This week saw yet another setback for Boeing, which found foreign debris in the fuel tanks of some of its fleet of grounded 737 Max planes, posing another potential safety issue in a long-running reputational crisis.
Already this year, leaked staff emails described the Max as being “designed by clowns, who are in turn supervised by monkeys”, and other employees stated that they would not allow their own families to fly on the plane. Last month Boeing reported its first annual loss since 1997, showing that the crisis is also beginning to bite in financial terms.
Boeing has not helped itself with its response to a variety of disclosures of safety deficiencies over the course of the crisis, initially appearing arrogant, aloof and dismissive. But the crisis itself was caused by technical issues, which are rooted in poor corporate governance.
The “clowns and monkeys” email is deeply embarrassing for a company that has always taken pride in its technical expertise, and whose stated values include “valuing human life and well-being above all else”. But it reinforces complaints from whistle-blowers and industry experts about substandard practices, safety concerns and a relentless focus on profits that show how far the company culture has strayed from those values.
The sense from commentators is that Boeing has become arrogant and taken its eye off the ball. Its governance had stopped functioning as it should, resulting in poor decision-making.
This can easily happen in businesses, especially when they are blinded by a single-minded focus on shareholder returns and short-term goals. But even businesses with a relatively strong focus on ESG can easily overlook the ‘G’ in a world in which high-profile environmental crises and social inequalities dominate the agenda.
They do so at their peril. Failure to maintain best-practice governance can be disastrous for a company’s reputation, and has resulted in some huge corporate crises and scandals, from Volkswagen’s use of ‘defeat device’ software to get its cars past strict emission tests, to Facebook’s misuse of data.
Effective corporate governance should reduce the risk of poor decision-making. It should provide a safety net to prevent mistakes before they happen. Yet time and time again we see self-inflicted corporate crises caused by a failure of governance.
It is not just major corporates that fall foul of flawed governance. We recently advised a relatively young and fast-growing business after being brought in to manage some heavy criticism they were facing from media and investors. What quickly became apparent was that while professionalising the way they communicated could bring about some improvements in outcomes (and has done so), the more fundamental challenge is to transform their governance procedures, which have not kept up with their growth as a business.
As communications advisors, our role in reinforcing to our client how reputationally damaging their governance shortcomings could be has been more important than our much more visible role planning and managing communications – or at least it will prove to be so in the medium term.
For Boeing, the process of restoring its reputation and trust will not happen overnight and things may get worse before they get better. It faces challenges on numerous fronts at a time when it has lost the confidence of regulators, customers, employees and shareholders. Communications can play an important role in this process of recovery. But navigating and recovering from a reputational crisis of this magnitude requires a much deeper and broader response, founded in a wholesale, independently scrutinised review of the company’s governance from the Board down.
Companies make mistakes, of course. But mistakes can be hugely costly for both the business and others – primarily in the case of Boeing, hundreds of people who have tragically lost their lives. This is why good governance is so vital: it exists to minimise the harm caused by mistakes, by poor decisions. Businesses that want to steer clear of serious reputational issues must make sure their clowns aren’t being overseen by monkeys.