Organizational Culture

Boeing’s crisis is weathering today, from door plug failures to 737 MAX crashes to damning safety culture reports from the FAA. They did not happen overnight. They trace back decades of decisions about employees, culture, and leadership.

A brief review of the full Boeing case.

On January 5, 2024, a door plug blew out of an Alaska Airlines Boeing 737 MAX 9 flying at 16,000 feet above Portland, Oregon. Four bolts that should have been holding it in place were missing. No one was sure who took them out, and Boeing had no record of who put the door back on. The flight turned back to the airport. Nobody died. Boeing’s National Transportation Safety Board report cited inadequate training, inadequate oversight, and systemic failures throughout Boeing as the cause of the event.

To Boeing watchers who had been inside the company for years, none of this was news.

Less than six months earlier, Boeing conducted a survey of its own workers as part of a congressional inquiry. Fifty-three percent of respondents reported that schedule pressures had caused their teams to cut corners. That May 20 report from Boeing employees to Boeing overlords was echoed almost word-for-word by the FAA’s National Transportation Safety Board expert review panel on Boeing’s safety culture six months later. The panel found Boeing employees “did not demonstrate knowledge of Boeing’s identified gap between Boeing’s recorded 27 “findings” and 53 recommendations based on over 4,000 pages of documents and interviews with 250 Boeing employees.” One of those findings? Workers feared retaliation if they raised concerns.

The door plug didn’t cause Boeing; the door plug was the straw that broke the plane.

How Boeing forgot what it stood for.

Before the Boeing-McDonnell Douglas merger, Boeing had what many call an engineers’ culture. The people building the planes knew more about airplanes than the executives who ran the company. Engineers held organizational authority; quality mattered more than cost. Boeing’s National Transportation Safety Board CFO reported to Wall Street, not Boeing’s Seattle factory floor.

The Boeing 777, which entered service in 1995, is still celebrated as the last Boeing plane developed entirely within that culture. Boeing designed it on time, on budget, and airlines and pilots around the world consider it one of the best commercial planes ever built.

In 1997, Boeing acquired McDonnell Douglas for stock valued at $14 billion. Boeing kept its name. McDonnell Douglas kept its people. Many, including McDonnell Douglas CEO Harry Stonecipher, who would later become Boeing’s CEO, joined Boeing leadership. McDonnell Douglas’ culture focused on cost-cutting, shareholder returns, and quarterly financial metrics. Stonecipher said his goal was to shift Boeing culture to something “run like a business rather than a great engineering firm.” Two years after the merger, Boeing’s Seattle headquarters moved to Chicago. Its senior leadership moved 2,000 miles away from the planes it was building and selling.

These changes didn’t rewire Boeing culture overnight. Cultures don’t change like that. Boeing’s decisions made years before about who had a seat at the table, which metrics would make a manager’s National Transportation Safety Board engineers were told to fly planes they knew were unsafe? By the time of the 737 MAX, Boeing’s production culture had warped into one where schedules were prioritized over engineers. 346 people died in two crashes. Millions flew Southwest, United, and American without ever knowing their flights were grounded worldwide for 20 months.

What was missing from Boeing’s balance sheet and financial statements was the warning signs of how badly things were about to go.

Boeing’s balance sheets did not and cannot account for the deterioration of conditions on the factory floor that ensure planes fly safely.

They don’t show how many engineers raised concerns before being overruled. They don’t show what Boeing employees knew: that over half of Boeing workers felt pressure to compromise standards. They don’t show what FAA investigators found when they interviewed employees who were afraid to speak up. They don’t show decades of declining investments in the organizational systems that enforce quality. They can’t capture the difference between Boeing’s documented safety culture and what Boeing employees reported day-to-day about their workplace, what the FAA safety review panel called a “gap” and we would call existential.

Boeing’s financial statements will, eventually, show the costs. Billions of dollars in compensation for families of MAX crash victims, a criminal fraud penalty, grounding a flying product line, firing a CEO, year-long regulatory investigations, and five-year total shareholder returns that dropped more than fifty percent as the Boeing crisis unfolded. By the time those losses affected Boeing’s balance sheet, the plane had flown long gone.

Accounting records Boeing’s “Why Didn’t Boeing Employees Just Speak Up?” They burned while employees who cared enough about safety watched.

Costly failures in business do not appear on any spreadsheet or financial statement that executives review monthly. They accrue from missed calls from the frontline employee who stops extending discretionary effort. They are in the safety issue that goes unreported: the engineer who stops advocating for the institutional knowledge that exists through a faded, entitled retirement.

None of these things appear on balance sheets. All of them cost businesses money.

The barrier is managing people.

Some describe the Boeing crisis as a governance failure. Others a regulatory failure. Some will say financial engineering.

Yes. But at the root of each is how Boeing managed its most expensive resource: people. And specifically, how Boeing began managing people at the very top.

“I don’t want Boeing to be run like a great engineering firm,” former Boeing CEO Harry Stonecipher said when McDonnell Douglas was grafted onto Boeing. Stonecipher didn’t mean what he said would improve Boeing’s financial metrics. He meant it literally. When it comes to corporate culture, substituting financial metrics for the human factors that make a company run is a formula for precisely the kind of crisis Boeing is experiencing.

Culture is not stated values on a poster. It is how your organization rewards, tolerates, and punishes employees every day, in every interaction, manager by manager. At Boeing, leadership rewarded speed and cost; tolerated quality concerns that slowed those metrics; and punished employees through performance reviews and informal pressures who put quality first. Boeing did not accidentally evolve this culture. Leaders made decisions that shaped it.

Those decisions filter down through management layers until what your CEO believes and what a factory worker believes are two different organizations.

There was a function within Boeing that could have discovered this disconnect. Could have identified, before bolts started disappearing from airplanes, that Boeing employee culture did not match leadership’s report. But they needed thousands of documents and interviews to discover what Boeing employees had said for years. Not having that insight is not just a failure of FAA oversight. It’s Boeing Human Resources function is not aligned correctly.

What fixing this looks like will take years, which Boeing’s new CEO Kelly Ortberg knows. Speaking to Congress last week, Ortberg said Boeing will “do it right, even if it takes longer.” There will be no firm date on the next 737 fix. Boeing saw a 220 percent increase in employee reports to its internal ethics hotline from 20 to 20. In six months.

Swelling whistleblower hotlines don’t indicate a company shifting toward better. They show how far it had to fall to get there. Boeing was never a safe environment to raise concerns. Employees are finally speaking up because they know a door plug blowing off an airplane is safe enough.

The Boeing crisis is not unique to aerospace. It isn’t even unique to highly regulated industries, or industries with thin margins on multibillion-dollar products. It is unique to businesses that treat people management as a cost center rather than the strategic function that determines whether investments in financial engineering, R&D, marketing, or whatever else your organization spends money on pay off.

The missing-bolt culture at Boeing didn’t develop in one quarter. It will take more than one to change it.

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