Boeing is shifting its employee bonus formula from finances to safety and quality
New York (CNN) — After being rocked by years of quality and safety issues, Boeing is changing the bonus formula it uses to pay more than 100,000 nonunion employees. Instead of basing most of white-collar employees’ bonuses on financial results, bonuses will now be based mostly on safety and quality metrics.
The company has faced harsh criticism for a series of quality and safety issues in recent years, with many of those critics saying the company has shifted its focus in the last few decades to financial results at the cost of safety and quality in its aircraft. But those safety and quality problems have resulted in five years of operating losses topping $31.5 billion.
“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,” said Chief Operating Officer Stephanie Pope on Thursday in comments to employees announcing the new bonus formulas.
The troubled aircraft maker said 60% of the annual incentive score used to determine bonuses for employees of its commercial airplane unit will now be based on safety and quality metrics. It previously had 75% of that score based on financial results, with the other 25% based on operational metrics that included data beyond safety and quality readings.
For the company’s defense, space and security unit, as well as its global services division, operating metrics will continue to determine only 25% of the bonus formula, but that 25% will be changed to focus solely on safety and quality. For employees in the corporate offices, their bonus score will be based on an average of the three units scores.
Among the safety and quality issues of recent years have been two fatal crashes of the 737 Max jet due to a design flaw in the plane, numerous halts in deliveries due to quality control issues and, most recently, a door plug that blew off of a new 737 Max operated by Alaska Airlines in January of this year, leaving a gaping hole in the side of the plane.
The National Transportation Safety Board has determined that aircraft left a Boeing factory without the four bolts need to keep the door plug in place. It has yet to assess blame for the accident, but CEO Dave Calhoun has accepted responsibility for the incident.
“We caused the problem, and we understand that,” he told investors during a call after reporting the latest quarterly loss at the company. “Whatever conclusions are reached, Boeing is accountable for what happened. Whatever the specific cause of the accident might turn out to be, an event like this simply must not happen on an airplane that leaves one of our factories. We simply must be better.”
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