You’ve seen the business news: NYSE chairman Richard Grasso was forced to resign his position on September 17th. A compensation package of $140 million hastened his demise.
Grasso asked for a vote of confidence from his board of directors and didn’t come close to staying. Thirteen voted to boot him versus seven who thought he should stay.
The bigger picture is a quest to reform the world’s largest stock exchange. In the process, it was discovered that Grasso’s extreme compensation package had been kept secret. It is easy to understand why it was kept secret.
Nobody with vested interests likes it when important information is kept from them, least of all customers.
So here’s an interesting observation: United Airlines has a new secret category of traveler, the “global partner.” You’ll hear this particular category of flier invited to board early, along with UA’s more traditional frequent flyers.
It turns out that UA personnel aren’t supposed to discuss the identity of these global partners. Just ask. Just today I encouraged a fellow traveler to inquire, and the gate agent’s response was, “If you were one, you’d know it.”
So why the secrecy?
The best I’ve been able to determine is that this is a category of flier who spends really big bucks. While they may not be frequent fliers in the common sense of the term, the price they pay for tickets seems to qualify them for special treatment. At the very least it lets them get on the airplane early.
Supposedly the global partner is higher in status than 1K’s, those who fly 100,000 miles annually on United. Within 1K’s there are higher status categories. I’m a “million mile 1K” but have run into the occasional two million milers.
So here’s my conjecture: since UA has newly created this global partner category, and since benefits of being a frequent flier on UA are marginal at best, the airline is justifiably concerned that 1K’s ain’t gonna be happy. There’s a new kid in town, and he’s sucking up perks and bennies 1K’s used to get.
United can do whatever it chooses. The company’s history is rife with stupid decision-making, but such behavior is common in the airline business. The imprudent aspect is the air of secrecy United has created by not explaining the decision to its best customers and instructing personnel not to discuss the subject.
What do NYSE and UA have in common? Keeping secrets is an ill-advised strategy, even when there are good reasons for doing so. If you don’t want to eventually see it on the front-page of a major newspaper or flashed across hundreds of internet sites, you shouldn’t be doing it.
The degree and severity of NYSE’s and United’s secret actions vary widely, but the principle is the same. Don’t let magnitude confuse the principle. Revenue almost always follows trust (unless, of course, you’re a monopoly), so the shroud of secrecy that cloaks the NYSE or United Airlines has served neither well.
Let other business leaders take note.