Boeing’s board is in crisis – does it need a complete overhaul?

Boeing’s board has some decisions to make and questions to ask about whether it is up to the task of good corporate governance, especially given the mammoth task of resolving its current crisis.  

The saga around the aircraft manufacturer’s 737 MAX began in the late 2010s, yet here we are, years later, and it doesn’t seem as though the company’s fortunes have gotten any brighter. 

At the centre of it all are passionate accusations of a poor corporate culture, leading to negligent engineering practices and sub-standard aircraft taking to the skies despite significant flaws. 

It’s a huge corporate governance problem because as soon as you mention the word “culture” as the root of a crisis, you inevitably discuss the board of directors.

Culture begins and is continuously shaped by the board.

• CEO Davie Calhoun (in the role since 2020) will leave at the end of the year. 
• Board Chair Larry Kellner (in the role since 2019) will not stand for re-election. Steve Mollenkopf will replace him. 
• The CEO of Boeing’s commercial airlines division Stan Deal has also resigned; long-time Boeing executive Stephanie Pope will replace him. 

Here are the lowlights of how Boeing has handled the 737 MAX crisis.

It may have been a few years, but the loss of Lion Air Flight 610 and Ethiopian Airlines Flight 302 still frame the depth of Boeing’s problems. 

The two incidents were high-profile, and they stick in the minds of the media without fail. If any further problems surface within Boeing, journalists will contextualise them with these two hull losses. It’s no surprise that regulators, who consume this media and face significant public pressure, follow the same path.

The shocking images of a gaping hole in an airborne Alaska Airlines jet filled with passengers are hard to move away from, especially when we now know that the door plug simply “fell away” due to a lack of essential fastenings. 

Any stakeholders who see these images can’t help but think, “Really? Boeing again?” and see that gaping hole as a metaphor for the company’s leadership. 

But the Alaska Airlines incident is a huge governance failure in itself because, at a crucial time when the company must demonstrate progress and evolution, Boeing instead had to deal with fresh accusations of negligence and a lousy safety culture, indicating that it has not moved forward at all.

Corporate leaders have a problem when their best, most reliable customers express vocal anger, even worse when those best customers are global airlines with significant media presence. 

But that’s exactly what has happened here. Some key Boeing customers, such as America’s United Airlines and Europe’s Ryanair (already known for its sharp-tongued publicity), have expressed grave concern over Boeing’s ability to provide them with new—and safe—planes on time. Ryanair CEO Michael O’Leary even went as far as saying his own engineers have found spanners and other items in their planes left behind by Boeing engineers. 

Furthermore, while previously expressing support for Boeing’s leaders, O’Leary has now stated that he welcomes the top-level re-shuffle and that an overhaul of Boeing’s board was “much needed”.

It’s the critical question. Boeing will now have a fresh chair and CEO, but is the crisis deeper than that, and should more major changes be made to ensure the right people are at the helm? 

Realistically, this question boils down to two key requirements:

The string of crucial and catastrophic incidents gives stakeholders the impression of lax control. However true or untrue this might be from an inside point, it’s almost irrelevant; people have died, safety is still an issue, and something needs to change. 

Any change of this magnitude must start at the board level. That means being tough and cutthroat about sticking to high standards and asking the right questions, no matter who might be blamed. 

If Boeing’s board can’t do that in the format it currently exists, it’s an urgent issue that needs solving.

You’re in trouble if you don’t have the right expertise in the boardroom. It can’t get simpler. 

Right now, Boeing needs experts around its boardroom table who can lead, advise, and warn about the following:

• Navigation through PR headaches and reputational risk
• Crisis management
• Engineering standards
• Overseeing a change in company culture
• All of the above is in addition to the more “regular” expertise required to keep the company moving forward. 

Boeing’s shareholders—and even its own directors—are ultimately the most capable of answering whether these requirements are met. Given the bumpy road the company has been on over the last few years, it would certainly appear that they are not being met and that new blood is needed. 

You need look no further than the decision to appoint Calhoun—a qualified accountant—as CEO of a company facing an engineering crisis to see that the logic around needs and expertise might not be totally aligned.

Boeing is far from the end of this crisis. It is in the extremely unwanted situation of having to repair a broken international reputation and core culture. 

The board’s job in these circumstances is to ask the hard but vital question: can it lead properly? And if not, what does it need to fix itself?