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Keeping Spirits Aloft at JetBlue

December 6, 2004
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Related Topics: Behavioral Training, Motivating Employees, Labor Relations, Featured Article, Recruitment, Staffing Management
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Vincent Stabile, vice president of people at JetBlue Airways, knows that a successful business is all about treating the customer right. But that doctrine is nothing but lip service, he says, if you don’t treat workers right first.

    In an industry that has seen decades of labor strife, JetBlue’s approach seems to be working. Unlike its ailing old-line competitors, the New York-based discount airline has become a Wall Street darling by emphasizing several worker-friendly elements: profit-sharing, constant communication, calling executives by their first names, hiring people with positive attitudes and encouraging the entrepreneurial soul in every employee.

    "People love working here," Stabile says with pride. But make no mistake: JetBlue is not a cult of eternally smiling crewmembers, as employees are known at the airline. While no unions have infiltrated the company’s ranks, organizing efforts have remained a constant since the airline’s inception in 1999, and past missteps in promoting employees with scant leadership knowledge to managerial postsproved temporarily damaging.

    Despite those issues, the overriding message and mission of this upstart airline is to value its 7,000 employees and empower them with information--from the company’s balance sheet to how fuel prices impact the bottom line.

    "I don’t want people to think all I think about is the people," he says. "I have just as much of an interest and focus on the cost side as I do on the people side. We look at our business holistically."

    Stabile, who reports to JetBlue president and chief operating officer Dave Barger, started his human resources career in retail, including a stint at Saks Fifth Avenue, where customer service was a way of life. Now 50, he earned a master’s degree in psychology from Manhattan’s think-outside-the-box New School for Social Research and also spent several years managing people at entrepreneurial publisher Ziff Davis during the dot-com boom.

    Stabile discusses the nuances of making worker/management relations look easy and how the firm has become one of the airline industry’s few bright spots.

    Workforce Management: Your first day of work at JetBlue was on Sept. 11, 2001. How did the workforce handle that?

    Stabile: I was not only new to JetBlue, I was new to the airline industry. In the process of my interviewing for the job, I absolutely had gotten the sense that this was a very different culture and that there were some huge commitments to doing what’s right. However, no matter how many interviews you go through and how many people you meet, it’s never the same until the rubber meets the road. From the moment the team at JetBlue realized that a true crisis was happening, all of the values people had talked about were in play.

    For example, when it became apparent that this was not a single-accident situation, a couple of folks on our team here immediately realized that the airports were going to shut down and people would be stranded all over the place. They immediately started to reserve as many local hotel rooms as they could, reserved some buses and shuttled our customers from the terminal at JFK and put them up at our expense at local area hotels.

    The thing that really left an impression with me was at the time we shared Terminal 6 at JFK with a couple of other airlines. When the directive at JFK happened to get planes on the ground, there were customers from other airlines who couldn’t find anyone from their airline, so they were coming up to our people. Our folks--nobody told them to do this--started directing those customers onto the buses and to hotels. We covered that expense as well.

    WM: How were employees able to make such a decision on their own?

    Stabile: We teach them to do that. One of the things we stress to them is that it’s our responsibility to train you, give you the tools you need, help with job training. But when it comes to how you deal with the customer, you have to figure out what is right. You’re not going to get a huge procedural rule book on how to handle customers.

    We are going to look to you and how you treat the customer. The rule book should be your values, what’s in your head and what makes common sense. We’ll help coach you if you make a bad decision, but we don’t treat it as a disciplinary situation.

    WM: What tools do you use to help in the hiring process?

    Stabile: We receive 100,000 applications a year and hire 2,400 to 2,500 annually. We actively scrutinize candidates before they come on board. We target our five values of our company: safety, caring, integrity, fun and passion.

    We use an interviewing product developed by an outside consulting firm, Development Dimensions International. The concept is adapted to what JetBlue’s values are all about, and it provides questions and guides to an interviewer. For all of our major work groups, not only are candidates being interviewed by recruiters and the line leadership; if an employee is interviewing for a customer service job, he is spending time with current customer service people.

    If you’re being considered as a pilot, one of your interviews is with a pilot. The interviewers keep notes and the interview is scored. The pilot, along with the recruiter and someone from line leadership, all put their scores together and, as a group, decide if a person is going to be hired or take the next step. Our posture in this is to help you get people you’d want to work with.

    The costs associated with the Development Dimensions product are proprietary and therefore not appropriate to share. I don't believe there's a way to meaningfully quantify an ROI for this product or process. I'm sure it contributes to our low turnover rate, which generates a financial benefit in a variety of ways, but we don't consider that to be a primary driver behind why we use the product.

    WM: What is your turnover rate? How does that compare to the industry at large?

    Stabile: Our turnover rate, annualized, ranges between 10 and 12 percent; the industry is somewhere triple that, 20 to the low 30s. People don’t want to leave here. People really enjoy working here. I’m not saying that to be a wiseguy. The things that keep people here the most is how they feel respected and how they’re treated by leadership. Everyone knows me as Vinny; the CEO, David Neeleman, is Dave.

    And as a company, we will not furlough people, period. We’re in a usual position right now. Based on our growth plans, we’re going to be hiring more than 250 people a month indefinitely even if things get tight.

    WM: How is JetBlue’s workforce training unique?

    Stabile: On the first day with the company, employees go through an orientation where they spend an hour with our president, Dave Barger, in a classroom talking about what the brand JetBlue is all about. Then Dave (Neeleman), the CEO, does a presentation on airline economics: "Here’s how we make money." And then they spend an hour with me where I do a presentation on the corporate culture and company values.

    We offer a blend of not only the technical skills but also the soft skills, how to interact with customers and one another. During every pilot or flight attendant recruitment training, our president spends a half-hour or hour with them.

    There’s also a segment in training called CRM that used to mean "cockpit resource management." It was about good communication among the pilots, (and) that evolved to "crew resource management" to include flight attendants. At JetBlue, we took it a step further to "company resource management."

    It’s an hour and a half where they learn about formal and informal processes we have in place for internal communications. The focus is on the mechanisms we have in place for communications with systems operations, dispatch people, whether it’s structured or unstructured. Things that drive how we get the plane pushed off on time and how what an employee does impacts that.

    We have regular monthly meetings at JFK the last Friday of every month, where we spend close to two hours with the president talking about industry, and then a wide-open Q&A. We usually have about 200 or so people there. Mechanics, pilots, customer service people, etc. We videotape it and put the video up on our intranet. We get thousands of hits on that.

    WM: What makes JetBlue different from Southwest?

    Stabile: Culturally, there are a lot of similarities. It’s not an accident that we don’t go head-to-head with them in certain markets. They are the 10,000-pound gorilla. What makes us different is that we have seat assignments and we have TV videos in each seat.

    Their people are a little bit more campy than ours. That’s by design for them. Their goal from the get-go was to have an entertaining style. Our goal has been to be more New York chic, edgy with still a sense of humor. That’s not positive or negative, it’s a point of differentiation.

    We see ourselves definitely as irreverent. There are aspects of their business model that we’ve adopted. My director of flight attendant recruiting came from Southwest. Our CFO came from Southwest. We are not looking to be a Southwest copycat; we’re looking to take the best practices of whomever and incorporate that in our business model.

    We have the commitment to taking care of our customers. That’s what Southwest is all about. That’s absolutely something we wanted to take from them.

    WM: What differentiates JetBlue from the legacy carriers like American, United and US Air?

    Stabile: One difference, which is really all about effective cost model for business, is never losing sight of the fact that the decisions we make have to be respectful of maintaining really good cost control. The other differentiator is how we choose to treat people. We treat our people the way we want them to treat the customers.

    WM: How do JetBlue’s pay and benefits compare to other carriers?

    Stabile: We pay about the midpoint or slightly above compared to industry norms. We offer health coverage, profit-sharing, 401(k)s, etc. The profit-sharing is very simple. We take 15 percent of our pretax profit and divide it out as a percentage of payroll. Last year, it was 17.5 percent of employees’ income; the year before it was 15.5 percent. The health insurance--our plan tends to be slightly richer than our competitors’, with lower deductibles and copays. And we match 100 percent on the first 3 percent in our 401(k) plan. In our stock purchase plan, the stocks are typically offered at a 15 percent discount of the price of the stock and we do the purchasing twice a year. A lot of firms do it once a year.

    WM: How do you train employees to smile?

    Stabile: We don’t train them to smile. We hire people who smile. I look at people and try to ascertain their default position. If their natural default is pleasant, courteous, smiling, that’s likely going to be a person that will provide the consumer service we want. If someone is looking unhappy or frowning, or has to put on a front to engage with people, that’s not going to be the right kind of person. People have bad days. If you don’t smile, you’re not going to get fired.

    WM: How do you train managers, and how do you deal with bad managers?

    Stabile: We did a survey three years ago, and we were getting a lot of negative feedback about the line leadership. We were fast growing. What we did was, maybe we had this person, a great customer service person, (and) we’d say, "Let’s promote them." We missed the boat in identifying that being good at doing a job doesn’t mean you’ll be good at leading other people to do that job.

    We needed to make sure we gave them the tools. We did a crummy job at that. We created "Principles of Leadership," an extension of the values--the values on steroids.

    We went through a six-month process. We included people throughout the company and put together a lifelong learning program to support the 800 leaders we had at the time. We put them through a two-day training session to build those concepts of leadership.

    After a couple of months, we sent out a survey to 15 to 20 of their people, all done anonymously, and then they came in for another three days and got the opportunity for role-playing with counselors to assess the feedback .

    On the third day, they got time for one-on-one (sessions) with an executive coach to put together an action plan on what they need to develop as a leader.

    We are now developing Phase 3 of this and will launch it in the middle of next year. Phase three will be a continuation of development as a leader, but we’re working on the details right now. While this has all been done in-house, we worked with New York University and the Center for Creative Leadership to develop some of this stuff.

    We’ve estimated cost so far at over a half-million bucks on an annual basis. At the risk of sounding like the MasterCard commercial, the ROI for the POL program is priceless. All kidding aside, we have seen significant behavior change on the part of our leadership, which was directly reflected in improvements in the leadership category scores we received on our annual crewmember surveys over the past two years. But I don't believe there's a meaningful way to quantify the impact it's had on our business.

    WM: How has JetBlue been able to remain a nonunion airline?

    Stabile: We started flying on Feb. 11, 2000, and our first union organizing activity started Feb. 8, 2000. Right now, my guess is there is something going on somewhere in the company. Do you hear me sounding panicked? It’s happening and will continue to happen.

    I have never participated in a meeting where the discussion was around what do we have to do to remain union-free. Remaining union-free is not an end game to me; the end game is treating our people with respect, making them feel good about the company, and leadership in particular. Make them feel they have access and issues that can be raised to anybody. If at some point in time they decided they need a union to achieve those things, then shame on us.

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