Page 28 - Insurance Times May 2024

While some have been keen to frame Boeing's problems Efforts to solicit dissenting views from more junior employees
around its equality, diversity and inclusion (EDI) efforts, this should be deemed a priority. So far, this is still missing at
argument is wildly unconvincing, reminds Taylor. What Boeing. Until the company appreciates that safety is non-
Boeing's problems actually illustrate is that despite negotiable for all stakeholders, from investors to customers,
corporations adding more women and minorities to boards Boeing will have to keep digging. A new CEO will not help.
and C-suites during the past several years, conformity of What is needed at Boeing is an entirely new mindset on core
thought and the strength of social ties are more powerful. corporate governance topics.

Groupthink Squeezing the supplier

Taylor quotes Nell Minow, a leading corporate governance If you develop a plan to squeeze your suppliers, you cannot
specialist, about boardroom groupthink: "We take these people just call it the 'squeeze the suppliers' programme. You need
of extraordinary ability and achievement. We put them in a a nice name. Boeing calls it 'Partnering for Success', explains
boardroom and there they suddenly become totally Guido Palazzo, ethics professor at the University of
incompetent. Why is that? My answer is that these are people Lausanne. What it means in reality is that suppliers have to
who have a genius for sizing up the norms of the room and reduce their costs by 15% while producing more. The
adapting to them. And that is a fabulous quality to have. But problem is that Orwellian newspeak does not keep doors
unfortunately, you've got 11 people like that - and one very falling off planes in the skies, he warns.
visionary, dynamic leader who controls their information, their
access to other people in the organisation, and even their Profit over safety
tenure and their compensation. That's not a good system." Boeing's acquisition of a struggling McDonnell Douglas in
1996 is identified by many old-timers "as the moment when
Board selection criteria vary, but while efforts have been Boeing went from being led by engineers to being led by
made to increase the independence of board members, business executives driven by stock performance".
personal and social connections still predominate. Many
studies demonstrate that members tend to have similar Boeing, the pride of American manufacturing, prioritised
backgrounds, political affiliations and even religious beliefs. financial gain over safety, with the federal government as a
collaborator, says Alec MacGillis in The New Yorker. He also
How is it that as Boeing and other companies have quotes Gregory Travis, a software engineer and pilot, who
diversified in areas such as gender and race, they seem not calls this "a collision of deregulation and Wall Street".
to have diversified their perspectives, or become any better While the 737 Max disasters were caused by a software
at preventing ethical scandals? feature, Boeing and regulators initially placed blame on the
planes' pilots.
Research by professor in management at Vanderbilt
University, Jessica Kennedy, has shed further light on Minow's Do risk assessments unduly focus on the physics of risk
observations: the more senior you are, the more likely you
dynamics and thus, chemistry becomes a blindspot? What
are to justify what the group is already doing - for better or were the considerations behind the McDonnell Douglas
worse. Her study of 11,000 employees across US
acquisition? Why was there reckless outsourcing of critical
government agencies found that senior leadership was parts of Boeing 787? Many of these risks emanate not from
almost 64% less likely to speak up against unethical practices
the shop floor but the boardroom.
than the most junior employees were.
Speaking up A fly on the Boeing boardroom wall could be just where to
begin analysing the information supply chain and spotting
Even if leaders created the very systems they oversee, they the signs of groupthink, supplier squeeze and profit over
become products of them over time. One useful mechanism safety - hopefully just in time.
to consider: give a group of younger employees and
executives an assignment to innovate and challenge the Courtesy: The article has been reproduced with the
existing board. Improved deliberation is certainly an asset, permission of Mr. Praveen Gupta. The article was contributed
but a healthy group dynamic is needed to achieve the by Mr Gupta for the blog of Chartered Insurance Institute
greatest advantage. Journal, UK.https://thejournal.cii.co.uk/

26 May 2024 The Insurance Times