Save on your hotel -

HBS professor Sucher: Boeing a template for how to not be trustworthy

  • Sandra Sucher is a professor of management practice at Harvard Business School. She is currently writing a book on how companies build trust. 
  • She told Business Insider that Boeing’s story is “a template for how not to be trustworthy.”
  • Here’s what else she has to say about how Boeing and its leadership fall short on the four dimensions of trust: Competence, motives, methods, and impact.
  • Click here for more BI Prime stories.

Boeing CEO Dennis Muilenburg’s highly publicized decision to not take a bonus this year shows “just how little he understands about human nature,” says Sandra Sucher, who teaches management practice at Harvard Business School and has over 25 years of experience in industry and nonprofit management.

Muilenburg giving up his bonus is “a completely weird gesture,” she says. 

The executive said he gave up “tens of millions” at Wednesday’s DealBook conference, a move following the two Boeing 737 Max crashes in October 2018 and March 2019 that left the company reeling. And the public demanding answers.

Muilenburg appeared before Congress on October 29, later meeting privately with the families affected by the second crash. He stated today that hearing the families’ stories affected him so deeply that he started thinking about how he could send an individual message of responsibility, in the form of forgoing the bonus until Max jets are once again in the air.

The move creates a strange equivalence, says Sucher, between the money Muilenburg receives and the lives that were lost under his watch. 

“It’s a confusion of what’s the denominator here,” Sucher told Business Insider. “No one’s thinking about what he gets paid, they’re thinking about the fact that he presided over two crashes that killed 346 people.” 

A CEO voluntarily giving up his bonus has precedent. Amid the recession in 2009, Honeywell implemented furloughs, where employees are asked to take unpaid leaves but aren’t let go, in place of layoffs. Employees were understandably upset, and Honeywell’s top management showed their empathy by losing out on more than half of their overall compensation for the year — They didn’t take their bonuses. David Cote, Honeywell’s then-CEO, writes that his bonus was significant, around $4 million, but he decided early on that he wasn’t going to take it. There’s equivalence there because it’s compensation measured against compensation.

Boeing’s circumstances, however, are rather unique. Muilenburg deciding to give up his bonus can’t gauze over the fact that hundreds of people died in problematically designed Boeing aircraft. If he stops at just this conciliatory gesture, it’s like saying that part of a CEO’s compensation is equivalent to massive loss of human life.

The four dimensions of trust

Sucher says that leaders must first establish competence in order to lay the groundwork for trust. She says Boeing failed to do so with the launch of the 737 Max. Even though the company considered building a new plane instead of building on the 737 model that first launched in 1967, competition from Airbus made launching quickly appear more lucrative than taking 10 years to develop a new plane. So Boeing went with the 737 Max. 

“Boeing just never did what you need to do in a business, which is to decide when it’s time to move beyond legacy platforms,” Sucher said. 

It would’ve been an expensive but essential undertaking in not only establishing competence, but also the second dimension of trust: how the public perceives a company’s motives.

“From the start, it appeared that Boeing’s main motivation was to beat its only competitor, Airbus,” Sucher explained. “It was willing to forgo many important steps in order to get a plane out as fast as they could.”

If a company is obviously motivated by a market race and appears lukewarm or indifferent to the lives of the people who depend on them, they undermine public trust. Sucher says Boeing’s response after the two crashes irrevocably damaged what was left of public trust.

“They were unwilling to act until they were forced to ground the plane that had proven itself statistically untrustworthy,” Sucher said. “They weren’t going to do anything about it until they were forced to.”

This brings in the third and fourth dimensions of trust: The means, or the way a company goes about what they’re doing, and how they deal with the impact of their actions. 737 Max training for pilots was lacking from the start, rooted in a short course that could be completed on a tablet. The way Boeing launched the 737 Max, the way it dealt with the fallout— from start to finish, in retrospect, there’s a traceable thread of faulty execution, she says.

All of this leads to what exactly can be done in the aftermath, when these four pillars crumble and the leaders at the helm attempt to glue what’s left back together.

What leaders should do to regain trust

The first step is understanding exactly how much power leaders have to shape the atmosphere of a company.

“Leaders create the context within which people behave,” Sucher said. 

In Muilenburg’s case, Sucher thinks that it’s about more than having the necessary capabilities or experiences. It’s about honestly asking if people will ever trust the company again as long as he’s still leading it. 

The onus was on Muilenburg after the first crash to launch an internal investigation and uncover what went wrong before journalists did. Sucher says he should’ve done his own analysis of what happened, and created an environment where people told the truth about the lead-up to these crashes. 

‘It’s a very compelling set of tensions and pressures, and you have to make priorities,” Sucher said. “As soon as you’re choosing, that’s where your boundaries come out. You’re showing people what you think by what you choose.” 

Sucher further clarifies that it’s not that business leaders can’t make good decisions. 

“It’s a choice to be in the business of making good choices,” she said.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *