Embattled airplane manufacturer Boeing said it’s overhauling its bonus structure to tie payouts more closely to safety — its latest move to prioritize quality over profits as it looks to recover from the reputational crisis caused by a midair door-plug blowout.
The new structure will apply to Boeing’s nonunion workforce of more than 100,000 staffers, including managers and executives, according to an internal memo obtained by The Wall Street Journal.
The note, which was first circulated among employees, said that the biggest shift will be in the company’s largest department, its commercial unit. Here, 60% of workers’ annual bonuses will be derived from safety and quality metrics, according to The Journal.
Criterion that will determine the rewards include employee safety, work done out of sequence on the assembly line and so-called rework required to fix problems, The Journal reported.
Previously, financial incentives comprised the lion’s share, or 75%, of the annual award, while the remaining quarter was tied to operational objectives, including quality and safety.
In Boeing’s two other units — defense and services — financial metrics will still determine three-quarters of staffers’ year-end bonuses.
However, quality and safety will be the only factors to determine the operational scores in these units, per The Journal.
Executives and managers who ovesee all units — including CEO Dave Calhoun — will be awarded bonuses on the average performance of Boeing’s three departments.
Boeing announced the changes this week in a webcast, where opetaing chief Stephanie Pope said: “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,” Boein told The Post.
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The change in bonus structure comes just after Boeing was given 90 days to develop “a comprehensive action plan to address its systemic quality-control issues” as part of the US Federal Aviation Administration’s harsh crackdown on the manufacturer.
Separately, the US Justice Department has said that it’s investigating the company’s role in a near-disastrous midair door blowout on an Alaska Airlines flight last month where luckily, no one was sitting next to the door that blew off.
The DOJ said that it’s deciding whether the incident falls under the government’s 2021 deferred-prosecution agreement with the company.
If prosecutors determine that the door plug blowout constitutes a breach of that contractual agreement, then Boeing could face criminal liability, Bloomberg reported, citing a person familiar with the matter.
Boeing is also kicking off negotiations with the International Association of Machinists and Aerospace Workers union on Friday, according to The Journal, which represents more than 32,000 Boeing machinists in Washington state, including at its 737 factory in Renton.
The union is seeking 40% wage increases within th next three to four years, the return of a defined-benefit pension and a commitment from Boeing that the next new jet will be produced by its workers, The Journal reported.
The proposed perks are not a direct result of the fuselage blowout, and instead come as the union looks to make up for years of losses in a controversial 2014 contract that agreed to eliminate pensions and accept modest wage increases.
At the time, the IAM said the deal ensured the wide-body 777X would be built in the Puget Sound region in northwestern Washington, according to The Journal.
It wasn’t immediately clear what Boeing’s objectives are during the talks, which mark the first full contract negotiations in 16 years, after the union agreed to extensions in 2011 and 2014, per The Journal.
This story originally appeared on NYPost
