We’ve all heard
the phrase “what gets measured gets done” but I also believe “what gets
rewarded gets done even quicker.”
Understanding
how employee rewards and recognition impacts productivity, performance, and
employee engagement has been the subject of many studies and experiments, ergo,
the salient connection between human behavior and appreciation needs no
introduction. We are wired to crave connection, support, and acceptance from
those around us, due to which the need for effective employee recognition has
been diligently emphasized by thought leadership.
Behavior
reinforced is behavior repeated. Behavior reward is repeated. This simple yet
profound concept is at the root of more poor productivity, broken
relationships, negative personnel issues and high costs of doing business than
any other management principle.
Boeing has been
in the news recently for a number of troubling safety and quality issues. Among
the safety and quality issues of recent years have been two fatal crashes of
the 737 Max jet due to a design flaw in the plane, numerous halts in deliveries
due to quality control issues and, most recently, a door plug that blew off of
a new 737 Max operated by Alaska Airlines in January of this year, leaving a
gaping hole in the side of the plane.
The National
Transportation Safety Board has determined that aircraft left a Boeing factory
without the four bolts need to keep the door plug in place. It has yet to
assess blame for the accident, but CEO Dave Calhoun has accepted responsibility
for the incident.
The theme is a
corporate culture that was once reflective of an engineering and product
quality driven leadership to that of a financial and investment community
culture of driving up share price and investor returns regardless of process
control, pandemic or building supply network challenges.
In
a Bloomberg, The Big Take in Business column titled: Boeing’s Legacy
Vanished Into Thin Air. Saving It Will Take Years. (Paid subscription), the
following was noted:
“Together,
these point to a common problem: the company’s once-vaunted system for building
its prized 737s has been badly damaged by worker turnover, supplier distress
and the shortcomings lingering from the breakneck production last decade before
the Max tragedies and the Covid freeze.”
This Bloomberg editorial
further observes:
“At the same
time that Boeing was reworking its supplier network, executives put greater
focus on propping up the share price with the help of dividends and buybacks.
Since 2011, the year the 737 Max was officially announced, Boeing has handed
some $68 billion to shareholders in the form of dividends and stock buybacks,
according to data compiled by Bloomberg, though it suspended the measures as
its financial crisis deepened. Airbus, by comparison, has been much more
conservative with its balance sheet, giving it greater resources to respond to
the pandemic.”
After being rocked by years of quality and safety issues, Boeing is changing the bonus formula it uses to pay more than 100,000 nonunion employees. Instead of basing most of white-collar employees’ bonuses on financial results, bonuses will now be based mostly on safety and quality metrics.
The company has
faced harsh criticism for a series of quality and safety issues in recent
years, with many of those critics saying the company has shifted its focus in
the last few decades to financial results at the cost of safety
and quality in its
aircraft. But those safety and quality problems have resulted in five years of
operating losses topping $31.5 billion.
“It’s very,
very important to drive the outcomes that we’re all committed to, and that’s to
deliver a safe and quality product to our customer,” said Chief Operating
Officer Stephanie Pope on Thursday in comments to employees announcing the new
bonus formulas.
The troubled
aircraft maker said 60% of the annual incentive score used to determine bonuses
for employees of its commercial airplane unit will now be based on safety and
quality metrics. It previously had 75% of that score based on financial
results, with the other 25% based on operational metrics that included data
beyond safety and quality readings.
Boeing said all
employees will be required to complete training courses on product safety and
quality management as a pre-condition to receiving any annual incentives.
A core
principle of TPS is a system and process that depicts audio and visual systems
that indicate a production process has been stopped because of a worker
observing and flagging a quality control issue whenever they occur. To quote a
Toyota descriptor: “Operators are equipped with the means of stopping
production flow whenever they note anything suspicious. Jidoka prevents waste
that would result from producing a series of defective items.”
The notion of
Genchi Genbutsu (Go and see for yourself) compels production managers to
dispatch themselves to where the problem was flagged and to produce timely
resolution. It implies not penalizing the worker for calling attention to the
problem, or risking a production shortfall, but rather triggering a collective
effort toward resolving the problem as quickly as possible. That includes
whatever engineering and technical resources that may be required.
The ongoing
crisis has Boeing’s most senior management now compelling production workers to
flag known production and quality problems. With the systemic changes to reward
safety and quality it’s corporate culture can focus on producing each aircraft
with the utmost quality and efficiency, and reward production and supply chain
workers for their ingenuity and follow through. Such a culture rewards
operational workers for significant quality and operational milestone achievements.
From my
experience, this will take time and extraordinary efforts. The question
remains, what is the willingness of Boeing’s senior leadership? It would be
tragic if the commercial aircraft industry faces a singular dominant global
provider. Industries require vibrant competitors, especially those with upwards
of ten years in order backlogs for new aircraft.
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