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Boeing to Tie More of Employees’ Incentive Pay to Safety

Change to annual bonuses follows production problems found after Alaska Airlines door plug blowout


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.

 

The company on Friday kicks off negotiations with the International Association of Machinists and Aerospace Workers union, which represents more than 32,000 Boeing machinists in Washington state, including the 737 factory in Renton.

 

The union is seeking wage increases of 40% over 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 IAM in 2014 agreed to eliminate pensions and accept modest wage increases as part of a deal to ensure the wide-body 777X would be built in the Puget Sound region.

 

Boeing has yet to disclose its objectives in the talks. It will be the first full contract negotiations in 16 years, after the union agreed to extensions in 2011 and 2014

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