Hidden Lesson From United Airlines Debacle

Quick True-or-False Question:  United Airlines kicked a passenger off one of its planes last week and, when he wouldn’t leave, the airline dragged him off the plane.

False, but you would hardly know that from reading the news reports on the incident.  In fact, it happened on a United Express flight that was operated and staffed by Republic Airways and the passenger was pulled off the plane by Chicago Department of Aviation personnel, as angry United pilots have made clear.

Yet United’s stock tanked, costing the  company hundreds of millions in market capitalization and it has become an internet punchline. So what is the secret message? How about this – It doesn’t matter whether the mistake was made by a contractor or any other vendor, when things go wrong, public outrage will find the biggest, most recognizable name brand.

In safety, the trend in the last decade has been to increasingly contractor out work and labor, then shield the host company in hold-harmless indemnification clauses.  Master Service Agreements offer some protection for host companies for everything from worker injuries to legal damages.

But when a disaster occurs the public rarely points the finger at the contractors.  The blame goes to the brand.  Here are a few examples of cases where a contractor was involved.

  • Contractor Morton Thiokol may have contributed to the Space Shuttle Challenger disaster, but we all think of NASA.
  • When a hotel walkway collapsed at a Kansas City hotel in 1981,  killing 114 people and injuring 200 more, people blamed owner Hyatt Regency, not the contractor whose work led to the disaster.
  • The Macondo spill prompted great debate over the responsibility of contractors, but there can be no doubt over where public focused its outrage.

We have to remember that perhaps 90% of the people who work at offshore oil and gas facilities are contractors.  The lesson of the United debacle is that companies need to consider the risk of putting that much control over a company’s brand into other company’s hands.

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