Against a backdrop of Boeing labor relations that one analyst described as the worst he’s ever seen, former Boeing Commercial Airplanes Chief Executive Alan Mulally delivered some advice on how to boost morale: work together and include everyone.
Mulally has moved back to the Puget Sound region after retiring from the top job at Ford Motor Co. On Wednesday, he spoke at a breakfast gathering of businesspeople in Seattle sponsored by the Puget Sound Business Journal.
A reporter asked him how to maintain worker morale and manage labor relations at a big company. At first, Mulally tried to keep his answer short and sweet by saying simply, “My thought about that is that working together really works.”
But he elaborated a couple of minutes later.
“It’s amazing to me the power of coming together around a compelling vision about where the organization’s going to go, whether it’s profit or nonprofit or the state, and then coming together around a strategy to achieve it that includes everybody where everybody benefits,” Mulally said. “I really do believe that working together with all the stakeholders works.”
Morale at Boeing
Worker morale at Boeing in Washington state has been poor the past couple of years. The union that represents engineers and technical workers came close to going on strike in 2013 because of contentious contract negotiations, and since then the company has announced a series of moves to shift thousands of engineering jobs out of state.
One analyst has said the company’s moving the jobs because it wants to get away from unions. Boeing has said it’s moving the positions for business reasons and to make the best use of its workforce across the country.
Late last year, Boeing told its machinists they must accept a contract extension that included phasing out of their defined benefit pension plan in order for the company to commit to build the new 777x in Washington state. The company said that competition in the aircraft market is fierce right now and that keeping costs contained is crucial. Workers narrowly accepted that plan, but the experience left many of them deeply unhappy.
Teal Group analyst Richard Aboulafia recently called the situation between workers and the company’s management a “toxic labor relations Superfund cleanup site” and said he’s never seen anything like it in his 26-year career.
Mulally’s Career
Labor relations weren't always rosy when Mulally was a top manager at Boeing. There were several long, bitter strikes.
But he was widely respected during his career at Boeing, which stretched from 1969, when he joined as an engineer, until he left to take the helm at Ford in 2006. He oversaw development of the 777, and worked on many of the company’s other planes, including the 737, the 767 and the 787.
At Ford, he led the company back to profitability and was able to avoid getting a bailout from the federal government, unlike Chrysler and General Motors, during the Great Recession. Fortune magazine this year ranked him third on its "world’s greatest leaders" list after Pope Francis and German Chancellor Angela Merkel.
During the breakfast, Mulally talked repeatedly about a management technique he developed during his decades at Boeing called the business plan review in which managers would color-code the status of the projects they were working on and report back to the group. Green means everything’s fine. Yellow means there’s some trouble. Red means things aren’t going so great.
Mulally described how reluctant managers at Ford were to own up to problems when he first arrived at the money-losing car maker. At the first few business plan review meetings, he said everyone showed up with their projects color-coded green. He told them that couldn’t possibly be true.
“I said, 'You guys, we’re going to lose $17 billion this year. Is there just anything, one little thing that’s not going well?’” Mulally recalled.
Slowly but surely, he says he got the managers to start to own up to problem areas and that openness led to different divisions working together to find solutions.
In an emailed statement, Boeing said the company has built on the business plan review Mulally introduced.
"Each successive BCA leader starting with Bill Allen has learned from and evolved the leadership lessons of their predecessor," the company said. "While styles may vary and words on the chart may be different, Boeing’s core values and mission have remained constant over nearly 100 years."
'Classic Alan Mulally’
Bob Uptagrafft, executive director of the Pacific Northwest Aerospace Alliance, described the talk as "classic Alan Mulally."
He said Mulally’s messages harkened back to the lessons of Dr. W. Edwards Deming, a business consultant who helped guide the rise of Japanese industry after World War II. Deming is known for his 14 points on management, including No. 8: “Drive out fear.”
“The best product of fear is mediocrity,” Uptagrafft said. “The turtles won’t stick their heads out of the shells, so your people aren’t going to come forward as part of your team and contribute to your success if they fear retribution of any kind.”
