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Boeing Works to Reshape Seattle Culture Amid 787 Woes

Jim Albaugh, head of Boeing Co.'s commercial unit
“The technical integrity of the engineering organization is second to none, but at times people were reluctant to share some of the views and thoughts they had,” Jim Albaugh, head of Boeing Co.'s commercial unit, said in a July interview. Photographer: Andrew Harrer/Bloomberg

Boeing Co., struggling with delays on the 787 Dreamliner, is working to reshape the corporate culture of its civilian aircraft unit by bringing in an adviser used after mergers a decade ago.

Senn-Delaney Leadership Consulting Group LLC was hired to help employees feel engaged and end a climate in which they sometimes were reluctant to speak up or ask for help, said Jim Albaugh, chief of Seattle-based Boeing Commercial Airplanes.

Deliveries of the 787 may not start until next year after setbacks to a 2008 target date for the first jetliner made mostly of plastic composites. Days before announcing the fifth delay in June 2009, Boeing had pledged the plane would fly within two weeks. Boeing said then that some people in the company had known about a structural flaw for several weeks before deciding it was serious enough to scrub the flight.

“The 787 has tarnished the company’s reputation,” said Pat Shanahan, who runs Boeing Commercial production and development. “We need to establish and show people what we can do technically and be predictable about it. Jim recognizes that and wants to get us back to this hallmark, so we can be recognized as innovators and as executors.”

Even as Boeing prepares the Dreamliner to reach the initial customers, the planemaker is working on modifications and replacements for its best-selling 737 and its most-profitable jet, the widebody 777.

Two Years

Bill Parsons, the Senn-Delaney partner in charge of the Boeing project, said redoing an organization’s culture typically takes about two years. Executives learn to foster personal accountability, openness to change, collaboration, integrity and realistic optimism, he said yesterday in an interview.

A team of six Senn-Delaney consultants met with Boeing’s senior leadership group in Seattle in January, followed by seminars with the top 1,000 executives, Albaugh said. A second phase is under way to reach all 7,000 managers. The commercial workforce numbers about 64,000 people.

Workshops by team leaders for rank-and-file engineers and machinists will probably begin in early 2011, said Mary Foerster, the vice president of communications and a member of Albaugh’s senior leadership team. Chicago-based Boeing declined to say how much it’s spending on the program.

Different Cultures

Albaugh, 60, who took his current post in September, worked with Senn-Delaney in his last position as head of defense operations to help assimilate four different cultures after Boeing bought McDonnell Douglas Corp. in 1997, Rockwell International Corp.’s space and defense business in 1996 and Hughes Space & Communications in 2000.

“The technical integrity of the engineering organization is second to none, but at times people were reluctant to share some of the views and thoughts they had,” Albaugh said of the commercial unit in a July interview. “I want to take that issue off the table.”

Foerster said Boeing surveyed employees earlier this year and plans a follow-up at the beginning of 2011 to examine whether the corporate culture has changed.

“Some of the 787 delays have had to do with communication issues -- getting problems up the chain and all that,” said David Strauss, a UBS Securities LLC analyst in New York who has a “neutral” rating on Boeing stock. “But some of it is also that Boeing hasn’t done a great job of realigning expectations when problems have cropped up.”

Delivery Plan

Albaugh said last month that the first Dreamliner delivery may slip into 2011, instead of this year, because of freshly discovered flaws. There are five test models flying now, and the company has assembled about two dozen Dreamliners at its widebody jet plant near Seattle.

Boeing fell 17 cents to $60.76 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have gained 12 percent this year.

Albaugh has said he may bring back some 787 work to Boeing employees from vendors and that the company’s engineers will be more involved with the next plane that’s built to help ease some of the supplier-driven glitches faced on the Dreamliner.

He installed Mike Delaney as chief project engineer in January and shuffled more than a dozen executives to strengthen program management. He said he also requires his engineering and operations chiefs to sign off that any plan for a new or modified jet has technology that’s ready and that cost and schedule estimates are realistic.

“Jim Albaugh is definitely trying to change some things there,” Strauss said. “Boeing has been pretty successful at taking people from the defense side, where they are forced by working with the government to operate under more structure, and bringing them over to the commercial side.”

Boeing’s defense business handles hundreds of development programs at once. That compares with a new airliner every 10 to 15 years, Shanahan said.

“Having an environment where people openly ask for assistance rather than being overly self reliant is good for finance, for human resources, for communications,” he said. “In areas where you want to improve execution, it’s even more important.”

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