Boeing is making significant changes to its employee bonus structure, shifting the emphasis from financial targets to quality and safety metrics in response to recent production challenges. The overhaul applies to the company’s nonunion workforce, which consists of over 100,000 employees, managers, and executives.
In Boeing’s commercial unit, the largest division, safety and quality metrics will now constitute 60% of annual bonuses, up from 25% previously. This change reflects a move away from the previous focus on financial incentives, which made up 75% of the annual award. Metrics determining bonuses will include employee safety, adherence to assembly line sequencing, and the amount of rework required to address issues.
Following criticism from regulators regarding quality controls and production processes, particularly in the wake of the January incident involving an Alaska Air flight, Boeing is taking steps to address these concerns. Regulators have imposed limits on Boeing’s 737 production as a result.
In Boeing’s defense and services units, financial metrics will still determine 75% of bonuses, with quality and safety being the sole factors in determining operational scores.
For executives and managers overseeing all units, including CEO Dave Calhoun, bonuses will be based on the average performance across all three divisions.
Boeing unveiled these changes during a recent employee webcast, emphasizing the importance of prioritizing safety and quality in their products. Stephanie Pope, the company’s operating chief, underscored the significance of achieving these outcomes during the webcast.
In a separate development, Boeing is set to commence negotiations with the International Association of Machinists and Aerospace Workers union this week. This union represents over 32,000 Boeing machinists in Washington state, including those at the 737 factory in Renton.
During negotiations, the union is pushing for wage increases totaling 40% over a span of three to four years, the reinstatement of a defined-benefit pension plan, and a commitment from Boeing to have its workers produce the next new jet.
The IAM previously agreed to forgo pensions and accept modest wage hikes in 2014 to secure the construction of the wide-body 777X in the Puget Sound region.
As negotiations begin, Boeing has not disclosed its specific goals. These talks mark the first comprehensive contract negotiations in 16 years, following extensions agreed upon by the union in 2011 and 2014.