Has Boeing Learned its Lesson?
Two weeks ago, Boeing disclosed a Boeing 737 Max wiring flaw delayed deliveries because of small scratches on wires in a group of undelivered 737 Max aircraft, caused by a machining error during production, leading to rework and first-quarter delivery delays. The Boeing 737 Max wiring flaw delays deliveries affects produced but undelivered planes, with Boeing performing fixes expected to take days per aircraft to ensure quality standards are met. Production continues at 42 jets per month, with plans to increase to 47 later in the year, and annual delivery targets of around 500 jets remain unchanged, according to Boeing statements.
“Our 737 program is performing rework on a group of airplanes to fix wires that have small scratches due to a machining error,” a Boeing spokeswoman said. “This ensures they meet our quality standards before the airplanes are delivered.”
The company added that production of new 737 Max airplanes proceeds at the existing rate, with some near-term delays impacting first-quarter figures but not year-end totals.
The Previous Problems with Safety
Neither Boeing or Boeing’s management have been held sufficiently accountable for the disasters that occurred in 2018 and 2019 when two fatal crashes occurred. Victims’ families have been unable to have their day in court. These accidents were caused by the faulty flight control software, Maneuvering Characteristics Augmentation System (MCAS), that led to the worldwide grounding of the 737 MAX fleet. I have co-authored an article with Bill Miller analyzes the safety culture at the company and concluded that Boeing had put profits ahead of safety.
The Boeing case shows how weaknesses in the internal control environment can lead to failures of internal controls and risk assessment. Moreover, the audit committee failed to live up to its responsibilities thereby compromising communications with the external auditors. The company failed to heed the warnings of whistleblowers, hoping instead that the defects in the manufacturing process would not cause operational problems. However, the problems with the 737 MAX planes were exacerbated by a lack of training for the pilots of the aircraft. The end result was two major crashes that caused the death of 346 passengers and crew.
Responsible Leadership
The concept of Responsible Leadership is generally credited to Thomas Maak and Nicola Pless.They developed the theory using stakeholder analysis with a “relational perspective” which is the center of leadership. They believe that responsible leadership and good character go hand in hand. Good character (responsibility, accountability, and integrity) forms the moral foundation for ethical decisions. The following are characteristics of a responsible leader.
- Exercise sensitive and moral judgments in all their activities.
- Accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate a commitment to professionalism.
- Maintain objectivity and be free of conflicts of interest in discharging professional responsibilities.
- Discharge professional responsibility to the best of the employee’s ability.
- Interact with stakeholders to communicate problems with the internal control environment.
- Be responsible and accountable for decision making.
Responsible leadership is an essential component of stakeholder theory. Stakeholder Theory starts with “the assumption that values are necessarily and explicitly a part of doing business. It asks managers to articulate the shared sense of the value they create, and what brings its core stakeholders together.” Stakeholder theory asks two key questions: “What is the purpose of the firm?” and “What responsibility does management have to stakeholders?” The second is of great concern in the Boeing case.
In the case of Boeing, as for all airlines, the company’s objective is to provide a safe flying experience for their customers. Management is responsible for building a safety culture that supports this objective. In particular, it should ensure that all safety protocols have been followed, all defects corrected, full compliance with FAA rules, and consistent behavior that satisfies Boeing’s own code of conduct. If management fails to act responsibly, the stakeholders may bring legal action against it, as occurred in the Boeing situation.
Boeing’s Culture
The systemic problems at Boeing were linked to another culture––a corporate cost-cutting one––that former CEO and board chairman Muilenburg seemed proud of. Boeing claims to have a speak-up culture that may have motivated at least two employees to inform top management of design defects, but the company did not support them in their efforts to correct the problem. John Barnett worked in quality control and reported safety and quality control issues to Boeing and the FAA. Boeing’s own internal investigation corroborated his complaints and the FAA ordered remedial action to correct the defects. Barnett subsequently filed a whistleblower complaint alleging he was harassed, intimidated, and forced into early retirement in 2017. He brought a whistleblower’s lawsuit alleging that the company prioritized production speed over safety and installation of substandard parts. His lawsuit, initiated under the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century whistleblower protections often cited alongside the Sarbanes-Oxley Act in corporate retaliation cases, was in litigation for seven years prior to his death. Barnett was found dead in March 2024, before testifying, from a self-inflicted gunshot wound.
In a U.S. Senate Hearing of the Homeland Security and Governmental Affairs Committee on April 17, 2024, Boeing quality engineer Sam Salehpour testified that he had been threatened for raising concerns about gaps between key sections of the 787 Dreamliner aircraft. He mentioned serious concerns stating “Despite what Boeing officials state publicly, there is no safety culture at Boeing and employees like me who speak up about defects with its production activities and lack of quality control are ignored, marginalized, threatened, sidelined, and worse.”
Boeing is a perfect example of a company that doesn’t ‘walk the talk’ of its own ethical standards. The culture of a company is negatively affected when its own rules are ignored, and employees who try to do the right thing are punished for it.
Quality Controls
Quality controls are firm-wide policies designed to ensure audits comply with professional standards and regulatory requirements in developing reporting mechanisms. Along these lines, key controls include conducting engagement quality reviews and implementing corrective actions to prevent future deficiencies. The violations of quality control may explain why pilots were not properly trained on the MCAS system and made the board’s job more difficult because they did not have a mechanism to receive periodic reports on safety, and it never learned about any employee or whistleblower safety complaints.
The FAA found that out of 89 product audits that were conducted, Boeing passed 56 and failed 33. An independent expert review panel identified that Boeing’s safety culture did not match its stated “foundational commitment to safety.”
Summing it Up
Ethical leadership and the internal control environment have a complimentary relationship whereby leaders establish an ethical tone at the top to recognize integrity and ethical values as the foundation for a culture that promotes transparency and accountability, enabling controls to operate effectively, and strong controls to ensure compliance with ethical rules and regulations.
The Boeing case can be used as a “teachable moment.” The overriding issues are the ethics of the internal control environment including risk assessment, internal control and the corporate culture, internal financial reporting and the audit committee, the speak up culture, whistleblowing and retaliation, cost-cutting and profitability versus a safety culture, a culture of compliance, and looking for and acting on red flags.
Lapses in ethical judgment by superiors can destroy trust and lead to the subordination of judgment, as Boeing discovered having ignored safety standards and whistleblower reports. When differences of opinion exist, the decision maker should be honest and candid, meet professional responsibilities, take the matter up the chain of command and report any differences to the audit committee or the board of directors. The fact that Boeing lacked an active and involved audit committee meant too much power and influence was placed in the hands of top management—Dennis Muilenburg in the case of Boeing.
Accountability and leadership are critical components of an ethical control environment. Boeing failed on both counts. Yes, there was strong leadership but it was not from an ethical perspective, instead emphasizing profitability and market share, which was important in its competitive race with the European competitor, Airbus, but not in product safety. Once the problems about the safety of the 737 became known, Boeing did not act quickly to right the ship. It was hoping against hope for a particular outcome, even when it was decidedly unlikely.
Blog posted by Steven Mintz, Ph.D, on March 26, 2026. Dr. Mintz is a professor emeritus from Cal Poly San Luis Obispo. Find out more about Steve’s activities by visiting his website.