Total Rewards and Compensation Research Paper

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Improving Diversity in the Leadership Ranks of Continental Airlines

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The demographic composition of the United States has changed in fundamental ways in recent years, and the "melting pot" of the late 19th and early 20th centuries in which immigrants quickly assimilated into the mainstream population has been replaced with a "salad bowl" trend wherein cultural differences are embraced and celebrated. In this increasingly multicultural environment, many companies have recognized the value of a diverse workforce and have taken aggressive steps to recruit, train and promote minority members throughout their organizations. This is in sharp contrast to just a few years ago when the "Old Guard" was still firmly in place and minority members who rose to the top of their organizations were rare. Notwithstanding their widely recognized efforts to overcome this lack of diversity in their top ranks, until fairly recently, Continental Airlines was one of the companies where the Old Guard had circled the wagons and still ran things even while the company was promoting itself as an enlightened employer. During the 1990s, for instance, Continental Airlines was very innovative in its executive selection process, and the company largely prevented any minority members from gaining access to the corporate boardroom despite the fact that this lack of minority representation in the top ranks was common knowledge. In fact, Continental managed to keep the unions at bay and maintain the status quo during this period in its history without attracting the attention of human rights activists or the media. Although it is reasonable to suggest that this mindset has been replaced with one that embraces diversity, the leadership that achieved this transition represents an area of interest to all international human resource management practitioners. To determine what has changed at Continental Airlines to improve diversity in the company's leadership ranks, this paper provides a review of the relevant juried and scholarly literature, followed by a summary of the research in the conclusion.

Review and Analysis

Research Paper on Total Rewards and Compensation Assignment

Developments in Diversity at Continental Airlines

Today, Continental Airlines competes in 150 different countries and employs more than 43,000 people in several primary career fields, including airport agents, cargo agents, dispatchers, flight attendants, pilots, food service, reservation agents and technical operations specialists (CO facts, 2010). Given these wide ranging operations, it is not surprising that many multinational corporations such as Continental have experienced numerous challenges and obstacles on their paths to developing a diverse workforce. For example, according to Roach (2006), "Compliance with diversity regulations is never an easy matter. Employers find themselves not only responsible for compliance with federal law on diversity issues, but they also find themselves having to deal with the fallout from some of the unanticipated consequences of compliance" (p. 37). This means that even if well-intentioned and thoughtful changes are implemented to address one set of diversity issues, these same changes may cause unforeseen problems in other areas of the organization that may have significant legal or ethical consequences. Nevertheless, the consequences of failure to seek diversity in the workforce can be even more severe, and besides just being "the right thing to do," there are some compelling reasons why organizations of all types and sizes should promote diversity in their workforces that involve such social and ethical considerations, but which also relate to improved profitability (Pyburn, Ployhart & Kravitz, 2008).

Diversity issues at Continental have also extended to its employment practices for older employees, but the company's track record during the 1990s was less than stellar. According to Mujtaba, Cavico, Hinds and Oscal (2006), even before the terrorist attacks of September 11, 2001, Continental had engaged in downsizing practices that specifically targeted older employees who were being compensated at higher rates with younger employees who were paid less. Although not as well publicized as some other equally egregious employment practices, Continental managed to weather this storm with little attention and a mere slap on the wrist when it was called to account. For instance, in 1982 the company lost a lawsuit that required female employees to wear make-up and sport certain hair styles (Gerdom v. Continental Airlines, 692 F.2d 602, 606 [9th Cir. 1982] and in 1997, Continental Airlines paid 207 employees somewhere between just $7 and $8 million in order to settle an age-discrimination lawsuit (Mujtaba et al., 2006). To their credit, the top leadership at Continental responded to these events by implementing a series of reforms that were intended to promote equitable treatment of all employees and improve the diversity within their ranks, including their management cadre, and these efforts are discussed further below.

Recent Trends in Promoting Diversity at Continental Airlines

In contrast to its past actions, the company's leadership has more recently been forthcoming and effective about expressing public regret for its past actions, although Smith (2005) suggests that this was approach is in Continental's best interests by acknowledging its failures to its stakeholders rather than covering them up. "By expressing regret," Smith advises, "public hostility can be tempered and the number and intensity of lawsuits may be contained. Make sure the apology is straightforward, such as the statement by Frank Lorenzo, chairman of Continental Airlines, who said in a full-page newspaper ad: 'We grew so fast that we made mistakes'" (quoted at p. 109).

Whether because of a strictly pragmatic recognition that the company had to change its ways with regards to diversity or falter or as the result of an epiphany on the part of Continental's top leadership team, changes were in fact made and the company has experienced a sea change in its corporate culture. As a result, in 2009, Fortune magazine named Continental the number one "World's Most Admired Airline" on its list of World's Most Admired Companies for the sixth straight year (Career opportunities, 2010). The company attributes this award to a corporate culture that is based on treating all of its employees as well as they deserve, and Continental takes pains today to ensure that all of its employees know what is expected of them and what is required to achieve superior performance awards. As a result, Continental's Web site enthuses, "It is no wonder we are thriving in the culture we helped create, one that encourages new ideas and rewards performance" (Career opportunities, 2010, para. 3). Besides national culture, one of the more salient factors that has been shown to influence a company's competitive strategies and compensation practices is its corporate culture (Martocchio, 2008). This also means, though, that companies that promote a corporate culture that communicates "come and grow with us and get rewarded for it" must put their corporate money where their public relations mouth is and provide the top-down support for compensation practices that are viewed as fair and equitable for all employees.

Current Diversity-Related Initiatives

In recent years, the company has made an apparent conscious effort to improve the diversity of its workforce in general and leadership ranks in particular. To this end, Continental has partnered with several minority associations in an effort to recruit more minority candidates. Besides implementing diversity training and diversity goals throughout the organization, once hired, minority recruits are motivated to grow with the company through a series of pay-for-performance programs and other incentives (Burke & Cooper, 2005). As a result, Continental has been designated as one of Fortune's one hundred best companies to work for as well as being placed on the Hispanic Business's list of the best places to work for Latinos (Burke & Cooper, 2005). These are laudable achievements, certainly, and Continental's corporate philosophy concerning diversity extends to the physically and mentally disabled as well. For instance, the company's Web site also points out that, "As an Equal Employment Opportunity and Affirmative Action Employer, Continental Airlines is committed to working with and providing reasonable accommodation to applicants with physical and/or mental disabilities" (Career opportunities, 2010, para. 4). This corporate culture should not be misread to reflect a "come as you are" mentality, though, and the company is equally emphatic about its expectations concerning commitment, hard work and loyalty in return for its generous bonus and other incentives programs. If people have what it takes to make the Continent grade, though, it is the company's stated policy that everyone is welcome and everyone can help contribute to the company's continuing success. In this regard, the company's Web site adds that, "At Continental, we recognize that our employees are our most valuable asset. With over 45,000 employees around the world, we know the rich diversity of ideas, experiences, cultures, and lifestyles that make up the Continental team allows us to consistently deliver great service and products to our global customers" (Diversity and inclusion, 2010, para. 1). The company's corporate culture is clearly reflected in its commitment to inclusion: "Continental endeavors to create a work environment where all employees feel included and empowered to make a measurable difference in our success" (Diversity and inclusion, 2010, para. 2). Indeed, the policymakers at Continental have been forced to come to grips with the realities of doing business in a majority of the… [END OF PREVIEW] . . . READ MORE

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