The VP in charge of Delta’s employee benefits says that their choice to pay out $1.4 billion to workers is all about talent retention and motivation
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Delta made a splash last week when it paid its employees a $1.4 billion bonus.
As the airline industry as a whole continues to bounce back from a pandemic-induced downturn, Delta decided to spread the wealth and share the money with workers through its longtime profit-sharing program, nearly doubling the amount it gave out last year. And 2024’s bonus is nearly 10 times greater than the $108 million the company shared with employees in 2022.
Although it’s a hefty sum, Delta says the bonus it’s giving back to workers is well worth it because of how it boosts morale, and incentivizes them to outperform in the roles. Those things together are also good for the company’s bottom line.
“Our overall philosophy at the organization is that we share our success with the people who make it possible. And we have this belief that, as we do that, that enables them to then deliver great value to our customers and our shareholders,” Kelley Elliott, Delta’s vice president of total rewards, tells Fortune.
While the payout formula has adjusted over time, this year, workers received around 10.4% of their total earnings in 2023—a little more than one month’s salary. Senior employees, including general managers, directors, and officers, are exempt from receiving profit-sharing payouts because they are subjected to a different incentive plan. But all other workers, including pilots, flight attendants, frontline managers, and corporate employees, are eligible for the payout.
Other companies might want to take note—profit-sharing programs have been found to boost employee satisfaction and productivity, and they're good for business. A study published in the National Bureau of Economic Research in 2010, analyzing 400,000 employees across 14 companies, found that they help boost productivity and profits through reduced turnover and increased worker motivation. Another paper published in Labour Economics in 2016 found that profit-sharing programs and similar schemes increased worker satisfaction.
Delta unveiled its profit-sharing program in 2007 as the company emerged from bankruptcy, and employees received their first payout in 2008, totaling $158 million. The company has done a payout every year except in 2020, when the airline industry suffered heavy losses from reduced travel demand because of the COVID pandemic. And although this year’s payout is huge, it still comes in second to 2019, when employees received $1.6 billion.
Elliott says the profit-sharing incentive is one way that the company ensures a “virtuous circle” between strong business performance and positive worker experiences.
“It's a big investment that we make, but I think we've seen the payout, as a result of the loyalty and the drive that it creates for our whole team working together,” she says. “It creates this cohesiveness throughout the organization that we're in it together, and we're going to solve this together.”
But Elliott also notes that the company offers other financial incentives to employees, including an emergency savings program, 401(k) matching program, and competitive pay rates. And when the profit-sharing payments are announced at the beginning of the year, employees use an election tool to either receive the payout outright, or put the money towards their 401(k), health savings account, or Delta’s Care Fund, the company’s charitable fund that provides financial assistance to employees.
“We try to make that process of responsible spending really easy for people,” says Elliott. “Of course, some people need the cash, and that's okay, we're not going to take that away from them. But we want to give them a lot of options to easily, responsibly save this, if that's what's right for them.”
Paige McGlauflin
paige.mcglauflin@fortune.com
@paidion
Today's edition was curated by Emma Burleigh.
This story was originally featured on Fortune.com
