Midway Airlines: Where
Employees Come Last
Melody
Felzien, Matt Simmons, Aimee
Midway
Airlines Contact:
Marcia Gross,
Customer Service Representative
marciag@hopenc.org
919-363-2594
Executive Summary
Midway Airlines has an undeniably rocky history.
Throughout its tumultuous times, the company dealt with the media and its
customers fairly well. However, it seriously neglected a primary public: its employees.
The airline had no employee communications plan and the consequences are
disturbing. Throughout closings, layoffs, and bankruptcy filings, Midway
employees were usually uninformed about the changes. Many discovered they had
lost their job in the middle of the night. Those who stayed received limited
information from management and their questions were often met with hostility.
In 1993, Midway Airlines began operations as a privately
held company in
On
Under conditions of the filing, Midway was
allowed to keep operating while it reorganized. Two days after the
events of September 11, Midway went out of business and terminated 1,700
employees. The company projected a decline in demand for air transportation
following the terrorist attacks and consequently ceased operations.
In November 2001, Midway
drafted a temporary business plan in order to receive funds from the federal
airline bailout program. With the money it received, Midway began operations
again, but lost nearly all of what it received from the government by July 2002
(Krishnan, “Court Filing Airs Details”). At this time, after more then a year
of missed deadlines and misinformation, the bankruptcy court judge ordered
Midway to file its reorganization plan or risk liquidation. In response, Midway signed a deal with US
Airways to become a regional jet provider and has since operated in that
capacity.
Planning
Midway had no formal crisis communication plan. However,
its general business plan can be inferred. Midway’s
objective was to reverse the direction of its financial losses. The company’s strategies were to seek
governmental aid, reorganize and cut expenditures, and maintain customer
satisfaction. The tactics included
slashing jobs, filing for Chapter 11 bankruptcy, cutting routes and
destinations, lowering prices, re-booking passengers on other airlines, and
refunding customer’s money for cancelled flights.
The flaw in
Midway’s plan was that it showed little concern for its employees. There was a complete lack of employee
communication strategies or tactics throughout this time. This lack of a formal plan is evident in the
fact that employees were often left uninformed and
confused. The communications hierarchy was almost non-existent. The sporadic
informational meetings held were based only on one-way
communication and upper-management was isolated from the frontline workers.
Employee neglect began
with the initial bankruptcy filing in August 2001. As previously mentioned, it laid off 50% of
the workforce, including 183 pilots, 99 flight attendants, 91 customer service
agents, 126 fleet service agents and 201 other personal (“Midway Airlines News
Pages”). Generally speaking, the bankruptcy came as a surprise to many of
Midway’s employees. According to Marcia Gross, a former Midway Airlines
customer service representative, the large fiscal losses the company was
experiencing were never discussed with employees. They
were never told that their jobs were in jeopardy. The company’s employee communication efforts
were non-existent. Many employees discovered their jobs were
terminated when their security clearance cards no longer worked (Gross).
Midway’s second
major fallout came following the terrorist attacks on September 11. For the second time, Midway management failed
to communicate properly with their employees. Midway spokeswoman
Karen Wing said, “It just became clear as we went through the day yesterday
that people weren’t booking air travel. The calls just stopped in the travel
center for reservations and the people who did call wanted a refund because
they didn’t want to be on an airplane for a little while” (Lillard). Based on
this information, Midway felt they had no hope of rebuilding from the emotional
and economic fallout following the attacks and immediately suspended all
operations. Seventeen hundred workers
were laid off, the majority of which found out through local media
coverage. A select few were called in the middle of the night and told they had lost their
job.
The experience of former Midway pilot Dan Saurino is
typical of many Midway employees. In an
interview on CBS’s The Early Show with Bryant Gumble, Saurino said that he
received no notification from Midway prior to the media announcement. “I got no notice,” Saurino said. “We actually were watching CBS News on the 12th
and that banner came across from the local affiliate that told us that Midway
had gone out of business” (Saurino). Gross said she found out about the
company’s decision to cease operations when a friend called on her way to work.
“The crews were told to go home and their hotel reservations were cancelled,”
Gross said. The communication efforts that were made
came in the form of sporadic informational meetings in which the facts were
limited and the communication was one-way.
At this time, approximately 100 employees were
retained to rebook passengers on other airlines.
Midway’s most blatant neglect of its employees came in
July of 2002. The events were foreseen, not a reaction to an uncontrolled
event, such as September 11. Midway failed to learn from its previous mistakes.
Gross stated that the day before operations ceased, rumors were flying among
employees concerning the future of the company. Again, Midway
failed to respond to these concerns. Instead, they took a reactive
position and responded in a hostile manner. “Headquarter personnel came over to
say things were fine and denied the rumors all day,” Gross said.
The following day, employees again found out about their
termination when their access cards failed to work. Gross noted “a security
guard came up to us with a clipboard. There were scraps of paper with the names
of who stayed and who went scrawled in pencil. My name had a question mark by
it. It was almost like random selection. The whole day felt like a lock-down.”
She said she was called at
From the time of Midway’s initial
bankruptcy filing in August of 2001, until their alliance with U.S. Airways in
June of 2002, their employee relations’ practices can best be
described as atrocious. During
this time period, Midway management appeared to devote
all of their energy to business problems while continually neglecting the needs
of their employees. Midway constantly
disregarded the five major rules of employee relations identified by Center and
1 – Employees must be
told first. Midway
continually neglected this important rule of employee relations through each of
its major layoff periods. As previously
mentioned, following their initial bankruptcy filing in August 2001, many
Midway employees discovered that they had been laid
off when their security access cards failed to work. There were examples of this same scenario
during Midway’s final layoff period in June 2002. In addition, many of the 1,700 Midway
employees who lost their jobs following September 11 found out through local
media coverage. Clearly, such a lack of
information and concern creates an intense distrust for management among employees. In addition to this distrust, the lack of
information fostered an environment conducive to rumors and grapevine
gossip. Employees became even more
skeptical and distrustful of Midway management.
2- Tell
your employees the bad news along with the good. Midway management continually neglected
this important rule of employee relations as well, primarily because they did
not provide their employees with any information at all. Midway began to encounter rather severe financial
problems as early as 2000. However,
management neglected to inform their employees of any of these problems. While employees were aware that the company
had been experiencing fiscal losses, few were aware of the severity of the
company’s economic troubles. For
example, many employees were in total shock when the company filed for Chapter
11 bankruptcy in August 2001. Once
again, this lack of information, and in some cases blatant misinformation,
fostered a sense of distrust between employees and management. The lack of information also gave many
employees a false sense of security.
They thought they were employed by a viable and
thriving company, yet were unaware of the precarious situation in which the
company found itself.
3- Ensure
timeliness. When communicating with employees,
it is vital that management disseminate information as quickly and accurately
as possible. Delay may create an
environment conducive to rumors, half-truths, and distortions. Midway continually violated this rule as
well, typically waiting until the last possible moment to inform employees of
issues, and oftentimes not informing them at all. Perhaps the best example of this is from June
2002, when Midway management either refused to acknowledge or categorically
denied all the rumors that were running rampant through the company. They did
this despite the knowledge that the company was to cease all operations the
next day. This type of misinformation
destroyed any shred of credibility that management still had with their
employees and created a situation where employees felt that they had no
reliable source of information.
4 – Employees
must be informed on subjects they consider
important. Some of the issues that
employees typically consider to be important include
organizational plans for the future, job advancement opportunities, personnel
policies and practices, the company’s status versus the competition, and
financial results. As
expected, Midway failed to deliver accurate and prompt information to its
employees concerning these important issues. For example, while most employees were aware
that the company was experiencing financial losses and increased competition,
Midway management made no discernible effort to inform employees of how these
events would affect their jobs. They
were not aware of the seriousness of the company’s problems, so the layoffs and
bankruptcies came as a shock. Midway
management also made no effort to discuss the impact that the September 11
terrorist attacks would have on the company with their employees. Following the attacks, Midway simply shut
down without any prior announcement to their employees.
5 – Use
the media that employees trust. Center and
One of the most striking [U1]ways to characterize the weakness of Midway’s employee
relations is by contrasting their policies with those of Southwest Airlines,
which is widely considered one of the best companies in the world for which to
work.
When Southwest experienced financial
difficulties in its infancy, the company was faced
with the choice of either selling a plane or enacting employee layoffs. Southwest management chose to put employees
first. They sold one of their five
planes and did not lay off a single employee.
They were open and honest with their employees about the situation. In exchange for not terminating jobs,
Southwest management asked that their employees master the so-called “10-minute
turn.” (Center and
Build trust and confidence by engaging in two-way communication with employees. This action includes a variety of tactics. First, management needs to be trained on how to communicate effectively with employees. This includes using memos and meetings to inform them of the rules of effective employee relations.
A large
part of Midway’s employee relations problems stemmed from the fact that
management was kept separate from the rest of the
employees. Midway management needed to personally explain the bankruptcy and the actions they
were taking to get out of it before they released a statement to the media. They should also have encouraged meetings
with different divisions. In these, employees could have voiced their concerns
and received answers directly from management rather than second-hand sources. Second, management should speak with one
clear voice to employees. The day before
the July announcement, rumors concerning another possible shutdown circulated
rapidly through Midway terminals. If
Midway’s management had clearly communicated with employees, the rumors would
have ceased.
Enact
an incentive program to entice workers to try harder in order to recuperate
lost money. If employees feel that their own well-being is tied to the company’s success, productivity and loyalty
will increase. An example of a way to achieve this is by offering monetary or
peer recognition prizes to employees who show the most aptitude and enthusiasm
for their job. In addition, the company
could have created divisional competitions to promote rivalry. By enacting any of these, Midway would have
promoted employee satisfaction, which could increase customer satisfaction and,
consequentially, increased sales. As a
result, the bankruptcy may not have been as severe.
Create
a formal crisis communications plan in which the employees are the first to
know of any potential disasters. Midway had no formal crisis communications
plan, despite the repeated financial crises it faced. The company needed to
have a plan in place so when events like September 11 occurred it would be
ready to act. By telling the employees
first, Midway would have created an array of informants who were
well versed in the situation and on the company’s side. Instead, the majority of people who worked
for Midway were not made aware of potential layoffs
until they actually happened. The only source of explanation came from the
area’s local news sources. This did not
reflect well on Midway when employees voiced their concerns to the media,
claiming the only things they knew were what they heard on the news. By communicating with the employees first, Midway
may have been able to create more understanding of the situation within the
community because the employees would be voicing Midway’s viewpoint rather then
their own.
Maintain
a proactive response. Although Midway
could not have predicted September 11, it could have learned from past events
and prepared more thoroughly for its actions in July 2002. Midway should have organized open meetings
with their employees in which they could voice concerns about the future of the
airline. Midway’s management should have
learned from past experiences and created
communication lines between themselves and their employees. If they had, the July 2002 announcement would
not have come as a surprise and would not have left the jobless Midway
employees in shock.
Conclusion
Midway’s employee relations practices are an example of what not to do in a crisis situation. This example clearly illustrates the importance of including employees in a crisis communications plan. In any company, it is essential for employees to have trust in their employer because they will be the most valuable assets [U2]in a crisis situation.
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Jackson. Public
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Midway.” Triangle Business Journal.
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Operations.” Press Release. Midway Airlines
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