Air Transport World

The buck stops lower. (empowering employees at United Airlines Inc. improves profits; includes related articles)(Managing in Turbulence)

United Airlines President and COO John A. Edwardson had been on the job for only a week or so when he got his first taste of his predecessor's management style: He received a written purchase request from one of his vice presidents for $5,000 worth of typing paper. A year later, Edwardson still recalls the incident. "I walked over to his office and said: 'Is this a joke, or are you testing me?' And he said: 'I never test presidents and I don't know you well enough to joke with you.'" In a company with an annual budget of more than $12 billion a year, his spending authority stopped at $4,999.

That story reveals a lot about the kind of top-driven, hierarchical organization that Edwardson and his boss, Chairman and CEO Gerald Greenwald, inherited when they joined the airline as a result of the historic 1994 employee buyout. Since that time--and when they are not on the road meeting and speaking with United's 80,000 employees--the two are rebuilding United into a company with fewer layers between the front line and the head office, in which initiative and creative thinking are prized, and incidentally, vice presidents have a bit more spending authority (see box, page 30).

Last April, they reorganized the company to "place the responsibility and accountability for customer satisfaction and profitability with the executives who oversee United's key markets," according to a statement at the time.

The key markets identified in the announcement are North America, which generates around 65% of the company's revenues; International; Cargo; Shuttle By United and New Business Development. Each market is headed by a senior VP who reports to Edwardson. All operational groups--flight operations, fleet operations, on-board services--also report to the president. A new marketing organization absorbed many functions that existed separately elsewhere, including advertising, customer research, product planning and development, brand management and distribution. It is headed by Senior VP David Coltman and reports directly to Greenwald.

Edwardson tells A TW that the April reorganization reflects his and Greenwald's frustration with a management structure that dispersed responsibility and resources widely across the organization, but left top managers lacking authority to operate their businesses. …

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