If there is one thing that I’ve had to learn this year it’s the importance or managing expectations. Now I know this is a very trendy phrase in business and many people won’t pay it much attention, but I believe it is important because it means that you try to control or forecast the emotions and based on that alone, the irrational.
I’ll use one example to highlight this: Swiss International Airlines had an incidence this past week of failing to manage their employees expectations. I really respect Swiss as a company for their innovative use of social media and for their attention to detail and realizing the value of giving customers a full package deal without all the extra costs involved when flying discount airlines, which often end up being more expensive than a major carrier. However, when I read the newspaper article this week about how the airline decided to not pay out Christmas bonuses to their employees despite record profits, I was a little taken aback.
Why would Swiss not pay their employees a bonus, when they’ve made more money than in the past? Many employees were evidently very upset, and when one reads many of the newspapers one can understand why. But the papers failed to paint a clear picture for the sake of a David and Goliath story.
Further research into the matter showed that Swiss had only offered Christmas bonuses in the years 2008, 2009, and 2010. The airline has been in operation since 2002. This fact was left out of the papers. What was mentioned was that the bonus is not part of the employees’ general contract. The questions as to how Swiss dealt with the situation here will draw up critics on both sides. Many felt sorry for the employees and bought up the capitalist taking advantage of the working class story. Others sided fully with the company and said that it is typical that employees are never happy with their employers and always feel owed more.
Noting that hindsight is 20/20, what could Swiss have done better? Being as the airline stated that certain goals were not achieved that would have allowed them to pay out the bonuses, we see that there were economic underpinnings for the decision. The operating costs of airlines are huge and as the airline crisis after September 11, 2001 show airlines can quickly fall into bankruptcy — that is after all what happened to Swiss Air. With economic growth expected to be slow in 2012, airlines need to maintain capital to make it through future rough spots. In that respect, many employees may well be happy next year when the financial reserves could mean that no one loses a job. But what could the airline have done differently?
The optimal solution would have been after the last bonus was given to make all employees aware of the new targets that the company was setting for the coming year and the need for those targets to be met and surpassed for a payment of a bonus in the following year. During the year the company could have kept employees informed on how they were doing in achieving their goals.
This would have had two positive effects. It would have managed the expectations of employees by letting them know that a bonus is not guaranteed just because they got one the past three years. Second, having a company goal would have given employees an incentive to try and reach the target together and possibly have bettered service, customer satisfaction, and increased ridership.
Letting employees know in an e-mail a week before they expected their bonuses that they would not be getting one was a mistake in managing expectations, that I’m sure the company won’t make again. For the rest of us it is an excellent example of the importance of being upfront with people and making sure that both parties understand what is expected from each other.