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Msg  323 of 327  at  9/16/2021 6:47:06 PM  by


Time for Boeing to shop elsewhere for top talent

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Time for Boeing to shop elsewhere for top talent

Cahill, Joe. Crain's Chicago Business; Chicago Vol. 44, Iss. 37, (Sep 13, 2021): 4.

As it works to rebuild its reputation after two fatal crashes of 737 Max jets, Boeing needs to demonstrate a commitment to quality and safety above short-term profits.

Here's a way Boeing can show it's serious about that cultural change: Look beyond the General Electric diaspora for high-level talent.

In recent weeks, the Chicago-based planemaker has handed two top posts to former GE execs. Boeing named David Joyce, onetime head of GE's aircraft engine division, to its board Aug. 31. Another GE aviation alum, Brian West, became Boeing's chief financial officer Aug. 27.

Joyce and West join Boeing CEO David Calhoun, himself a GE veteran, as were two of his three most recent predecessors. The cross-pollination brought about change at Boeing, which was summarized succinctly by GE transplant and former Boeing CEO Harry Stonecipher.

"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, shortly before stepping down amid disclosures of an inappropriate relationship with a subordinate.

Of course, every company should be run like a business. In the years that followed, Boeing fulfilled that obligation and then some. Expanding profit margins, copious cash flows and generous share buybacks made Boeing a Wall Street favorite. Between 2005 and 2018, Boeing shares soared 523%, nearly five times the rise in the S&P 500.

But Boeing struggled to meet another important obligation: making airplanes well. Trouble started in the early 2000s with the disastrous decision to outsource most production of the new 787 Dreamliner, a blunder that spawned numerous manufacturing snafus and delayed the jet's debut by three years. The culmination came when flawed 737 Max software caused two crashes that killed 346 people in 2018 and 2019.

"Boeing has had problems with the last four commercial airplane programs," notes industry analyst Scott Hamilton at Leeham.

Mishaps continue to plague Boeing. New quality issues have forced the company to stop shipping 787s, the launch of a new 777X jumbo jet has been delayed by three years, and the Starliner space capsule failed its latest test with NASA.

Some blame a culture that overemphasized financial results at the expense of engineering, manufacturing and quality. Investigations following the Max disasters brought to light troubling signs of cynicism and go-along-to-get-along thinking in the ranks. Some Boeing employees spoke of manipulating safety regulators, while others hesitated to raise quality concerns that might imperil production timetables or financial targets.

In the end, quality lapses begat financial calamity. Costs related to the Max crashes and subsequent grounding of the jet for 20 months are expected to exceed $20 billion. Boeing stock is down by nearly half since the second crash in March 2019.

As Boeing faltered financially, parallels to another once-vaunted industrial giant emerged. GE wowed Wall Street for decades, until it became clear that all those quarterly earnings beats masked serious underlying problems.

Yet Boeing keeps handing big jobs to former GE execs. There are practical reasons for this. GE, which makes jet engines, is one of the few large companies where executives can learn the commercial aviation business.

Calhoun, Joyce and West doubtless bring important skills and knowledge to Boeing's board and executive suite. Calhoun and West also spent years at other companies after leaving GE. And it's true that Boeing has hired far more directors and senior executives from other companies.

Still, newly hired GE veterans occupy three of the most influential positions at Boeing. That's plenty.

Looking elsewhere for top leaders would help Boeing meet its most important challenge: driving fundamental change through all levels of the company. Boeing also needs to convince aviation regulators and airlines that quality and safety really are its top priorities.

Those are tough jobs for any big company, especially one with as many internal and external constituencies as Boeing has. Success requires not only rhetoric from the top but also consistent actions.

Hiring decisions show a company's true priorities and intentions. Boeing's reliance on GE expats only raises doubts about its oft-stated vows to prioritize safety and quality over all other goals. Tapping other talent pools would put meaningful action behind the promises.


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