Turbulence: Boeing and the State of American Workers and Managers

This is a story as much about cutting costs, avoiding failure, and raising stock value as it is about how to treat employees, their role in business decisions, and the changing employment relationship. Over ten years, Boeing employees were surveyed and interviewed, monitoring the effect of major business decisions (new ‘teams’ culture, technology, increasing roles for women, etc…). The shift by top executives to a more single-minded and short-term focus on the financial bottom line created a sense among many blue and white-collar workers alike that they are expendable resources to be used and discarded according to the calculations of distant investors and financial gurus. Overall, the effects were not positive. Thousands of workers laid off, with thousands still employed left to do even more work than before.

Major Takeaways

Many factors collided to create the conditions that Boeing experienced in the 90’s. However, while some factors were out of Boeing’s control (the emergence of Airbus, increased shareholder pressure, deregulation, and changing culture), how they responded to these factors is the focus of the study. Major takeaways, with each summarized below, include: • Failure of top-down decisions (new systems, technology, ‘teams’) • Irresponsible implementation of layoffs • Changing employee loyalty

Failure of Top-Down Decisions

In the face of changing cultural, governmental, and business environments, Boeing had to respond. Deregulation of the aviation market forced Boeing to look at production costs and quality to maintain their success. The changing role of women in the workforce forced them to open more opportunities to women. The emergence of Airbus in the global market forced them to respond with an even greater emphasis on production costs and productivity. Boeing executives responded to each of these forces with appropriate business decisions, implementing new technology (parts and design systems, even email), quality and manufacturing models (‘teams’, TQM, and global outsourcing), and many other systems that were weakly implemented and forgotten. In 1999, Boeing took 22 days to assemble 737 NG; by 2005 they only needed 11 days with only two shifts and 60% less inventory. However, the new team culture, rather than building cohesion and cooperative enterprise, was perceived as cold, calculating, and uncaring. Little to no blue/white-collar worker input or consideration was used in these decisions. Implementing every new fad in the business community should be avoided. The pace of change should be considered. New manager teams for planning and implementing new changes in business and operations should be created. The managers are the main voice in translating executive decisions to everyday workers.

Irresponsible Layoffs

In the ten years of this study, Boeing’s workforce reached a high of 109, 523 in 1998 and a low of 48,067 in 2004 with many up and downs in between. The aviation industry was known for being volatile, but this was more excessive than the past. There were many sound reasons for the mass hiring and layoffs that Boeing experienced. Many of the changing environmental factors discussed above contributed to the need for layoffs and successive re-hiring. However, the method and pace of the layoffs have shown to be detrimental to the well being of all workers, to those laid off and those that remain. Layoffs turned the company’s financial crisis into a human and social one. Employee attitudes and health proved to be negatively affected. Good employees looked for a way out. Others remained but things were different. Detached, passive, and disengaged workers may not only be detrimental for the company; such toxic mental states are likely to damage employee well being over the long run. Leaving Boeing during this time even proved to be good for employee health. “The misery of uncertainty is more painful than the certainty of misery.” Companies need to do a better job at sharing the pains and gains with employees (e.g. cutting back executive bonuses and salaries with employees) and treat them with dignity and respect. A major mistake of Boeing was cutting back on the human resource functions that would have greatly aided the remaining employees in surviving such chaotic changes. Above all, companies must acknowledge the human cost of decisions. Employers can use strategies to enhance revenues and cut costs that engage employees as full partners and co-beneficiaries.

Changing Employee Loyalty

Many factors, including the ones discussed above, contributed to the changing feeling of employees towards their Boeing. Boeing employees over and over again spoke of Boeing as feeling like family. Boeing workers were proud of their work and resulting product so much, it was very common for family and friends to work together. With the changing business environment, attitudes and feelings changed. Employees’ contributions being respected and viewed as a source of competitive advantage was a thing of the past, replaced by Boeing as a team; where people and positions were expendable or interchangeable with other workers around the world. Human relationships are built on reciprocity, and workers repeatedly said as Boeing started to treat them as expendable commodities or numbers, they no longer felt the same sense of loyalty to the company. Most employees don’t really care about shareholders. As discussed before, Boeing’s shift to focusing on the bottom-line and shareholder value left employees feeling expendable. Employees were faced with both layoffs and increased outsourcing. Loss of job security was painful and difficult for many employees to accept. The past experience of long, successful careers was unlikely now. A new paradigm exists: employees must now think in terms of their own employability rather than a fixed employment relationship in response to changing workplace conditions.

Summary

The postwar conditions that made the high security, high pay, and high benefits social employment contract possible are rapidly disappearing. The Boeing workforce was proud of their work and accomplishments. Boeing’s response to changing market, cultural, and regulatory conditions affected that. The focus on shareholders was a shift from employees as owners. Employees were expendable now: human capital to be purchased and spent. Where Boeing had been innovative before, Boeing’s response to shareholders was to increase profitability on current designs. It’s not until the development of the 787 that employees begin to rebound. However, the struggle continued with the delays of the production and delivery of the new aircraft. Giving employees some sense of control and influence over decisions that govern their fate can sharply reduce the psychological damage they suffer. It’s more important than ever for employees to adapt to change, be flexible, and protect their own interests.