Editor’s note: Just as Boeing prepares to finally deliver its first 787 Dreamliner aircraft to customers, a team of experts has published Turbulence: Boeing and the State of American Workers and Managers. The book investigates the experiences of employees at Washington’s largest private employer during a 10-year period of dramatic organizational change. The following is excerpted and adapted from the book.
In the course of our research on Boeing—between 1996 and 2006, for our book, Turbulence: Boeing and the State of American Workers and Managers (Yale University Press, 2010)—we saw how Boeing’s merger with McDonnell Douglas, repeated layoffs, cultural changes and a focus on short-term profits resulted in a sharp drop in employee satisfaction and commitment and a surge in employee stress at the company.
In 2003, however, the launch of the 787 Dreamliner program brought the promise of better times. Employee morale rebounded as excitement and hope began to replace fear and insecurity among the workforce. By 2007, the 787 had piled up orders faster than any aircraft in history. Not only was this new airplane creating excitement among industry analysts, but Boeing’s own workers began to regain some confidence in the company’s future. “The most important change at Boeing in the past ten years is the commitment to build a new model of airplane, the 787,” one engineer told us. “This shows that Boeing has the innovation and faith to invest in the company.” A female shop floor employee of over 26 years spoke of how “the 787 program has helped turn things around for Boeing.” Fast forward to 2010. Pat Shanahan, vice president and general manager at Boeing Commercial Airplanes, admitted to The Seattle Times that “the 787 has tarnished the company’s reputation.”
What happened? After numerous delays, the 787 began to look more like a sinking ship than a plane that would redeem Boeing. The complexity of the project, in retrospect, was, perhaps, a fatal flaw.
Equally important to its current difficulties and to its longer-term prospects, we believe, is Boeing’s culture. The company has developed a culture of fear, distrust and silence that keeps vital information locked away in employees’ heads and sequestered from managers and senior executives. That culture silenced employees who had warned early in the project that Boeing was “giving away” too much of the 787 without thinking through what that meant for product quality, operational feasibility, and the long-term health of the company.
Belatedly, Boeing management has become aware of the impact of this culture of silence. Boeing told The Seattle Times that it was bringing in a consulting organization to “help employees feel engaged and end a climate in which they sometimes were reluctant to speak up or ask for help.” Unfortunately, the consulting organization appears to be the same one used after the merger with McDonnell Douglas 13 years ago, about the time when the culture of silence emerged at Boeing.
It was also about that time that “short-term shareholder value” became the guiding mission at Boeing. True, Boeing had become a somewhat bloated, plodding firm that needed to shift gears rapidly to compete successfully. However, the new management, largely pulled from McDonnell Douglas, sent a clear message that the push for profit was the new driving force for Boeing. In a series of speeches and interviews he gave in 1997 and 1998, Harry Stonecipher, Boeing’s then-new CEO, said Boeing would never again sell planes with zero margins as it had in 1998, but instead would aim for double-digit profit margins. “When people say I changed the culture of Boeing, that was the intent, so it’s run like a business rather than a great engineering firm,” he said in 2004. “It is a great engineering firm, but people invest in a company because they want to make money.”
The new management team also punctured one of Boeing’s core values: family. In a 1998 speech, Stonecipher warned employees that they had to “quit behaving like a family and become more like a team. If you don’t perform, you don’t stay on the team.” Company leaders kept reminding employees that “this isn’t your father’s company,” recalls one female manager with 24 years of service at Boeing.
The impact of the shift from family to team was profound and long lasting. Years later, employees continued to lament the loss of “family feeling,” that Boeing changed from being a “family that valued its employees to one where team members could be traded for cheaper labor overseas.” The blame for the shift was often assigned directly to Stonecipher. In the 2006 survey, one manager complained that since Stonecipher had taken over, “We lost our way, our moral compass, our business vision.”
One consequence of the focus on short-term profits and the abandonment of the sense of family was the decision to outsource so much of the production and design of the 787, a decision with disastrous consequences. Wrote one Boeing employee in response to a Seattle Times article, “Stonecipher, Condit, McNerney and Mullaly monumentally screwed up when they decided Boeing Commercial Airplanes was a ‘systems integrator’ and no longer needed to be in the actual business of BUILDING airplanes … The 787 would have been tough enough to pull off if Boeing had full in-house control, but just delegating the hard work to a bunch of partners was really STUPID.”
Boeing has recently started talking about trying to change its culture of silence. But the real challenge won’t be getting employees to talk. The real challenge will be getting Boeing management to listen.
Excerpted and adapted with permission from Turbulence: Boeing and the State of American Workers and Managers (Yale University Press, 2010). Edward S. Greenberg is a professor of political science and member of the board of directors of the Institute of Behavioral Science at the University of Colorado, Boulder. Leon Grunberg is a professor and chair of comparative sociology at the University of Puget Sound. Sarah Moore is associate academic dean and dean of graduate studies at the University of Puget Sound. Patricia B. Sikora is principal of Sikora Research LLC, an organizational and marketing research firm based in Superior, Colo.