; the
collective body of those who manage or direct an enterprise. (Merriam-Webster) These
things all happened at Continental Airlines beginning in 1995 under the direction of
Gordon Bethune. Gordon, as he is known to all of his employees from the second in command
down to the newest ramp agent, is a leader who is about his people and his product. He is
a feisty, plain-speaking man who fought for the position as Chief Executive Officer.
After ten leaders in ten years, the Board of Continental had only wanted someone to be a
figurehead for the company. They were not looking for a leader; they had had ten of
those already. The Board simply wanted someone to take over. So, they let Gordon take
over for the next ten days until the next board meeting; at that point, he would have a
chance to address the Board and some decision would be made. What a timeline; what
stress. Gordon knew the company needed dramatic change in every conceivable way. His
first step was an easy one; he stuck a wedge under the once-locked, video camera monitored
doors of the executive suite. This was the equivalent of hanging an under new
management sign in the window of a restaurant. It was a start, as well as a testament to
his style of management and to the culture he longed to see at Continental. Bethune spent
the next ten days holed up with Greg Brenneman, then a consultant for Continental and now
the President and Chief Operating Officer, to come up with a plan to present at the board
meeting. Gregs background was in turning companies around and Gordon quickly recognized
his talents in doing just that and wanted his partnership in this turnaround attempt.
What an attempt this would be. For this board meeting, Gordon and Greg had ten days to
not only make the usual financial and operations presentations but to design a plan that
would completely change the direction of a $6 billion corporation. What Continental
Airlines was about to undergo was a monumental change, one which would dismay and delight
the critics, the customers, and the employees.

For Gordon and Greg, manipulating the numbers was the easy part, changing the hearts and
minds of employees who had undergone years and years of different leaders, pay reductions,
and distrust was the hard part. The people of an airline are just as much an integral
part of the product as the planes themselves. Reengineering was to become the order of
the day.

Everyone knows that reengineering is about processes. To the great relief of many workers,
the focus is taken off of them and put on the work. At that point in time, the employees
were just plain skeptical about anyone coming to create change. Change and
reengineering thoughts processes are characteristic of the following types of statements.
"Let's not blame people, let's look at where the process failed." "If there is a problem,
it's because the process is broken. The people are doing their best to make it work."
Employees know these things all along, but they are pleased when they have a leader or
someone in management whom can bring about change that believes in these ideas. In many
ways, not only had the processes failed but so had Continental failed the employees. When
a company finally gets a leader who can bring about changes in the processes, improve
them, fix them, the employees should be happy. Right? Well, there is a problem. The
employees are people and reengineering the processes means change, and people have a lot
of problems with change. The employees of Continental Airlines had already undergone ten
changes in ten years and there was little trust with which to work. Any reengineering
project that does not factor in the difficulties people have with change and address the
change issues in a systematic, structured way, is doomed to fail. Gordon new he was up
against these types of odds and took measures to make sure his people knew he was in this
with them. Let us take a look at a few states of change in the reengineering process.
They are the future, current, and delta states of change as described by Jeaneanne LaMarsh
of LaMarsh and Associates.

The future state of change involves the idea of wanting a change, but not necessarily the
changes in the plan itself. Employees may have their own ideas about what should change,
and this change frequently revolves around someone else changing, not them. For
Continental, it involved both. The current state of change involves the thinking that
while the new way of working may be much better, employees do not see that there is that
much wrong with the current way of working. They may see the way to make things better as
just adjusting and manipulating what they do today, not the drastic and wrenching changes
in the plan. It can be difficult for them to individually visualize the effect they
themselves have to change and the overall effect. In this case, the employees did not have
the faith that any change would make the difference, so why bother. They had spent the
last ten years trying change after change after change; they were numb at this point.
Finally, the delta state of change involves the new change being viewed as highly
desirable, and the current way very unsatisfactory, but the process of going from here to
there, the process of changing, looks too hard, will take too much energy, and is
confusing and frightening. Moreover, it may appear that there are not enough resources of
time, people and money. (LaMarsh) Not to mention, for the Continental Airlines employees,
they were too tired and beaten down for yet another change. They wanted someone to show
them change, not just talk about it from up high. They needed communication,
reinforcement, and reward to get the job done. Companies and people have no choice: they
must change to survive. They do have a choice, however, in how they change. Deciding to
manage change by applying an organized, structured methodology is the clear choice of
successful companies. When they do this, changes are implemented faster, cheaper, and with
Continues for 6 more pages >>




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