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Boeing Enters into a New Era with Organizational Reforms

Boeing has been through a great deal of turmoil in recent years. The $2.5 billion settlement with the Justice Department last week marked a notable difference in how the company structured its internal monitoring, ethics, and compliance initiatives. The Boeing 737 Max was grounded after two plane crashes in Ethiopia and Indonesia claiming the lives of 346 passengers. Boeing employees admittedly engaged in a conspiracy to defraud the Federal Aviation Administration (FAA). Information withheld by Boeing employees resulted in knowledge about MCAS software being left out of the FAA final report and, therefore, not made available in airport and pilot training materials. The MCAS software was instrumental in each of the two crashes. According to David P. Burns, acting assistant attorney general of the FAA's criminal division, "Boeing's employees chose the path of profit over candor by concealing material information from the FAA..." He continued by stating, "This resolution holds Boeing accountable for its employees' criminal misconduct, addresses the financial impact to Boeing's airline customers, and hopefully provides some measure of compensation to the crash-victims' families and beneficiaries."

When a company goes through an ethical misconduct disaster, as did Boeing, their entire culture and structure faces scrutiny. Often the companies who survive these catastrophic events come through the other side much stronger and better prepared to manage their operational risks. Hopefully, the changes at Boeing have set them on this path. The company has restructured by separating product safety management from business unit management with the ultimate objective of preventing any similar shortfalls moving forward. In addition, Boeing added a board level aerospace committee to provide the highest level of oversight and awareness of the compliance process. This effort will allow compliance to function effectively and without any interference from other business unit priorities or profitability objectives. Roy Goldberg, an aviation lawyer with Stinson LLP summarized the actions of Boeing, "The main thing going forward is to make sure that pilots and engineers know they can speak up. You have to separate the business motive of Boeing and the safety. You can't have them tied together."


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