Improving Diversity in Continental Airlines' Leadership Ranks

Introduction

The demographic composition of the United States has changed in fundamental ways in recent years. 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 stands 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 conservative 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. Continental managed to keep the unions at bay and maintain the status quo during this period without attracting the attention of human rights activists or the media.

Diversity Challenges in Multinational Corporations

Although it is reasonable to suggest that this mindset has since been replaced with one that embraces diversity, the leadership transition that achieved this shift 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 scholarly literature, followed by a summary of the research in the conclusion.

Continental's History of Discriminatory Practices

Today, Continental Airlines competes in 150 different countries and employs more than 43,000 people across several primary career fields, including airport agents, cargo agents, dispatchers, flight attendants, pilots, food service workers, 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 encountered numerous challenges and obstacles on their paths to developing a diverse workforce.

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, those same changes may cause unforeseen problems in other areas of the organization — problems with significant legal or ethical consequences. Nevertheless, the consequences of failing to seek diversity in the workforce can be even more severe, and there are compelling reasons why organizations of all types and sizes should promote diversity in their workforces beyond simply doing "the right thing."

Corporate Culture Shift and Public Commitments

Diversity issues at Continental have also extended to its employment practices for older employees, and the company's track record during the 1990s was less than stellar. According to Mujtaba, Cavico, Hinds, and Oskal (2006), even before the terrorist attacks of September 11, 2001, Continental had engaged in downsizing practices that specifically targeted older, higher-compensated employees, replacing them with younger workers 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 called to account. In 1997, for instance, Continental Airlines paid 207 employees a combined settlement of somewhere between $7 and $8 million to resolve an age discrimination lawsuit (Mujtaba et al., 2006).

More recently, the company's leadership has been forthcoming and effective about expressing public regret for its past actions. Smith (2005) suggests that this approach was in Continental's best interests, noting that acknowledging failures to stakeholders is preferable to 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 regard to diversity or as the result of a genuine change of heart on the part of Continental's top leadership team, changes were in fact made, and the company 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 consecutive year (Career opportunities, 2010). The company attributes this award to a corporate culture based on treating all employees as well as they deserve. 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 the company's website states, "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 shown to influence a company's competitive strategies and compensation practices is its corporate culture (Martocchio, 2008). This also means that companies promoting a corporate culture that communicates "come and grow with us and get rewarded for it" must provide the top-down support for compensation practices that are viewed as fair and equitable for all employees.

Conclusion

The research showed that at Continental Airlines, diversity is the name of the game whether the Old Guard likes it or not. In contrast to Continental's more limited offerings during the closing decades of the 20th century, the company currently competes in 150 different countries and has approximately 45,000 employees, with almost half being women and an increasing percentage being minorities — particularly Hispanics and African-Americans.