JetBlue Airways: Starting from Scratch Essay

Before David Neeleman’s non-compete agreement with Southwest Airlines expired, he envisioned the concept of starting a low-fare airline that would combine common sense, innovation, and technology and bring the humanity back into air travel (Gittel & O’Reilly, 2001). In 1998, JetBlue was born. In order for David to fulfill his goal of a â€Å"do-it-right† kind of airline, he needed to recruit superior industry veterans who were willing to start from scratch and place an emphasis on employees and customers. Each of these individuals, from the President, General Counsel, CFO, and the HR director, wanted to create an airline that was fun, had integrity, was safe, and cared for their employees, plus had a passion to get it right (Gittel & O’Reilly, 2001). When JetBlue hired Ann Rhoades away from Southwest Airlines, she brought with her, her experience on how to set up the rules and regulations that JetBlue would use to manage its personnel. During JetBlueâ€⠄¢s beginning operations, they relied upon five core values that were emblematic of the main characteristics of the company (Gittel & O’Reilly, 2001). These values included safety, caring, integrity, fun, and passion. Taking into consideration these five values, JetBlue used the Equal Employment Opportunity (EEO) acts to determine how, where, when, and which employees would join JetBlue as team members. In order for JetBlue to become successful, they needed to abide by the equal employment opportunity laws that formed a structured path that would enable the HR department to defend their decisions legally, if challenged. JetBlue started with high integrity standards and, to this day, continues to sustain these high standards (Gittel & O’Reilly, 2001). When hiring or dealing with personnel issues, some of the EEO acts that JetBlue references on a daily basis include the following: the Equal Pay Act of 1963, the 1972 amendment to that act, the Lilly Ledbetter Fair Pay Act of 2009, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, amended in 1978 and 1986,  the Americans with Disabilities Act of 1 990, the Pregnancy Discrimination Act of 1978, the Americans with Disabilities Act Amendments Act of 2008, the Immigration Reform and Control Act of 1986, the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, the Uniform Services Employment and Reemployment Rights Act of 1994, the Veterans Benefits Improvement Act of 2004, and the Occupational Safety & Health Act of 1970, amended January 1, 2004 (Gittel & O’Reilly, 2001). JetBlue’s main priority is the safety of its passengers and employees. In order for JetBlue to provide safety for all of its employees, they referenced the Occupational Safety & Health Administration (OSHA, 2001) guidelines for general duty that specifically state that the employer needs to provide a safe and healthy environment for the employees to work, free from loud noises, hazards, falling and sharp objects, and containing breathable air. These are a few areas of concern for JetBlue that relate to the well-being of their employees. In addition to the noted areas, their mechanics, ground crew and pilots have received continuous training on wearing ear protection when on the tarmac at the airport. This training also provides for the ground crew to place chocks under the wheels, florescent cones for the perimeters around the plane and information on other safety gear to prevent accidents. The ground crew needs to be able to read, write and be fluent in English in order to pr ocess all safety information regarding their jobs and other areas and peers who work for JetBlue. Mechanics also have strict safety guidelines that they need to adhere to when providing maintenance to the aircraft. The most important guideline is to ground the airplane, so no static electricity will build up and discharge, causing an explosion or damage to the electronics on the plane. Pilots also have a laptop that they do safety checks with on all the systems of the airplane before takeoff (Gittel & O’Reilly, 2001). JetBlue’s HR department tailored each job and its wage and benefit structure to meet the needs of the individual who was hired for a specific job. When the HR department analyzed industry-standard for wages and benefits, they saw a â€Å"one-size-fits-all† attitude toward industry employees, which did not meet their expectations or standards (Gittel & O’Reilly, 2001). JetBlue’s strategy was to listen to their employees, and by judging the reply from their employees to the questions, they set up a customized wage and benefits packag e for each employee, tailored just for him or her. By giving the  employees a choice, this allowed them to be part of the decision-making team and to fulfill a desire from the employee to be heard. The Equal Pay Act of 1963 played a significant role in JetBlue’s structuring of its wages and benefits. This act is to equalize pay between genders at the same location. There are a couple of exceptions. One exception is that different parts of the country have different wages and cost-of-living structures, which is taken into account when hiring, and the wages are adjusted accordingly. Also, within the structure of wages, JetBlue investigated all jobs within the industry and made sure that they paid above the pay grade of each job specification (Gittel & O’Reilly, 2001). When word spread throughout the industry that JetBlue was paying better than the other airlines, most positions had hundreds and sometimes thousands of applicants. When they offered part-time call center reservation help and paid a dollar more per hour than most agencies, their only ad for reservation help provided them with a waiting list of over 2500 applicants. Many people wanted to work for JetBlue, but many would be denied because they were not a perfect fit in regards to the five core values of JetBlue, and some new hires were even let go because they didn’t live up to the values set forth by JetBlue’s management team (Gittel & O’Reilly, 2001). The Fair Treatment for Experienced Pilots Act and the Age Discrimination in Employment Act of 1967, Amended in 1978 and 19 86, are two acts that deal with age. The Fair Treatment for Experienced Pilots Act deals with the retirement age of pilots who fly commercially for all American airlines (Federal Aviation Administration [FAA], 2007). As stated in the act, pilots who fly domestic flights can fly until their 65th birthday. If they are international flight pilots, only one pilot can be up to 65 while the other flight crew member must be below 60 years of age. This law was enacted because so many pilots were reaching retirement age and new pilots were becoming scarce. Congress took it upon themselves to write the Fair Treatment for Experienced Pilots act so that pilots who were close to the retirement age of 60 years old could continue to fly for another five years. This was backed up by medical professionals who stated that there was only a slight risk in health issues by allowing these pilots to continue to fly five more years. JetBlue has instituted a program to train new pilots, making sure that their fleet is continuously running. In the next 10 years, there will be a deficit, about  85,000 airline pilots. JetBlue’s mission for their pilots is extensive training and providing safe and caring service. This act helps JetBlue retain some of their senior pilots and allows them to be diversified over a greater period of time (FAA, 2007). The best external recruitment tool that JetBlue used was selecting pilots who had a high degree of computer knowledge and also fit the conditions of the core values of JetBlue (Gittel & O’Reilly, 2001). A pilot who enjoys his job will tell his other pilot friends, who work for other airlines, about the benefits he received when hired at JetBlue. One of these benefits, was the paid training to learn to fly the Airbus A320, a $30,000 investment on the part of JetBlue to attract skilled and qualified pilots. Most people will not recommend someone unless they are going to be beneficial to the company. An employee does not want someone to tarnish his reputation with the company for referring a person who will not measure up. In the first year, after the hiring of pilots, they had to release 20 from JetBlue due to lack of living the core values (Gittel & O’Reilly, 2001). Most times it is a balancing act on who will actually be a good employee or not. On the one hand you have several pilots that conform to the mission of JetBlue and then you have a few bad apples that must be purged due to the fact they did not live up to each core value: safety, integrity, caring, fun and passion. The benefit to JetBlue are pilots who are willing to do a good job and understands that the ultimate goal is safety. Once a pilot loses his vision of the core values is when JetBlue and the pilot parts company. This could cause a few issues with keeping planes in the air if a majority of pilots were disgruntled with JetBlue (Gittel & O’Reilly, 2001). When JetBlue started to hire their Flight Attendants, the developed three distinct categories for them. One was for college students that only lasted for a year, to gi ve them some experience, fun and travel (Gittel & O’Reilly, 2001). Another was job-sharing, this scenario allowed two people to share a job and would allow them to balance both job and home life equally. Lastly, JetBlue offered regular full-time employment but with a twist. For Flight Attendants who worked less than 70 hours per month they would be paid a dollar more than industry standard, for those who worked more than 70 hours per month would be paid $30 per hour. JetBlue targeted colleges to recruit able bodied college students who were over 21, wanted to travel, have fun, and represented the company’s core values (Gittel &  O’Reilly, 2001). As far as the Flight Attendants, these jobs were just temporary type positions to only last between one and five years. The benefit of this position is what JetBlue would always be rotating new staff to keep the front line employees fresh but also the bad thing about this would be always constantly hiring for Flight Attendants (Gittel & O’Reilly, 2001). One of the best internal recruitment methods that JetBlue has available to itself is the employee database (Gittel & O’Reilly, 2001). This database allows manager s to see the capabilities and also who is qualified for the desired position. The employee database tracks many aspects of an employee’s career within the company such as how many days they were sick, on-time performance, over time, knowledge of the firm and its policies and procedures. Too many promotions from within results and a lack of creativity, this is why you need a balance of 80/20 of people you would promote from within. The 80% of employees would give you exceptional talent, along with 20% who would give you new ideas and the creativity to look outside the box (Gittel & O’Reilly, 2001). Another internal method of recruitment is a physical listing placed on a board in various areas of the company, for instance including a job advertisement on an employee break room bulletin board. One of the best external recruitment methods that JetBlue uses to hire new pilots is employee referrals. Many of the pilots who fly for JetBlue are satisfied and happy because the airline covers the extensive training to fly the A320. Most pilots who are refer red to JetBlue have extensive skills in computers and are comfortable with the laptop and are the best in the field. An employee would not want to refer somebody if they were a poor candidate and have that come back on them (Gittel & O’Reilly, 2001). Virtual job boards (such as Indeed, Hot Jobs, Monster, Career Builder) are another strong external recruitment method used by companies, as is social media, where companies have taken to looking for employees through forms of social media like Facebook and Linkedin. When JetBlue started to hire people they took into consideration the five core values as a guide to make sure that each employee was the right fit for the company (Gittel & O’Reilly, 2001). These core values were used as a template to judge people’s responses for desirable and undesirable behaviors. Pilots were asked to tell of an example where they were to describe a situation where a customer request went against company policy and the way that they  had resolved that issue. When mechanics were interviewed they were asked to think back when they work for another emp loyer where â€Å"integrity† was a factor in their job. One example, was a mechanic who is prepping the plane for an international flight notice that the compliance and safety of the plane was not to standards. Management pressured him to sign off, but ultimately he refused to comply with management’s request to authorize the flight, which delayed the flight. Management fired the mechanic for noncompliance. On the other hand, JetBlue hired this individual for his unwavering integrity (Gittel & O’Reilly, 2001). JetBlue’s goal was a diverse, selected and knowledgeable employee base that would ensure all applicants were the perfect fit before anyone was hired. People from all walks of life wanted to work for JetBlue, this included college students, the average Joe, housewives, professionals, and your everyday person looking for job (Gittel & O’Reilly, 2001). JetBlue’s interviewing criteria was lengthy with multiple interviews. All interviewers had to approve/sign off the job offer to each candidate that passed scrutiny. The main goal in making the potential employees go through this process was to find the employees that were â€Å"not just looking for a place to work† but an employee that wanted to be a part of a company that would recognize them as a person and not just a number. A happy and content employee is an employee who will go above and beyond t he call of duty and are more likely to stay and work for the company for years (Gittel & O’Reilly, 2001). Performance appraisal systems are to help managers/management evaluate how well work was carried out and how it measured up with regards to the corporate goals (Gittel & O’Reilly, 2001). These appraisals give the necessary feedback to managers in a concise way that measures the adaptability, judgment, appearance, and attitude of the employees, team members and/or groups being evaluated, this lends itself to identifying where the successes and gaps of the developed plan needs to be revised. This type of communication, if used properly, can enhance how each manager interacts with a subordinate and how the employee receives beneficial enhancement actions to better improve him/herself on how to achieve the company’s goals (Gittel & O’Reilly, 2001). When setting up the performance appraisal system, there are external and internal factors that can affect the appraisal process. Among these are federal regulations that specifically target nondiscriminatory actions. In one such case, a  company was ruled against, by a federal judge, because there was sufficient evidence that indicated the use of age bias and age-based policies throughout their performance appraisal against a protected age group. Organizations must avoid any appraisal systems that targets a protected group (Gittel & O’Reilly, 2001). Unions are often an external factor in performance appraisal systems. Most unions are set in tradition and stress seniority over any other basis for promotion or pay increase. Union can demand that a union member be promoted or given a pay increase just because he/she was there for so many months or years, not based on the idea that the person was doing his or her job and enhanced the company’s goals. Fortunately, JetBlue gave its employees the opportunity to voice their opinions and be heard, staving off a union formation (Mondy, 2012). Corporate culture is the greatest internal influence for a performance appraisal system. Many corporations find that if they want to attain employee engagement, they must give an employee a voice to effect change within their department or organization. JetBlue has this ability as they are constantly talking with their ground crew, flight attendants, pilots, and service personnel to get feedback on how well each employee in the company is doing to achieve its goal (Mondy, 2012). Many other factors that influence the evaluations of employees are as follows: 1. Leniency error – this is where the evaluator has his own set of values and rules that he assigns to set the standards by which the employee will be judged (Mondy, 2012). 2. Halo/horn error – this is where employees are judged myopically with enhanced performance reviews and horn is just the opposite, where they are judged with a negative performance review and not on their whole work performance (Mondy, 2012). 3. Similarity error – is when in an evaluator imprints his self onto the employees, ma king those employees seem like the evaluator (Mondy, 2012). 4. Low appraiser motivation – this is when an evaluator knows that this will harm the chances for the employee to receive a promotion, so they may give a false appraisal (Mondy, 2012). 5. Central tendency – this is where the evaluator gives medium appraisal’s to all employees and fails to recognize any with exceptional skills (Mondy, 2012). 6. Appraiser discomfort- this happens when a manager has difficulty in executing the appraisal system. Often times, this makes it stressful for him and the employee, and sometimes results in negative feelings toward the  company and manager from the employee’s perspective (Mondy, 2012). 7. Objectivity error – this is where an evaluator rates an employee by personal attributes, such as attitude, appearance, and personality and disregards other performance appraisal factors (Mondy, 2012). 8. Recent behavior bias – this is when an evaluator rates an employee’s behavior in the last couple weeks rather than throughout the year (Mondy, 2012). 9. Manipulation of the evaluation – evaluators control the appraisal system which allows for manipulation of said system (Mondy, 2012). When you take into account the above list of factors on a standard method of evaluation methods, there is more than one way a supervisor, manager or management can deem the employee worthless, berate him/her, praise, and/or not promote or give a raise. JetBlue has eliminated this by setting up a 360-degree feedback evaluation method, where it is not just one person’s responsibility to dictate who or when someone gets a raise, but rather, a group of the employee’s peers, supervisors, management, and sometimes, even customers give their feedback on how to give that person a helping hand, instead of beating them down with criticism (Gittel & O’Reilly, 2001). This system utilizes multiple methods of evaluation such as a rating scale, collaborative, 360 – degree assessment, critical incident, essay, work standards, ranking, forced distribution, behaviorally anchor rating scale, and results-based. These are a few methods that are used to determine how the employ ee integrates with the team. After all surveys or questionnaires are tabulated, they are presented to the appropriate manager or management team. The management team will go over the survey and isolate habits that have formed and put into place systems to enhance constructive ways to bring change to an individual in a positive manner. The purpose of this is to highlight the behaviors needing correction and praise areas that the employee excels in within the team atmosphere (Gittel & O’Reilly, 2001). Performance reviews of yesteryear were usually done by the supervisors in charge of the employees. Today, up to 90% of Fortune 500 companies use some sort of 360-degree feedback evaluation. JetBlue also uses an appraisal process called â€Å"the 320-degree process† which, reflects their fleet of A320 aircraft. JetBlue and other companies that use the 360-degree programs utilize the results for training, conventional applications, succession planning, and professional development (Gittel & O’Reilly, 2001). Eliminating or reducing errors in  the appraisal system was the goal for the 360 ° evaluation. This app raisal system provides a more unilateral assessment of a person’s character, integrity, adaptability, and performance. Also, shifting the evaluation from a manager to a whole group of peers allows for less errors as stated above and also giving the company a better chance of fighting a claim of unfairness, discrimination or any other legal issue that should arise because of an unhappy employee (Gittel & O’Reilly, 2001). The ultimate goal of the 360-degree evaluation method is to give the whole organization (i.e., employee, supervisor, management, customers, peers) a way to give a constructive critique for improvement (Gittel & O’Reilly, 2001). Another advantage to a 360-degree feedback evaluation system are to evaluate employees, managers, supervisors, and administration with surveys or rating cards which are handed out to peers, customers, team members, managers, the employee, and administration. When the evaluations are complete and totaled, the management team evaluates how to help the employee and/or management towards personal or professional growth (Gittel & O’Reilly, 2001) . This places the employee as the key intention of this appraisal. Actually, when both parties go over the evaluations, the employee can see that this process is not about evaluation, is for career and professional development. Bringing forth, an employee who will dedicate to improving his self-worth to the company. For management, this also proves an ideal way for managers to improve training techniques that will foster growth within the individual and organization (Gittel & O’Reilly, 2001). Additionally, this type of feedback method also highlights the areas where the company’s training needs improving or enhancement to provide better solutions to the training for the company’s goals (Gittel & O’Reilly, 2001). When David Neeleman started the process to create JetBlue, he brought on several people that he thought would benefit the company. After, many strategy meetings, they came up with their five main goals: safety, caring, integrity, fun, and passion. In order, for JetBlue, to maintain their five main goals they needed a system that would allow every person in the company to have a voice (Gittel & O’Reilly, 2001). The preliminary management team was concerned about how they were going maintain the fun in the organization, while maintaining a safe and productive atmosphere, along with how to get all the necessary feedback to their questions. Also, they wanted to provide a convenient and  cost-effective way to satisfy their customers as they grew while maintaining the small company feel. When you look at the case study, Ann Rhodes, Executive vice president for people, was in charge of making a values-based culture to attract, develop and maintain a rapid growth achievement in personnel (Gittel & O’Reilly, 2001). The 360-degree feedback evaluation would give the organization the needed tools to set up their training model that would express their goals and allow them to foster change quickly and decisively to achieve this scenario. Mr. Dave Barger, the COO, wanted to create a spirit within the company that was fun for both the crew and customers. His ultimate mission was to focus on the people and to keep the company union free. Ms. Rhodes agreed with Mr. Dave Barger. They set up teams that were fluid instead of having major work rules in place that hampered the communication between management and employees or vice versa (Gittel & O’Reilly, 2001). The ability to pay is the most significant factor when it comes to financial compensation. JetBlue compensates its employees over and above the competitive rate, which attracts highly skilled individuals (Gittel & O’Reilly, 2001). The performance of an employee is a factor in compensation. If an employee does well and is motivated, this will be noticed by his employer. Resulting in better compensation (Gittel & O’Reilly, 2001). Most companies are looking for experience this too is another factor in compensation. Experience gives the necessary tools to senior employees to handle difficult situations with leadership and performance. Many executives do not need tr aining and can meld into the job and hit the ground running (Gittel & O’Reilly, 2001). Many companies hire young, ambitious employees with potential. Potential is another factor. They determine how much compensation is warranted by the perceived potential represented by the individual (Gittel & O’Reilly, 2001). Today, most companies are looking for employees with seniority. Seniority is a key factor in financial compensation. The longer the employee is on the job, the more salary he or she receives a handsome salary and benefits package. This is due to the ability to multi-task within the organization (Gittel & O’Reilly, 2001). Job requirements are a factor for compensation. A job that requires specific skills, that happen to be risky or hazardous and have tremendous responsibility, will heighten the wages of the job (Gittel & O’Reilly, 2001). As organizational strategy, JetBlue excelled at this  factor for compensation. JetBlue wanted rapid growth and also set higher wages than their competitors (Gittel & O’Reilly, 2001). Discretionary benefits are a deemed gift from the company to the employee. One of these benefits is paid vacations. Vacations from a job, help rest and reinvigorate the crew members and employee so their production does not waiver (Gittel & O’Reilly, 2001). A growing number of companies have grouped sick time, vacation, and personal days together to form what is known as paid time off (PTO). This is a simpler way of keeping track and helping streamline the administration of days off and eliminates most of the excuses people give to get out of work. This benefit is highly praised by employees (Gittel & O’Reilly, 2001). On-site healthcare is becoming popular with many employers to help reduce healthcare costs (Gittel & O’Reilly, 2001). On-site healthcare provides assistance with minor illnesses, injuries, physical therapy, vaccinations, and follow-up care. When employers provide these types of clinics, they it helps to eliminate trips to the emergency room or the doctor’s office which can cost considerably higher (Gittel & Oâ€℠¢Reilly, 2001). Many companies see a great benefit with these on-site healthcare clinics because after implementation, the return on investment is approximately 2.5 to 1 on cost savings (Gittel & O’Reilly, 2001). Dental and vision care have recently become popular as a discretionary employee benefit. Most employers pay for this benefit with maybe a deductible paid by the employee. Employers believe that if their employees have a nice smiling face and eyes they can see out of, they will be happier employees (Gittel & O’Reilly, 2001). JetBlue’s goal was to listen to the employees regarding what type of benefits they wanted and never to say no. JetBlue either met or exceeded the industry standard when it came to discretionary benefits (Gittel & O’Reilly, 2001). Most full-time employees received the following benefits: medical, 401k, profit sharing, double time pay for holidays, and personal time off. Many of the flight attendants received medical coverage plus an additional $500 in pay to help compensate for living in NY. Pilots, dispatchers and technicians were provided with stock options. Pilots got paid training benefits and laptops for checking documents for the certification to fly the A320 Airbus (Gittel & O’Reilly, 2001). Customer Service agents and ground  crew were paid a dollar more than any other crew at their airport and shift differentials. Many part-time employees received the following benefits: medical, 401K, profit-sharing and double pay if they worked holidays. All benefits started from day one because Ms. Rhodes felt that a probationary period was demeaning to the employee (Gittel & O’Reilly, 2001). References Mondy, R.W. (2012). Human resource management. Upper Saddle River, NJ: Prentice Hall. Gittell, J.H., & O’Reilly, C. (2001). JetBlue airways: starting from scratch [PDF]. Retrieved from http://people.westminstercollege.edu/faculty/mkoerner/00_courses/mba_650_spr_06/jetblue_airways_starting_from_scratch.pdf Occupation Safety and Health Administration. (2001). OSH Act of 1970. Retrieved from https://www.osha.gov/pls/oshaweb/owasrch.search_form?p_doc_type=OSHACT&p_toc_level=0 Federal Aviation Administration. (2007). FAA Fair Treatment for Experienced Pilots Act. Retrieved from https://www.faa.gov/news/press_releases/news_story.cfm?newsId=10072