Continental Airlines: The Go Forward Plan

In 1994, CEO Gordon Bethune inherited an airline on the brink of its third bankruptcy. The case describes his turnaround plan, focusing on (a) the goal to dramatically improve on-time performance, and (b) the team-based bonus he believed would convince his cynical and demotivated employees to execute the plan.

(1) Illustrate a group incentive system ? one that ties a financial reward to a measure of group, rather than individual, performance; (2) introduce the concepts of ?implicit?, or ?relational?, contracts and basic game theory tools for analysing these contracts; (3) illustrate links between cultural/communication initiatives and formal incentives.