Boeing's New Plan to Fix a Broken Culture: Leaders on the Factory Floor

• Boeing's new CEO plans to change the company's culture by placing executives on factory floors.
• This strategy aims to promote safety, communication and trust in Boeing.
• One analyst said Boeing should have always connected its top managers with employees.

Boeing's new CEO on Wednesday laid out a four-part plan to turn around the troubled company.

He said a top priority was to “fundamentally” change the culture, including by putting executives on factory floors.

“We need to be on the factory floor, in the bakery shops and in our engineering labs,” he said in a memo to employees. “We need to know what’s going on, not just with our products, but also with our employees.”

It's not uncommon for companies to send executives to work with rank-and-file employees.

Home Depot recently announced that company employees would be required to work one shift every quarter at the company's stores. Former Starbucks CEO Laxman Narasimhan last year directed senior managers to work in stores to better understand employee pain points and customers' experiences.

For Boeing, this strategy could help close safety and communications gaps as the plane maker tries to regain its footing in the aerospace industry.

Boeing plans to better connect with its employees

Ortberg is tasked with stopping Boeing's free fall after a tough year of quality, safety and production problems as well as a 40-day strike that cost the company an estimated $50 million a day.

During Boeing's third-quarter earnings call on Wednesday, Ortberg told investors that he is focused on holding the organization accountable and reassessing the company's values ​​to regain trust. He said cultural change starts at the top and won't happen overnight.

“I'm still in the process of traveling around and meeting our people, especially two and three floors down,” he said on the call. “We just have to put everyone in the right position, make the right play and focus on the right thing, and I think we still have a ways to go.”

Ortberg said he would consider supplementing the team with outside resources to fill Boeing's cultural gaps. At the same time, he promises to reduce the company's workforce by laying off around 17,000 workers.

“One of the things I've heard from a lot of employees is that the overhead is just too high; it slows them down from doing their work,” he said. “So we're really going to focus on reducing headcount by streamlining those overhead activities (and consolidating) things that can be consolidated.”

If managers put themselves in the shoes of workers, it could improve safety

Ortberg said his plan to change the company's culture would help eliminate quality problems and give executives more insight into employees and products.

Boeing's safety action plan, submitted to the FAA in May, focuses on strengthening employee safety reporting, simplifying and clarifying work expectations, and improving employee communication and training.

A communications failure was later identified as one of the reasons critical bolts were missing from the Max 9 jet, which lost a door plug mid-flight in January. At least three whistleblowers have come forward since the incident, reporting quality problems with slips on the assembly line. A senior engineer said he faced punishment from Boeing for raising safety issues.

Putting managers in the shoes of workers could help streamline communication and quality processes and ensure employees get the resources they need.

Uber boss Dara Khosrowshahifor example, has been vocal about how his time driving for the company has illuminated the issues its drivers face.

It could be the change Boeing needs

Richard Aboulafia, managing director of AeroDynamic Advisory, told Business Insider that Boeing should have sent executives to the factory floor long before Ortberg appeared.

“Boeing needs to weed out the people who thought it was appropriate or even acceptable not to have that interaction at all,” he said. “Who said it’s OK to run a company where there’s such a big gap between the people at the top and the people who actually run the company’s business?”

Aboulafia said Ortberg may have a hard time bringing about culture change unless he fires some of the managers who have led the company through recent crises.

Third Bridge analyst Peter McNally told BI that Ortberg's operational background would be critical to the company's cultural revitalization.

“Kelly Ortberg was hired for his operational expertise, not his ability to sell more aircraft,” he said. “He is an engineer with extensive industry experience, and his previous experience at Rockwell Collins gives him great credibility with the rank and file.”