Under fire for production snafus, Boeing is overhauling how it pays employee bonuses to emphasize quality and safety over meeting financial targets.
The move, one of many to address quality issues following the door-plug blowout on an Alaska Air flight, applies to Boeing’s nonunion workforce of more than 100,000 employees, managers and executives, according to a memo sent to employees and reviewed by The Wall Street Journal.
The biggest shift will be in the company’s commercial unit, its largest, where safety and quality metrics will now account for 60% of annual bonuses. Previously, financial incentives comprised 75% of the annual award, while the remaining 25% was tied to operational objectives including quality and safety.
Metrics 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.
Regulators have criticized the company’s quality controls and production process and imposed limits on Boeing’s 737 production in the wake of the January incident.
In Boeing’s other two units, defense and services, financial metrics will still determine 75% of bonuses. But quality and safety will be the only factors to determine the operational scores.
Executives and managers who oversee all units, including CEO Dave Calhoun, will be based on the average of all three.
Boeing announced the changes this week on an employee webcast.
“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,” operating chief Stephanie Pope said in the webcast.
Write to Sharon Terlep at sharon.terlep@wsj.com
Here’s your comprehensive 3-minute summary of all the things Finance Minister Nirmala Sitharaman said in her Budget speech: Click to download!