Boeing’s culture cannot escape the spotlight

Boeing’s culture of work is under scrutiny. For its directors and other corporate leaders, this is the last place they want to be. 

Why? Because culture is everything. Anyone with corporate governance education knows how central it is to a company’s operation. A company with serious issues but a good culture might bounce back quickly. A company with serious issues and a bad culture – and this looks to be the case with Boeing – may struggle for years.

Fresh from allegations of poor engineering, governance, and mechanical faults aboard its planes, a whistleblower has come forward with claims of “shortcuts” in Boeing’s manufacturing process, designed to speed up production of the 777 and 787 Dreamliners and clear backlogs. 

The facts are: 

• These shortcuts meant critical components of the 787 fuselage were improperly fastened together, posing serious safety risks over time, engineer Sam Salehpour told the New York Times. 
• Production on 777 fuselages suffered similar issues. Some workers jumped on misaligned parts to force them to fit together, he said. 
• Salehpour attempted to bring the issues to Boeing’s corporate leaders, but they did not heed his warnings, his lawyers’ statement read. 
• Boeing has called the accusations “inaccurate” and said it was “fully confident” in the integrity of both the 787 and 777. 
• Nevertheless, the American Federal Aviation Administration (FAA) is investigating this issue.

First, we should acknowledge that the latest news concerns just allegations and an investigation at this point. Any specific flaws with the 787 and 777 will take a while to be confirmed. 

On the other hand, it does little to negate Boeing’s record of poor corporate governance – a saga stretching the bulk of a decade. 

Salehpour is not the first whistleblower. The 787 and 777 are not the first Boeing models to receive reputational damage. The negativity against Boeing is not just based on words. 

Boeing’s reality is that faulty equipment has caused two well-known crashes, hundreds of deaths, and a door plug that simply “fell off” mid-flight. Meanwhile, multiple people who know the company’s inner workings have come forward with concerns. 

None of this spells good corporate culture.

The bad news is that the company has amassed more than enough criticism and stakeholder attention to mean its culture will be under the microscope for years. 

It will be easy for the company to fall out of the news cycle. All it has to do is avoid more malfunctions or whistleblowers – not a given, but entirely possible. 

But that’s just the news cycle – short-term reputational risk. Attention from other stakeholders—specifically regulators—won’t vanish as easily. This means the company’s board of directors and other key executives must prepare for years of investigations and increased oversight of its inner workings. 

At the heart of it all is the company’s governance culture, which past events suggest is extremely poor.

Of course! The problem is doing so in a timeframe that stakeholders will accept. 

Culture is one aspect of governance that takes years to build but can collapse overnight. That’s not good news for Boeing. 

The key to fixing corporate culture is that it has to come from the top, in other words, the CEO and board of directors. 

There have already been high-profile departures at this level recently – CEO David Calhoun will leave at the end of the year, and Board Chair Larry Kellner will be replaced following the next election – but is that enough? 

Boeing’s woes so far suggest the company has – whether knowingly or not – deprioritised high engineering standards, whistleblower protection and reputational risk in favour of increasing production and clearing backlogs. 

To reverse those strategic decisions, you need the right people at the helm: people who can lead by example, have the right skills, and demonstrate to external stakeholders that the company has changed its tune.

Stakeholders will expect cultural change from Boeing, and that’s where their attention will be for a long time, regardless of progress or the pace of change. 

During that process, attention will continue to fall on Boeing’s governance, heaping pressure in ways the firm doesn’t need but which it won’t be able to escape from for the time being. 

Boeing’s corporate leaders need to be up to that challenge, ready to be proactive in the face of extreme anger and scepticism. 

It’s a true governance test following poor decision-making; let’s see how it responds.