Boeing Awards Taking Off in New Direction

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1 Feature: Boeing Awards Taking Off in New Direction Boeing Awards Taking Off in New Direction Boeing is adopting a high-tech, culture-sensitive employee recognition system to replace one that wasn't motivating its employees. By Bridget Mintz Testa ewards and recognition isn t rocket science at aerospace giant Boeing--but until recently, it was almost that difficult. A Fortune 20 company, Boeing employs nearly 154,000 people in 48 U.S. states and 67 countries. Thousands of those employees are unionized. Job types range from factory work in building civilian and military aircraft to aircraft mechanics, test pilots, engineers and designers of all stripes, executives, support personnel, Ph.D. researchers and, of course, rocket scientists. As if such a large, diverse workforce didn t make rewards and recog nition difficult enough, Boeing employees have endured brutal assaults on morale since the company merged with McDonnell Douglas in The two corporate cultures came together like crashing cymbals, and the result was nonstop discord. A succession of damaging ethics scandals began in 1999, reaching a low point in March 2005 when Boeing s board forced the resignation of CEO Harry Stonecipher because of his affair with a female employee. In September, Boeing endured a 23- day strike by 19,000 union employees. Despite all this, the company s recent financial performance has been excellent, with 2005 net income of $2.57 billion, up from $1.87 billion in Continued financial success is an explicit reason for the company s hard look last year at the rewards and recognition program put in place in Another reason was the need to eliminate the cultural divide and its discordant consequences. Boeing found that its program was complex, confusing, difficult to use, expensive-- and it wasn t motivating and engaging employees. In response, the company clarified its rewards and recognition philosophy, identified specific objectives for a new program and forged a relationship with a new partner to fulfill those objectives. Launched January 3, the revised Pride@Boeing program--which is Web-based and includes formal appreciation, instant appreciation, service awards and cash awards--is too new for much formal feedback.

2 But by March, it was already supporting thousands of daily interactions with employees and managers. Boeing s original rewards and recognition program used two separate contractors-- one for long-term service and another for performance. The two components weren t integrated, resulting in lots of problems. Lack of integration made the awards process labor-intensive and expensive, involving a network of 750 "focals"--people who served as touch points in getting award transactions completed. By no means were all 750 focals required to arrange any single award trans action, but the sheer number of people tapped to help indicates how complicated the rewards process was. It could take up to 28 days from the time an employee was no minated for an award to when he or she received it. "Recognition must be timely; it must be immediate," says Jacqueline Coulter, who directs Boeing s rewards and re cognition program as part of her job as manager of the Puget Sound Hu man Resources Service Center in Washington state. Waiting nearly a month for an award is bad enough, but in the old program, getting an award might not mean much notice for an employee--which is the point, after all. "With the old program, if an employee received recognition from someone other than his or her manager, that manager wouldn t know about it and couldn t recognize the employee," Coulter says. Distance made things just that much harder for Boeing employees based outside the U.S. "(The process) was kind of hit-and-miss before, especially for the international population," Coulter says. Tax and regulatory issues increased the complexity. "A big issue was how to address taxes nationally, by state, county, city and so forth," Coulter says. Certain awards that hadn t previously been taxed in the U.S. lost their tax-free status in Regulatory restrictions prohibit Boeing executives from receiving cash awards. Many Boeing union employees were also contractually prohibited from receiving cash awards, but when some unions negotiated new contracts in 2005, that changed. Privacy laws in the countries where Boeing operates vary widely. With all that, it s easy to see why the entire recognition process, which wasn t automated, needed radical change, beginning with a clearer philosophy. Program goals Good financial performance and customer satisfaction are the primary philosophical drivers for rewards and recognition at Boeing. "An engaged, involved workforce is a satisfied workforce," Coulter says. "A satisfied workforce is a high-

3 performance workforce, and a high-performance workforce produces customer satisfaction. In turn, that leads to good financial performance for Boeing." Another philosophical driver is the company s desire to encourage ongoing topnotch performance, good corporate citizenship and leadership, and any behavior that produces extraordinary customer satisfaction. "We need a culture of recognizing people for what they re doing, not just for what they have done," Coulter says. "We re trying to effectively and meaningfully recognize and reward the behaviors the company desires." Linking recognition to current rather than past events focuses everyone on ongoing performance and overall company strategies and goals. "It shows that what people are recognized for is linked to the company s business requirements," Coulter says. In implementing its new Pride@Boeing program, however, the company had additional philosophical goals: egalitarianism, cultural sensitivity and genuine relevance to employees. It s not easy to treat everyone equally when the workforce is huge and diverse. Yet that was vital for the new program. "The benefit of consistency is that everyone is treated the same," Coulter says. "We don t have to justify any differences." Egalitarianism also means making the program both available and equally userfriendly to every Boeing employee, whatever country they work in. The old program definitely didn t do that. Cultural sensitivity is crucial. "When we give someone a $100 cash award in the U.S., it s nice, but in New Delhi, that s a month s salary," Coulter says. "So what constitutes an appropriate award in the U.S. may not be appropriate elsewhere." In China, it s taboo to give sets of four of anything, such as goblets. The English word four is pronounced the same way as the Chinese word for death, a bad omen. "You must have a program that accounts for these cultural differences," Coulter says. If rewards aren t relevant to employees, they don t buy in and don t behave the way the company desires. So an important part of the new program was training for managers about the significance of recognition to employees. "It s very difficult to teach," Coulter says.

4 "Rewards must match the person," she says. "This is why it s so important for the leadership to understand their employees and what s meaningful to an individual. It all comes back to really getting to know that employee." Renewed Pride@Boeing To meet its goals, Boeing established a partnership with Rideau Recognition Solutions, a 94-year-old company with world headquarters in Montreal and U.S. headquarters in New York City. Technology that promised to automate and vastly simplify the entire recognition process was a major reason Rideau was selected, says John Mills, the company s executive vice president of business development. "If you can open a browser, you can use our system," he says. Boeing s new program has four elements: formal appreciation, instant appreciation, service awards and cash awards. "Formal appreciation is based on activity and behavior," says David Gladson, director of business development at Rideau and account executive for Boeing. Both managers and employees can nominate employees and teams for exceptional performance. Awards are delivered as points redeemable online for various types of merchandise, and Boeing covers all relevant taxes. Instant appreciation, currently available only in the U.S., involves small items like mugs, bags and pens that managers have on hand and can give to employees at any time to reward some specific behavior, event or accomplishment. Service awards recognize length of employment in five-year increments. They come as kits, with certificates and a choice of merchandise preselected for various service levels. Cash awards, from $250 to $5,000, go to employees for extraordinary performance. These awards are manager-to-employee only, and there s no tax assist on them. Every step of the new Pride@Boeing program, from nomination to award to redemption, is online and automated via Rideau technology. Also online are all the necessary program data: employee facts such as location and associated manager; cultural information; legal and other restrictions; domestic and foreign privacy laws; foreign tax laws; and U.S. tax data that includes federal, state city, county and municipal regulations. The only part of the process that isn t online is the physical distribution of awards, but that s linked directly to Rideau s warehouses in Plattsburgh, New York, and Montreal, so it s still automatic.

5 Benefits of the new technology-based solution are numerous. Through automation, a program that was complex, inconsistent and not always culturally suitable is now simple, egalitarian and fitting. The 750-person focal network is gone, replaced by automation. Cycle time from nomination to award is a single day. Managers are instantly notified if one of their employees is recognized. "The process is now a selfservice e-commerce environment," Coulter says. "Before, it was labor-intensive. Now, it s easy." All aspects of the nomination and awards process are consistent and integrated, regardless of a Boeing employee s location. When an employee or team is nominated for an award, the online data automatically comes into play, steering awards selections to those that are appropriate. "The company doesn t have to use additional resources to administer different programs, " Coulter says. "Now, the program is standardized and is delivered consistently across the company." Boeing sought to streamline and simplify its program, make it more consistent and easier to use for all employees, and reduce administrative costs. It accomplished those goals. However, the company s primary objective was to engage, involve and motivate its employees to satisfy customers and achieve corporate success. Though it s too early yet for formal metrics, there s every indication that the new Pride@Boeing has also achieved that goal. Says Coulter: "The program treats employees the way we want employees to treat customers." In rocket science, that s called a successful liftoff. Bridget Mintz Testa is a freelance writer based in Houston. editors@workforce.com to comment.