Case Study “ Boeing Aircraft Company

The objective of this first assignment is to review some of the early Management Techniques discussion in the course and which are being used in an organisation via a case study. This is an individual assignment.

Read the Boeing case study and answer the following questions: –
1. What were the problems facing Boeing at that time?

2. Evaluate the leadership styles between Shrontz and Condit.

Your answer should be presented in the form of a report which should be approximately 1500 words long.

The appropriate use of diagrams, although not essential, is a useful skill to develop and will help you to keep to the word limit.

You must use concepts from the relevant lectures provided (and from your own research elsewhere should you wish).


1. Clarity of the brief, description of the Boeing organisation and the identification of the initial problems.

2. Analysis of leadership styles of the key players discussed.

3. Quality and accuracy of bibliography/referencing in accordance with the Harvard system.

To gain a distinction grade, the report must be in the correct format and have an appropriate numbering system, etc. It should explain fully how the concepts could be applied to the Boeing Aircraft Company case study.

Destroying the old hierarchies
Seth Lubove, Forbes, June 1996

At a recent charity event, Boeings Co s new chief executive officer, Philip Condit, donned a cowboy hat and belted out a rendition of the country and western classic Could I have this dance? A karaoke machine provided the accompaniment.
No one could imagine Condit s predecessor, Frank Shrontz, 64, a lawyer by training and a former Pentagon deputy, singing in the shower, much less in front of strangers. The change in personalities at the top of the world s largest aircraft manufacturer is rich in symbolism.
The seventh man to run Boeing since its founding by timber-man William Boeing in 1916, fifty four year old Condit is a Boeing lifer who faces the tough task of redefining Boeing s often confrontational relationship with its 108,000 employees workforce, tightly unionised by the militant International Association of machinists and Aerospace Workers. Nobody states the problem better than Ronald Woodard, the blunt spoken president of Boeing s Commercial Airplane Group: We have to understand that we are a manufacturing enterprise. We aren t an engineering, technology development enterprise. There s a world of meaning in that seemingly bland statement.
Booming on the surface, Boeing is in fact a company in transition. Much as they are technological marvels, today s passenger jets are basically commodities to Boeing s customers, the world s airlines. Their job is to move people and goods from point A to point B at the minimum cost consistent with safety. Boeing makes great airplanes, but so do airbus and McDonnell Douglas. Who gets the sale depends to a large degree on price, terms and availability.
That s what Boeing s Woodard means when he talks about making people understand that Boeing is a manufacturing company, not a high technology company.
Boeing jets represented two thirds of the dollar value of all commercial airplanes ordered in 1995. Boeing s defence division, already the prime contractor on NASA s space station, is competing on the Joint Stroke Fighter jet project, a potential $160 billion contract. Wall Street expects per share earnings to rise by 20 percent this year (before charges in 1995) to $2.75 on sales of $22 billion. The Street expects earnings to go on rising through the decade.
But that will happen in what is now a commodity business only if Boeing can do what companies like General Electric do so successfully: take costs out of the product and continue to take out.
Condit made his mark when he oversaw development of Boeing s latest generation airplane, the 777; know internally as the triple seven. Smaller than Boeing s humpback 747, the 777 is more distinctive for what you don t see than for its profile. It s a pilot friendly and airline friendly product. For the first time, the pilot s commands to the rudder and flaps are communicated electronically, rather than by cables and levers. Airlines can internally reconfigure such areas as galley and lavatories within as few as seventy two hours, compared with two to three weeks on older aircraft. No marketing detail was too small; even the toilet seats gently sink on to the toilet bowl, instead of loudly smacking. First put into service by United Airlines last June, the 777 is Boeing s first plane designed entirely on computers.
But for Boeing, Condit s biggest change was in the organisation of the program. Adopting the theme of Working Together, Condit broke down the old fashioned procedural walls within the company. In the past, design engineers worked independently of the production and operations people who actually built the plane. Here it is the designers would say; now go build it.
Condit instead organised hundreds of integrated design build teams, composed of members of all these groups. Each consults the other, so that the production teams aren t stuck with overly costly, hard to build design specifications, for example. This sort of reform, common now in manufacturing, came late to Boeing. None of us is as smart as all of us, Condit says, explaining his new integrated design strategy. He wants to reorganise the whole company along these lines. Explains Ron Woodard: We re trying to destroy all the old functional hierarchies.
This is where the job gets tough. Any significant changes involving the workforce still has to get past the Machinists Local, Boeing s largest union, and about 33,000 members. (Boeing s engineers are represented by another, less combative union, the Seattle Professional Engineering Employees Association.)
Say what you may about the shrinking clout of private sector unions in this country, the fact is that the machinists can still bring Boeing to its knees, as they proved during last fall s sixty nine day strike. The thing that s different is ten years ago we could have had a strike and delivered airplanes late to customers, and they didn t care, says Woodard. But today, a strike means lost sales.
Frank Shrontz hammered at reducing cycle times and cutting costs, to the point when Boeing now delivers an airplane within 10 months of the order, compared with eighteen months previously. He pushed toward greater standardisation of parts and shrank the workforce from 161,700 in 1990 to 108,000.
But Condit knows that making further gains in reducing costs and improving delivery time depends on making improvement in that amorphous area known as human relations. In naming Condit as his successor, Shrontz cited Condit s interpersonal skills “ not necessarily his engineering abilities “ as the characteristic he considered most important for the next leader of the company. We can make pronouncements up here all day long, say Shrontz, sitting in his orderly office overlooking historic Boeing Field. Phil is motivational. We need to motive people to understand the importance of the change and to help make it happen.
Unlike Shrontz, who was rarely seen on the shop floor, Condit frequently pops into plants unannounced, usually tie-less and dressed casually. Recently, he walked unescorted onto a 777 undergoing final assembly in Boeing s Everett, Washington, plant and asked the supervisor to leave the plane so the workers could speak without feeling intimated.
During the strike last fall, when most Boeing executives kept a low profile, Condit walked over to a group of picketers outside his Seattle office and chatted amiably about the proposed contract for four minutes. He even signed striking union member Tony Russell s picket sign. Addressing the message to Russell s wife, another Boeing employee, Condit wrote: We all need to work together.
Back at work now, Russell, a tool builder, is already seeing some difference in his job. Under the old, military style of management, if Russell detected something wrong in his engineering plans, he d have to go through his supervisor and the problem would move through the chain of command until it eventually reached the engineer.
Now Russell speaks with the engineer directly. When he was building the scaffolding for the 777 line for instance, Russell noticed that the metal deck he received was bigger than the deck on the blueprints. Russell called the engineer and quickly fixed the problem.
Multiply this sort of shortcut throughout the company as large as Boeing and you can see how much expensive time was wasted before. You can see, too, why it used to take the company eighteen months to deliver a product as complex as a giant jet.
When Phil Condit chats with workers on the factory floor, he s not just going through a public relations exercise. He is obviously sincere when he talks about making the workers partners rather than just a factor of production. Traditionally, when Boeing needed additional employees they would put applicants through extensive aptitude tests in an attempt to ensure that they were capable of undertaking the jobs.
A cynic might say that Boeing wants to weed out potential malcontents, but that misses the point. Boeing is also recognising that an efficient workforce is one that genuinely believes in what it is doing and gets along well as a team. Thus such questions as: How does a worker respond in a confrontation with a supervisor? None of this is now in manufacturing circles (Forbes, 9 Oct 1995) but it s a big change for Boeing.
Selection of supervisors and managers, too, will change. Rather than promoting a person who is good at, say, riveting, and making him a supervisor of rivets, the company will look for managers who can motivate, rather than intimidate, the workforce.
To underscore the emphasis on communications, at least symbolically, Boeing now sends annual reports to all its employees, not just shareholders. The company also put 75,000 employees through a programme that discussed the realities of a tough market. The message: We no longer have it made just because we re Boeing; the customer tells us our planes cost too much and take too long to deliver “ a message that is broadcast throughout the company.
It has been a cultural change, a fundamental change in the way we think, act and do, says C. Gerald King, President of Boeing s Defence and Space Group.
The machinist union is responding “ cautiously. It says it is willing to relax job specifications to allow cross training of workers. But William Johnson, president of the local branch that represents the Boeing workers, is hardnosed about sub-contracting, or what the union calls off loading work, now done in house. Boeing makes 52 percent of its plane parts in house and wants to shrink down to 48 percent. Management thinks it can save an estimated $600 million annually by such outsourcing. More important: outsourcing is a way to win favour from foreign airlines by agreeing to let factors on their home turf do some of the work.
In settling the latest strike, union and management compromised on outsourcing. Boeing agreed to give the union warning on any major sub-contracting deals and to retain surplus workers for other jobs in the company. In the old days we would have fired them, says Larry McKean, senior vice president of human resources.
But what is perhaps the biggest current irritant in management labour relations at Boeing remains the constant pressure on the workforce to meet constantly shrinking delivery schedules. Front line managers and the workers below them are evaluated on how fast they can get the planes out of the door. If the work falls behind, the team must go on overtime. They re trying to get into cross training, but we don t really have time, says a frantic Robert Boudreau, a lead mechanic on the 777 wing line, as he motions to a schedule that indicates his team is days behind on its work.
Many workers are cynical about the new togetherness the company tries to foster “ buzzers is their slag for the buzzword phrases like total quality management and world class competitiveness.
Daniel Mahoney, general counsel of the engineers union, sums up the dilemma neatly: You just can t have peer democracy in the workplace. We have these extraordinary leaders in management who are willing to treat the rank and file with great respect and listen to their ideas. But at the same time they have a responsibility to get the best product out on time.
But Mahoney doesn t deny that Phil Condit is doing this best to reconcile those seemingly irreconcilable objectives. Condit plans incentive pay and rewards for achieving individual performance goals. To make this point, he banishes Boeing s model airplanes to a display case outside his office and in their place displays his mother s black and white photos of children from around the world. He says he wants his employees to think, Gosh, the company is really interested in my welfare. And there can be no doubt: Condit really means it.
He rightly says that many new ideas are just old ideas the people forgot. Visit the restored converted barn where William Boeing first began building planes, he says. Designers were on the top floor: production was downstairs. If production people had a problem with a blueprint, they just walked upstairs for an answer. Can Boeing get back to that as an employer of over 100,000 people spread over 76 million square feet of factory floor? No, but Condit is determined to show that at the new Boeing, whilst aircraft are now a commodity, people no longer are.

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