Internal Marketing at Continental Airlines: Convincing Employees that Management Knows Best |
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Authors: | Prasad Ashutosh Steffes Erin |
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Institution: | (1) School of Management, The University of Texas at Dallas, Richardson, TX, 75083 |
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Abstract: | Maintaining a high level of customer service quality is necessary for success, particularly for firms in service industries, but employees need to be motivated to provide it. Management can provide the motivation through the use of compensation schemes and internal marketing. In this paper we examine profit sharing compensation schemes that reward employees for achieving customer service objectives. We discuss how such schemes should be implemented, and explain why management needs to convince employees through internal marketing programs about the benefits of its scheme. We obtain the optimal amount of profit that the firm should share with employees, and the optimal effort it should spend on internal marketing. Finally, we relate the analysis to a successful scheme implemented by Continental Airlines. |
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Keywords: | internal marketing incentives employee compensation |
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