Lessons of Boeing’s Cultural Decline–and How It Can Recover 

BY Jennifer Haupt | May 01, 2022

Boeing, a creator of the jet age, was once seen as a prestigious American corporate icon. Yet the company’s relationships with employees, investors, and business partners went into a tailspin after its merger with rival McDonnell Douglas in 1997. That’s the thesis of journalist Peter Robison, author of Flying Blind: The 737 MAX Tragedy and the Fall of Boeing, who spoke at a From Day One conference in Seattle about how this revered corporation went astray by neglecting some of its original core values, and what other companies can learn from this cautionary tale.

“The conflict ensued almost immediately with a strike that was the largest white-collar strike in U.S. history at the time,” said Robison, an investigative reporter for Bloomberg and Bloomberg Businessweek. “A federal mediator talked with an engineer I also interviewed who said, ‘This company is doomed.’ The reason he gave was that on one side you had hunter- killer assassins, the McDonnell Douglas side, which was more stockholder focused, and on the Boeing side, you had boy scouts who were customer- and product-focused. So when you look at the Max tragedy, you have to look at the DNA that started with that merger. It had impacts that lasted that long,” he said in a fireside chat with Marissa Nall, staff reporter of the Puget Sound Business Journal.

The Federal Aviation Administration (FAA) grounded the Boeing 737 MAX airliner worldwide between March 2019 and December 2020 after 346 passengers died in two crashes. This was the longest-ever grounding of a U.S. airliner, which cost Boeing an estimated $20 billion in fines, compensation and legal fees, with indirect losses of more than $60 billion from 1,200 cancelled orders. Engineering reviews uncovered design problems, and lawmakers investigated Boeing’s incentives to minimize pilot training for the aircraft.

Author Peter Robison (Photo courtesy of the author)

Nall asked about the impact of the merger on leadership and what that meant operationally for Boeing. “When you think of an aircraft, it's a product that has such a long product cycle, and decisions made at the management level filter down to the employee level,” said Robison, who conducted hundreds of hours of interviews with Boeing engineers. “Culture is a word that seems so amorphous, but it’s amazing how specific people get about it.” The culture of Boeing, he said, became all about “its schedule, its cost, its shareholder value. And that stems directly from the influence of some of the top leadership who came from McDonnell Douglas in the late 90s.”

Robison explained that the leadership focus was centered on cost containment. He looked at one engineer’s evaluation that said ideas are measured in dollars. Another engineer was given specific performance and time requirements tied to reducing costs. The culture became one stemming from the idea that corporate executives ultimately make the best decisions about allocating resources, and ultimately about safety. The leadership was under pressure from stockholders to reduce costs, and that trickled down to managers and their teams.

The compliance regulation of Boeing by the FAA lapsed, since the regulators were under pressure to cut costs as well, so both the FAA and Boeing were rewarded by stakeholders for speeding designs through production. This tension between Wall Street and the more product-focused engineers corroded the corporate culture that had defined Boeing in its heyday and helped to make the company so successful.

The good news is that Robison believes corporate America has learned something from the MAX tragedy. “In the late 90s, the Business Roundtable put out a statement and said, essentially, the shareholder is right and a company’s first duty is to the shareholder,” Robison said. “Everything else will take care of itself as long as the shareholders are rewarded. But in 2019, the roundtable revised that stance and said companies owe a duty to everyone, including customers, employees, and communities.”

And, Robison said, Boeing has shifted its business practices to reflect a closer alliance with its former corporate culture’s product focus. For example, Boeing's current CEO, David Calhoun, is getting weekly reports from his engineering team and there's a safety committee on its board.

So how does Boeing build back its credibility with both the airlines and the flying public? “I think that will take showing integrity,” Robison said. “Part of the reason that Boeing struggled so much with the MAX crisis was that there were multiple moments when it was found to be saying things that weren’t true. There was a moment I described in the book where Boeing was claiming after the first crash that it was maintenance errors. But pilots in America knew that was not the case. Boeing, both in public and behind closed doors, needs to show absolute integrity.”

Jennifer Haupt is a Seattle-based author and journalist.


RELATED STORIES

Creating an Inclusive Dialogue With Workers About New Technology

AI in the workplace is no longer emergent, it has emerged. It's in our computers organizing our tasks, talking to staff and clients, writing content and generating images, and hiring the next generation of workers. At a recent From Day One event, Carrie Teegardin of the Atlanta Journal-Constitution spoke with a panel of experts on why we should be having more conversations about AI in the workplace.Marshall Bergmann, vice president of advisory services at i4CP, has done a lot of research on AI, looking at who's using it and what successful use of AI looks like. “We surveyed over 1,500 leaders across organizations and 50 different companies across 50 different countries. Just one thing I will point out is that if you’re not trying to get involved in Generative AI right now, you are already behind."Bergmann says that organizations that are using Generative AI, and experimenting with it, are ahead of the curve. He identified three types of organizations that exist on a "maturity model" with AI. The first are the AI laggards, or organizations whose leaders don’t discuss usage of AI or have any guidance on it. The next are AI inquirers. “These folks have leaders actually researching, but are largely in a wait and see mode. The messaging to employees is mostly ‘don’t use Gen AI unless we say you can use it,’” Fordyce said.Lastly, are the AI innovators who are “already seeing advantages in productivity, efficiency, error reduction.”"They have leaders who are effectively communicating their support for AI use. Leaders need to step up and discuss how Gen AI is going to be used.”The panelists discussed the topic "Creating an Inclusive Dialogue With Workers About New Technology" (photo by Dustin Chambers for From Day One)Sherlonda Martin, the global head of DEI at Takeda, touched on the power of AI to eliminate monotonous tasks human workers typically do, or used to do. “Imagine a tube coming through that we need to make sure has no particles or floating objects in it. Typically, those have been inspected by people, right? So imagine sitting in a dark room watching a vial go by for eight hours out of your day. That just won’t work,” Martin said.Teegardin brought up the recent instability in the journalism market, citing that over 500 journalists lost their jobs in January alone. “In my industry, people are always afraid we’re gonna be losing our jobs. How are you all dealing with that and addressing that fear?”“Our research shows that organizations that are communicating more about Gen AI to their employees and listening more about their fears, and their concerns, are performing better than the organizations that don't.” Bergmann said.“It’s really critical for the CEO, the top of the top ELT (executive leadership team), to come forward and talk about how AI technology is able to embed into the strategy of an organization,” said Tanie Eio, the human resources business partner and vice president at UPS.Eio says that talking about apprehensions is important for leadership and the workers under them. More important is upskilling for when AI takes over in some areas workers will be able to transition to new or altered roles with the new technology.“We started with this program called the Digital fluency training that starts from the top. And then we also allow employees to come forward say, ‘Hey, I'm interested in trying to introduce certain technology or system or platform with this company.’” The end result is they form a group that works on ideas to adapt technology to improve processes then pitch it to senior leadership, which leadership will adopt and experiment with.Martin says they’ve already introduced upskilling into the workplace and have given employees the space to pursue that effort.“At Takeda, we’re starting to give people time to upskill. We’re now giving people three hours a month to be able to upskill on a topic that’s important to [them]. It doesn’t have to be a topic related to work. But if you are now signaling that you want to now go in a different direction and upskill from a technology perspective, you now get that time," Martin said.Mark Fordyce, regional sales director for Workvivo, sees upskilling as an all company, all roles effort for organizations. “I think AI is going to affect every department, meaning it’s going to help make finance people more productive, legal people more productive, and so on. So I think the upskilling is relevant for anyone and everyone within your company no matter what they do for a living.”“Every part of your organization will be transformed in the next five years. So you might as well get started now and have some fun with it,” Bergmann said of the ongoing AI revolution.Matthew Koehler is a freelance journalist and licensed real estate agent based in Washington, DC. His work has appeared in Greater Greater Washington, The Washington Post, The Southwester, and Walking Cinema, among others.

Matthew Koehler | February 22, 2024

Fostering Workplace Well-Being Amid Today’s Stressors

With 81 at-home baseball games a season, Atlanta Braves’ executive vice president DeRetta Rhodes knew her employees would need to catch a break during their shifts.Introducing the wellness room: a room that mirrors a living room, equipped with a sofa, TV, and refrigerator for anybody who simply needs time to rest. “It’s about creating space for individuals who need to be able to take care of themselves,” Rhodes said. “In the wellness room, people have the opportunity to go and take a relaxing break if they need to.”In a recent survey, 77% of employers saw an increase in mental health concerns, with 16% anticipating an increase in the future, indicating that health and wellness will continue to be a pressing issue for employers and employees in 2024.Rhodes’ approach is one of many other health and wellness strategies employers are taking to meet their employee’s needs. At From Day One’s Atlanta conference, leaders joined moderator Kelly Yamanouchi, business reporter at The Atlanta Journal-Constitution to discuss their health and wellness focal points for the new year.Changing Traditional Financial ProcessesWhether it’s due to the rising cost of living, inflation or the flexibility of remote work, more workers are working two jobs than ever before. Eight million Americans reported working more than two jobs this past January alone. For workers who take on a second job to make ends meet, timely pay matters, says Jon Lowe, chief people officer of financial services company DailyPay.“Today, the number of people who have more than one job is quite high and that creates a very high degree of stress. If you were a bartender around Christmas, you probably made a killing. But come January, when you’re working your part-time job and bartending on the side, there’s this degree of very high variance that we start to see,” Lowe said.With more than 60% of Americans living paycheck to paycheck, employers need to rethink the two-week pay cycle, Lowe said.“When we look at this idea of earning wage access, we need to be disrupting this idea that two weeks is the right cadence to be paid,” Lowe said. “Today, we’re able to offer access to tools that technology allows us to do, where it recognizes the evolution of what work looks like and allows that degree of flexibility to be able to go and tap into resources that otherwise would not be available.”Building Wellness into the CultureFor Kimberly Rath, vice president of home builder company PulteGroup, wellness programs play a key role in building a healthy foundation for a company.The full panel of speakers from left to right: Steven Lester of Mayo Clinic, Josh Crafford of Synchrony, DeRetta Rhodes of the Atlanta Braves, Kimberly Rath of PulteGroup, moderator Kelly Yamanouchi of the Atlanta Journal-Constitution, and Jon Lowe of DailyPay (photo by Dustin Chambers for From Day One)“At PulteGroup, we build homes. If you think about how wellness comes to life for you, a lot of what you do or how you take care of your well-being is done in your home,” Rath said. “At work, it’s similar. Wellness is the health of an organization and how people show up for work. If we’re strategizing how we take care of our employees and build great places where people work, we're going to get so much more from our employees.”From higher retention to increased productivity, employers can yield the benefits of happier and healthier employees. At healthcare clinic Mayo Clinic, professor of medicine and cardiologist, Steven Lester, M.D., discusses how supporting employees both in and off work can strengthen the overall performance of businesses.“As an organization, we are optimizing our business performance by incorporating well-being into the design of work,” Lester said. “We have programs supporting the financial, physical and mental well-being of our employees at work and we are also thinking about how we identify and allow people to have purpose, meaning and belonging at work.”Leading With EmpathyAn overwhelming 90% of U.S. employees believe empathetic leadership leads to higher job satisfaction, underlining the strong value employees place on leaders who lead with purpose and care.One part of empathetic leadership is active listening which helps in engaging with employees, Lester said. “We want to be actively listening to the needs of individuals and give them that safe, comfortable opportunity to engage and be heard, and know that the organization is here to support them and their well-being,” Lester said.With the emphasis on supporting employees, leaders will need to shift their priorities, Josh Crafford, vice president of technology learning and development, of financial services company Synchrony, said.“We're teaching leaders to be coaches and mentors and not care as much about the numbers,” Crafford said. “The numbers will come but the happier, safer and the more secure and connected your workers feel, the more productive they will be.”Wanly Chen is a writer and poet based in New York City.

Wanly Chen | February 13, 2024

Does Your Corporate Culture Promote Overwork? How to Tell–And How to Fix It

When Malissa Clark was in graduate school, she went into labor with her first child right before spring break. Instead of going to the hospital right away, she waited until her contractions were less than six minutes apart so she could finish a midterm. “I spent a couple more hours at the coffee shop, occasionally doubled over,” she said during a fireside chat at From Day One’s conference in Atlanta.Clark told moderator Nicole Smith of the Harvard Business Review that “I didn’t feel like I could stop. I didn’t feel like I could ask for support. I just felt like I had to push through.” At the time Clark realized she had a problem. However, she said she didn’t really address it until she began writing her book, Never Not Working: Why the Always-On Culture is Bad for Business – and How to Fix It and doing research on workaholism. Today, many people are feeling burned out in their careers and are trying to find a healthier work-life balance. However, workplace culture far too often gets in the way, says Clark. “Companies just aren’t listening to employees,” she said. Despite people learning during the pandemic that they could do their jobs from home and be productive, organizations are still pessimistic about remote work and insisting workers return to the office.“One of the biggest misconceptions about burnout is that the employee is just not managing stress well enough and needs to learn more coping skills and mindfulness, and then they can handle this,” Clark said. “That’s just not accurate. It’s the organizational and societal factors that are the stressors building on top of each other, and cumulative stress has a toll on our bodies.”When individual employees are overworked, it lowers not only their performance but that of others, says Clark. “You’re not as good of a teammate or boss, and so that hinders the morale of the group,” she said. Breaking the “Always On” MentalityA key contributor to the current culture of overwork is the belief that employees should be available 24/7, says Clark. Sometimes this attitude comes from the top of the organization, but lower-level employees can perpetuate it.“I think during Covid, we learned some bad habits,” she said. For example, parents who had to supervise their children during the day tended to contact their colleagues in the evenings about work, which put pressure on those colleagues to respond.Clark says some companies are encouraging those who have different work hours than other team members to go ahead and write the emails, but to use the schedule send feature so they aren’t received outside of working hours.Incentives for Using Vacation TimeAnother way employers can promote a healthy work-life balance is by encouraging workers to take paid time off. However, offering unlimited vacation days doesn’t work, says Clark, noting companies that have tried this found employees were taking even less PTO than before.Author Malissa Clark signed copies of her book Never Not Working for From Day One audience members (photo by Dustin Chambers for From Day One)Some companies are finding innovative solutions to encourage workers to use their PTO. Medtronic found a way to encourage employees to use their allotted days. In their ‘Earn Time to Win Time’ program, the more workers use their vacation time, the more opportunities they have to enter drawings to win even more days off.“It’s like a positive reinforcement for actually taking vacations,” Clark said. “I thought that was pretty ingenious.”The Four-Day Week MovementSeveral years ago, some companies began experimenting with four-day work weeks, in which employees worked 32 hours a week but were paid the same as they would have been for a 40-hour week. Revenue at those companies grew, while 70% of workers reported less burnout, according to data and employee surveys.“Almost every single employee said they wanted to continue with this,” Clark said. “One of the most astounding things is that 15% said they would not go back to a five-day week for any amount of money. It was life-changing for them.”A 32-hour work week doesn’t have to mean working eight hours a day, four days a week, says Clark. It can be five days a week from 8:30 am to 3:00 pm, which is popular with parents.“We don’t need to be working 40 hours a week,” Clark said. “We have technology, we have AI, we have all these tools that help us to be more productive. We equate hours worked with productivity, and we need to stop doing that.”Mary Pieper is a freelancer reporter based in Mason City, Iowa.

Mary Pieper | February 12, 2024