Social Responsibility in Boeing – Case Study

Posted: August 13th, 2013

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Social Responsibility in Boeing – Case Study

Q1

The ethical and unethical behavior in Boeing affected several stakeholders. First, the boards of directors were affected by the hiding of financial information. This action of the employees affected the organization’s reputation. The board of directors is expected to oversee the operations of the company, any misappropriation or embezzlement of funds by the company discredited their work. The ethical issues that occurred in Boeing during this period therefore greatly affected their moral standing as the highest authority responsible for the organization’s operations. The incident whereby Boeing managers were found in possession of stole n documents, the collusion between Boeing managers and Darleen Druyun, sexual discrimination allegations and the Stonecipher’s misconduct had a heavy impact on the Boards role in ensuring ethical standards were adhered. It painted the board in bad light and even implied that they promoted misconduct within the organization.

Other stakeholders that felt the impact of the ethical and unethical misconduct of the company were the employees. For instance, the gender discrimination allegations directly affected female employees. Female employees at Boeing claimed they were lowly paid and unfairly denied job promotions. This affected the female employees especially. They were denied their due wages because they were women. They faced unfair treatment at the company even though the law protected them against such unfair treatment. Another issue that affected employees was the cancellation of orders by Pentagon and the massive $2.6 billion loss experienced by the company after the merger with McDonnell Douglas. These two incidents lowered the company’s revenue during the affected years. A fall in company revenue means a reduction in finances. This might have affected employee rewarding schemes, salary rates and wage rates. There were therefore less financial rewards for employees. Subsequent changes in the top management that occurred because of the misconduct had a great effect on employee morale. The resignation of the CFO Michael Sears was closely followed by Condit and Stonecipher’s resignation. This created great confusion and instability in the company. The new managers introduced new methods which were probably not well received and which in turn disoriented staff members.

The ethical and unethical behavior of Boeing management also affected the government’s relationship with the company. Boeing’s was a trusted trade partner with the government given the previous business partnership concerning the supply of airplanes. The possession of documents stolen from Lockhead Martin soured the relationship between Boeing and the defense department. The previous business relationship Boeing had enjoyed with the defense department regarding the supply of airplanes and other equipment was greatly affected. The trust that might have previously existed between Boeing and the department had changed into mistrust. This incident triggered a backlash that resulted in the cancellation of the Boeing’s orders from the defense department and a further 20 months ban from bidding on any government orders. The government reaction to Boeing’s behavior showed how the possession of stolen documents had influenced their relationship.

Q2

During Condit and Stonecipher’s tenure as managers in Boeing the company adopted a defensive approach to corporate social responsibility. According to this approach, a company adheres to the lowest legal standards and disagrees that it has committed any wrongdoing even if there is clear evidence of misconduct. Companies that adopt a defensive social responsibility show no responsibility for their actions. Such companies accommodate ethical and legal misconduct within the organization. Their main aim is to make the highest profits. The profit objective is given the highest priority compared to being socially responsible. They thus resort to using the law to hide their irresponsibility. Companies that take the defensive approach do not avoid acts of social irresponsibility but rather try to clear the consequences using legal means. There is usually very little effort to combat issues of ethical and legal misconduct that may arise within the organization. Boeing represents a perfect case of the defensive social responsibility stance during Condit and Stonecipher’s tenure as managers.

Boeing did not try to avoid unethical issues but rather tried to provide arguments and excuses after they had happened. During Condit’s time as manager, he failed to create policies that would harmonize relations between Boeing and McDonnell Douglas. As a result, Boeing performed poorly after the merger leading to a $ 2.6 billion loss and a subsequent lawsuit that cost the company $92million in damages. Characteristic of the defensive approach to social responsibility, Boeing refused to admit liability for any form of misconduct. The defensive approach can also be seen in the legal suit that followed Boeing’s possession of documents stolen from Lockheed Martin. Even after the firing of Chief Financial Officer Michael Sears, which unsurprisingly came a year later Condit refuses to resign out of his own volition. Despite the evidence of gross misconduct that led to the prosecution of Sears and Druyun Condit only resigned after immense pressure from the board. During Stonecipher’s term, he was also forced to resign by the board for alleged misconduct and sexual harassment. Like his predecessor, he also did not admit liability for misconduct but only resigned amidst pressure from the board. Boeing therefore practiced one of the highest forms of defensive social responsibility during the period of this case study.

When McNerney took over as CEO, he changed the way things were done at Boeing. He adopted a different approach to social responsibility compared to the previous CEOs. McNerney introduced many changes in the organizational behavior and approach to ethical and legal issues. McNerney’s approach represents a proactive stance towards social responsibility. The proactive approach requires that companies prioritize social responsibility. The proactive company shows no reaction to critics of its social responsibility. The company however strives to improve its social responsibility. McNerney emphasized on the need to make legal and ethical issues a priority in every day organizational practice. He insisted on a complete organizational change. He saw the need for managers and employees to change their attitude towards ethical issues. He insisted on sincerity and responsibility in the way things were done. In a typical proactive stance, the new CEO insists on an open and clear policy on staff remuneration to avoid financial mismanagement. This insistence on openness and accountability is a characteristic of the proactive social responsibility approach. Another proactive factor that McNerney brings along to Boeing is the focus on employees. He plans to enhance teamwork and strengthen employees’ sense of purpose as well as introduce factors that will enhance employee motivation.

Q3

McNerney’s new policies are highly likely to improve ethics in Boeing. The ethical issues Boeing faced during this period resulted from the poor organizational management. Previous managers at Boeing did not prioritize ethical and legal considerations. Condit did not approach ethical and issues in a responsible way. Stonecipher, on the other hand, was found guilty of misconduct. Both managers were not concerned with instilling the basic ethical concepts in the organization. None of them would dare tackle the issue as both of them accommodated unethical issues in the company. He had previously committed employees to sign forms against any form of harassment. The lack of a manager leader who would guide the company by example was Boeing’s main problem. Previous CEOs were inadequately equipped to tackle the legal and ethical issues facing the workplace. They showed a certain level of tolerance for ethical issues.

McNerney’s plan to create a comfortable working environment through teamwork was a huge step towards achieving organizational change. It will improve cooperation between the workers of McDonnell Douglas and Boeing. This will ensure harmony within the workplace. Secondly, his insistence on a policy that focuses on workplace accountability and sincerity will help develop an organizational culture that appreciates the need to work according to ethical and legal considerations. His proactive approach and his insistence on a change in the way management approached ethical issues shows that he is ready to tackle ethical issues in the workplace. His preference to indulge the entire organization in the change process shows his ability to turn things around. Ethical considerations can only be approached from an individual perspective. McNerney knows this and prefers to take this approach in instilling ethical values in the organization. His leadership approach, policy changes and the focus on individual change to the way people view ethical and legal issues in the organization is the best way top instill ethical discipline.