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Boeing has announced overhauls to its employee bonus plan, with safety and quality metrics now accounting for 60% of payouts to non-unionized executives, managers, and employees.
The new annual incentive plans are a proposed solution to serial safety concerns at Boeing that have been uncovered after the Alaska Airlines door plug blowout incident in January and from a recent investigation from the Federal Aviation Administration (FAA) following two fatal 737 crashes in 2018 and 2019.
The changes apply to employees in the Boeing Commercial Airlines (BCA) unit, where safety and quality will now be valued more heavily than meeting financial objectives.
Previously in the BCA, financial targets accounted for 75% of the annual bonus, with operational objectives including quality and safety metrics only accounting for 25% of the reward.
"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," says Stephanie Pope, Chief Operating Officer at Boeing, in a webcast to employees.
Boeing’s operational goals for 2024 will now focus on safety and quality.
Financial metrics at Boeing’s two other business units - defense and services - will still account for 75% of the award, though operational metrics will now solely be based on quality and safety.
Compensation and training teams lead Boeing’s response to safety concerns
The changes apply to Boeing's nonunion workforce which includes more than 100,000 employees.
For executives and managers who sit across commercial airlines, defense, and services, such as CEO Dave Calhoun, bonuses will be based on an average of performance across the three units.
According to Boeing, all employees will need to complete product safety and quality management training before they are entitled to receive any annual incentives.
In its recent investigation, the FAA criticized Boeing’s safety training programs, finding that employee confusion arises due to procedures and training that are “complex and in a constant state of change.”
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The FAA has notified Boeing that it is launching a further investigation after a door plug detached in mid-air on a brand new Alaska Airlines 737 MAX 9, stating “This incident should have never happened and it cannot happen again.”
Boeing’s quality assurance issues have been described by the FAA as “unacceptable.”
The move to tie employee bonuses to quality and safety training seems to reflect a collaborative effort between L&D and compensation teams to address criticism over knowledge gaps in its workforce.
The FAA said in its investigation into the crashes in 2018 and 2019 that Boeing employees “did not demonstrate knowledge of Boeing’s enterprise-wide safety culture efforts, nor its purpose of procedures.”
It also reported a “disconnect between Boeing’s senior management and other members of the organization” on safety culture and a conflict of interest among managers that led to employees hesitating in reporting safety concerns “for fear of retaliation.”
Boeing may well hope weighting quality and safety measures more highly than financial targets in the BCA unit will, in part, address these cultural and structural flaws.
The aircraft manufacturer has previously stated it has “taken important steps to foster a safety culture that empowers and encourages all employees to share their voice,” but admits there is “more work to do.” Calhoun has also encouraged “all teammates to use their voices to speak up.”
