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Boeing: successful crisis management is only possible with an open corporate culture

August 9, 2019 by Jenny Payne

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The Boeing 737 MAX crisis serves as a timely reminder of how an open, value-driven corporate culture is a crucial element of building crisis resilience. 

With countless lives impacted, a string of lawsuits and a financial impact in excess of billions of dollars, the 737 MAX crisis is the most significant Boeing has ever faced. It has already provided the ultimate test of crisis leadership and, with the aircraft likely to remain grounded until next year, it shows no signs of abating any time soon.

There are many crisis management lessons that can be learned from Boeing’s handling of its recent troubles. Here we focus on how Boeing’s corporate culture arguably sowed the seeds of the crisis.

An open, honest culture enables issues to be identified before they become crises

In recent weeks, one Boeing engineer described a culture where "everything was designed to stop an ability to communicate concerns upward." Another industry analyst said how “delivering bad news was generally regarded as a very bad career move” at Boeing, resulting in a situation where employees may have felt unable to speak out.

Fostering an environment where employees feel comfortable raising concerns is a critical step in crisis prevention. However, listening alone is not enough; companies must investigate warnings from staff and act upon them when appropriate.


Financial incentivisation can hamper crisis resilience

BBC Panorama programme alleged that engineers who worked on the 737 MAX programme were pressurised into reducing costs and were given targets for doing so. This seemingly created a cost-centred culture, which potentially increased the risk of safety being deprioristised. As economist William Lazonick said: "If you supercharge the incentives of top executives and tell them that their job is to get the stock price up, they're not going to pay the kind of attention they need to pay to ensuring they produce a safe plane."

While financial metrics will inevitably be a critical KPI for senior management, too much emphasis on generating value can lead to unnecessary risk-taking and drive cost-cutting measures that can breed crises.


Always stay true to your values

One of Boeing’s Enduring Values is safety, which states that Boeing “value[s] human life and well-being above all else and take[s] action accordingly.” This seems at odds with their response to the recent issues given Boeing’s reluctance to proactively ground the aircraft after the second 737 MAX crash in March. There have also been media reports criticising Boeing for cutting corners on safety to get the 737 MAX to market. If true, this suggests that Boeing has prioritised perceived commercial gain over one of its core values.

While value-driven behaviour in an organisation can help prevent crises happening in the first place, they are also a defining factor in how an organisation responds when the worst happens. Teams that use their values to guide decision-making are more likely to respond effectively and get ahead of a crisis early on, minimising the reputational impact.

It seems clear that Boeing’s corporate culture has contributed, at least in part, to the crisis it is now facing. All organisations should invest time in ensuring that they truly live by their values to help build their crisis resilience.

To see how prepared your organisation is to handle a crisis, take Insignia’s crisis readiness test.