Boeing is a venerable American icon with over 153,000 employees and net earnings over $1.5 billion in 2005. Yet, the company has been hit by a number of ethical scandals over the last few years that have caused people to look at Boeing in a different light. The scandals range from obtaining improper advantages in government contracts to misbehavior by senior executives. New CEO Jim McNerney has to change all of this if he has to set Boeing right.

Case Question 1:  Which organizational stakeholders have been affected by ethical or unethical behavior at Boeing?  Give specific examples.

When Boeing settled a shareholder lawsuit for $92 million in 2002, the losses were eventually borne by the investors.  The loss of the governmental contract following the improper hiring of Darleen Druyun cost the firm $1 billion in sales and thus affected the investors as well as employees who may have lost their jobs in the wake of this.  The frequency with which the company changed its CEOs surely must have affected its financial results. In general, the stakeholders most affected by these scandals were Boeing’s shareholders and its employees.

Case Question 2:  What organizational approach to social responsibility did Boeing appear to use under the leadership of Condit and Stonecipher?  How do you think the approach will change under McNerney’s leadership?

Under Condit and Stonecipher, it appears that Boeing used the “obstructionist” stance to social responsibility.  According to this stance, the organization typically denies or avoids accepting its responsibility.  The shareholder lawsuit upon the merger with McDonell-Douglas was settled without admittance of any wrong doing.  Similarly, the Darleen Druyun incident led to a court case. McNerney is an outsider to Boeing and such does not have any “baggage” that he brings to the firm.  He is likely to take a proactive stance to social responsibility.

Case Question 3:  Are the actions McNerney is proposing likely to improve ethics at Boeing?  If yes, explain why.  If not, tell what actions McNerney could take that would be effective.

While opinions may vary, it is possible that McNerney will succeed in improving ethics at Boeing.  First of all, he is an outsider and hence is likely to have the objectivity that both Condit and Stonecipher lacked.  Second, he is committed to change things at the company.  He insists on openness and accountability and plans to change compensation practices to ensure adherence to ethics.  Both in actions and words, McNerney has emphasized the need for change.