James Mcnerney: Leadership Ethics at Boeing

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Running head: LEADERSHIP ETHICS AT BOEING

W. James McNerney, Jr. and Leadership Ethics at

Boeing: Changing the Culture Starts with

Leadership Development

Stephen A. Kluckowski

Dowling College

Abstract
W. James McNerney, Jr. became CEO of Boeing in 2005 at a time when Boeing was embroiled in numerous scandals, including one which involved his predecessor related to an inappropriate relationship with a subordinate in violation of Boeing’s Code of Conduct. The choice of Mr. McNerney at that time was a good one given his well-deserved reputation as an ethical leader with strong beliefs in instilling values into a company’s culture, and his previous success at 3M where he was able to successfully modify 3M’s culture while improving its profitability and market value. Mr. McNerney focused on Boeing’s leadership development programs to instill an ethics-centric culture at Boeing, and tying compensation to compliance. He also made a business case for ethics at Boeing: integrity in business dealings can be seen as a differentiator to potential customers.

W.James McNerney, Jr. and Leadership Ethics at Boeing: Changing the Culture Starts with Leadership Development Since becoming CEO of Boeing in 2005, W. James McNerney has sought to change the culture at Boeing in the face of numerous scandals involving the company. This paper will examine: the causes of the ethical shortcomings at Boeing in recent years; how Mr. McNerney is responding to the challenge of overcoming a corporate culture which had taken a win-at-any-cost approach in doing business prior to his arrival; and whether Mr. McNerney possesses the necessary characteristics to be an effective leader at Boeing in successfully transforming the company’s culture. In determining whether he possesses the necessary characteristics to be an effective leader, I will evaluate Mr. McNerney in terms of “The Five Temptations of a CEO,” written by Patrick Lencioni: does Mr. McNerney focus on results; does he hold his management team accountable; is he afraid to make decisions; does he encourage productive conflict; and, is he open about his weaknesses? In 2003, three Boeing executives were charged with stealing proprietary information from a rival, Lockheed Martin, and violating federal procurement laws. A year later, Boeing became involved in an influence-peddling scandal in which it was shown that Boeing leadership was involved in influencing the bidding process for a US government contract involving a program to produce the next-generation of aerial refueling tankers (Pae, 2003). The CEO at the time, Phil Condit stepped down, and the CFO was fired when it was uncovered that they were involved in offering employment to the Air Force procurement staffer involved in the bidding process, in violation of Boeing’s code of ethics. At the time of Condit’s resignation, Steve Ellis of Taxpayers for Common Sense noted that Condit “created a culture where this type of activity was routine” (Pae, 2003, ¶10). Condit’s successor, Harry Stonecipher, was also forced to resign a year later when he too violated Boeing’s code of conduct when his affair with a subordinate came to light (Czarnecki, 2006). It was in this context that James McNerney accepted the position of CEO at Boeing in mid-2005. Based on his successful track record as a leader, James McNerney was a good choice for Boeing to lead it through very challenging times, and to affect a change in its culture. Mr. McNerney had led various divisions of GE during his 18 year career. Even though he wasn’t chosen to succeed Jack Welch when he retired in 2001, Mr. McNerney was a highly sought after leader, and took the CEO Job at 3M, a company that had always hired its CEO from within (Ford, n.d.). At the time, there was some concern that his GE background (increasing efficieny and discipline) would not mesh well with the 3M culture of innovation;...
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