Boeing Revamps Bonus Structure to Prioritize Safety and Quality

Key Takeaway

• Boeing shifts annual bonus structure, now 60% based on safety and quality metrics in its commercial unit due to production issues.
• Defense and services units' bonuses still largely financial, but with a new focus on quality and safety for operational scores.
• Changes aim to address regulatory concerns and improve product safety following the 737 production restrictions post January incident.

Production Problems Prompt Bonus Changes

Boeing has made significant changes to its annual bonus structure in response to production issues that came to light after the door plug blowout incident at Alaska Airlines. The company's commercial unit, its largest division, will now have safety and quality metrics accounting for 60% of annual bonuses, a notable shift from the previous emphasis on financial incentives. Metrics determining rewards will include employee safety, work sequence adherence, and rework needed to rectify issues.

Divisional Bonus Adjustments

In Boeing's defense and services units, financial metrics will still dominate 75% of bonuses, with quality and safety becoming the sole determinants of operational scores. Executives and managers overseeing all units, including CEO Dave Calhoun, will have their bonuses based on the average performance across all three divisions. These changes aim to address regulatory concerns over quality controls and production processes, particularly in light of restrictions imposed on Boeing's 737 production post the January incident.

Leadership Commitment to Quality

Boeing's leadership, including operating chief Stephanie Pope, emphasized the importance of delivering safe and high-quality products to customers in a recent employee webcast where the bonus changes were announced. The company's proactive approach to enhancing safety and quality standards underscores its commitment to addressing past shortcomings and ensuring a more robust operational framework.

Management Quotes

• Stephanie Pope, Operating Chief of Boeing:

  "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."