Engaged WorkforcePerformance Management & Rewards

Boeing’s Recognition Runway

How do you keep 153,000 employees engaged? How do you reengineer a process in a company chock full of engineers? Boeing’s employee recognition solution sets some new standards for scope, scale, and savvy.

by Jay Whitehead

By now, Boeing’s Jacqueline Coulter has heard all the “noise” jokes. You see, of her 21 years at the company, she has spent nine in the aerospace giant’s “noise engineering” department. Now she manages HR. Just don’t tell her that she traded one type of “noise” for another. She won’t laugh.

For Renton, WA-based Coulter, Boeing’s manager of HR and recognition, HR is a return to her early calling—serving people. After all, she was inspired to earn her medical degree in clinical audiology and speech pathology at the University of Washington when her mom suddenly and for an unknown reason went deaf. Her acoustics expertise got her a job monitoring noise levels and counseling employees on protecting their hearing from the roar of jet and rocket engines and factory noise. Then, in a career move that reflects her passion for health and wellness, she started managing a segment of the company’s occupational health program. Finally, in August 2004, she inherited the company’s formal employee recognition program, which had been underway since 2000.

We all have sat in Boeing’s commercial planes—the fleet of 707, 727, 737, 747, 757, 767 and 777. Some of us even know that Boeing also makes military products and space systems. With 153,000 employees and $55 billion in revenues, Boeing is No. 26 on this year’s Fortune 500 list. It owns the world’s largest building—where giant planes are assembled in Everett, WA. In a move that ruffled a lot of feathers in the company’s original home state of Washington, the firm shifted its headquarters to Chicago a few years ago.

Boeing is the type of company that moves international stock markets when it announces news, which happened on April 13 when it announced an 80-plane, $4 billion deal with China that sent stocks flying in New York and London.

Because it is locked in a Pepsi-versus-Coke-type battle with the French consortium Aerospatiale for commercial and military contracts, Boeing understands that the difference between winning and losing a big deal often comes down to one thing: people. But as a company that is highly unionized and traditionally paternalistic, Boeing has been anything but an early adopter in HR outsourcing. On the topic of HRO, you could even call Boeing overly cautious.

As a large employer, Boeing is looked upon as a leader in how it treats its human assets. As a result, it is a coveted account for HRO providers. So when Rideau Recognition took over the airline company’s employee recognition programs from multiple vendors in 2006, there was a lot at stake, not the least important part of which was moving the dial on that most important of company human capital measures: employee engagement.

As a performance metric, “employee engagement” gained popularity after the Harvard Business Review first reported in 2004 that companies with the highest “engagement” levels were nearly always the profit leaders in their field. The 2004 and 2005 Corporate Board surveys on the same topic also found a remarkable correlation between high scores and profit leadership. HR leaders followed suit and started seeking reliable ways to improve their “engagement” scores. As many of them soon discovered, a formal employee recognition program is by far the most cost-effective engagement-improvement tool for employers.

Employee recognition’s effectiveness makes sense when you consider one fact, says Peter Hart, CEO of Boeing’s provider, Rideau Recognition. “Employee exit interviews confirm one reality above all others,” he said. “Employees don’t quit their companies; they quit their managers.”

According to Hart, studies indicate that a connection (or failure to connect) between an employee and their supervisor is the primary determining factor in whether the employee is motivated and stays at the company or is unmotivated and quits. This is the secret to employee recognition’s effectiveness—it hits right at the heart of the manager-employee relationship.

Boeing’s Jacqueline Coulter is clear about where her company stands on the topic. “Our top leadership is committed to recognition for a very specific reason,” said Coulter. “Recognition is directly tied to performance. Employees are our No. 1 asset. An employee who is recognized feels valued and is more involved and engaged. The more involved and engaged they are, the better their performance. As we get more sophisticated, we realize how important and cost-effective it is to recognize people and keep them engaged. This may sound funny, but it is amazing how much you gain from a simple thank you, including positively affecting the bottom line.”

When Coulter arrived in August 2004, Boeing’s recognition program had three different pieces: service awards, cash awards, and Pride@Boeing, with products and services delivered by separate suppliers. Service awards were highly valued pins for 5, 10, 15, and more years of service, along with a catalog of award merchandise. Cash awards of $250 or more were given by managers to employees.

The Pride@Boeing awards appeared in 2000 after McDonnell Douglas and Boeing merged in 1997. Coulter characterized this award class starting off as “rather grass-roots, infrequent, and informal.” When she arrived, the company was at the end of a contract term with their incumbent recognition suppliers, and employee survey results indicated lots of room for improvement.

“When I came in, I asked a lot of questions to learn more about the process,” Coulter recalled.

After reviewing survey results and learning more about the company’s recognition program and its connection to employee involvement and engagement, Coulter realized that engagement is both intellectual and emotional, not just about whether an employee is satisfied or happy.

“If they’re not engaged, they’re not connected with their manager or their company,” Coulter explained. “Recognition became one of the tools that we use to reinforce the principles, practices, and behaviors that help drive the needed business results. It is the main dial for employee engagement. It is not the only dial. But it’s a big dial.”

Coulter envisioned a two-phase program for improving recognition’s results. The first phase was to stabilize the foundation. This included addressing several tax issues.

“Award taxation is a thorny issue. It differs by state, by type of award, and the federal regulations are more complex than quantum physics,” she said. “It took us a while to tie up all the loose ends.”

Another key part of this first phase was to look for a global solution with a single supplier.

“We needed an e-commerce platform,” Coulter explained. “We have a large virtual population. The old way with catalogs was not working. Employees throughout the company did not have the resources at their fingertips that they needed to easily complete their transactions. As a result, people were not redeeming awards.”

Boeing circulated an RFP in mid-2005 to a short list of recognition providers. The main objective was finding someone who could take the program to the next level around the world.

“We narrowed it down quickly,” Coulter said. “The e-commerce solution requirements are complex. Ultimately, we found one provider who could meet our needs.”

In August 2005, Boeing signed a contract with Montreal-based Rideau Recognition for a program set to go live in January 2006.

Once the program launched, Coulter recalled one of its first tests. “Users were looking for immediate gratification,” she explained. “We went from a worst case scenario of 25- to 28-day turnaround to one-day, nomination-to-delivery time. Based on recent survey results, users are now much happier.”

In addition to rapid turnaround, phase one successes included manager and employee alerts that awards had taken place and enhanced reporting tools. All awards are based on a points scale. It also incorporated feedback from the employee survey results. The survey takes place in May, and results come out in August. “We heard what our employees said in 2004/2005 and what they were looking for, and we acted,” she added.

The program’s phase two—started in April 2006—was focused primarily on enhancements to the cash awards program and added enhancements to the service awards and Pride@Boeing programs. A key feature of phase two is to allow managers to access real-time reports on their people, see upcoming anniversary dates, and manage their budgets for all types of rewards at one online location. That means the recognition provider, Rideau, is also touching the cash awards, but passing it through as a way of being able to report on it.

The second phase, Coulter noted, is also about changing the manager-to-employee connection “in a way that connects our corporate vision to the behaviors that deliver results.” For Coulter, that translates into a move away from lifestyle items into symbolic awards in the company’s service awards program. “Away from a bicycle, for example,” Coulter explained, “to a Boeing company painting by a local artist of a Boeing product or logo-stamped items. And a much larger selection as well.”

Managers who use the tool have also asked for more tutorials and tools for creating a more meaningful recognition experience. “Really, people are not so much looking for the merchandise. They want the personal connection, the heart-felt thanks for a job well-done,” she said. “It does not cost a lot, but it is very hard subject on which to train people.”

One of Coulter’s recognition team members is Carl Kurtz, a 43-year company veteran. Nearly all of his years have been spent in recognition and retiree-related work. In HRO Today magazine’s experience, Kurtz may own the one-company record for the largest number of employees touched directly and indirectly in a recognition setting.

“If you add them all up, I’ve touched 500,000 employees total, 150,000 of them face-to-face,” Kurtz told me. “In all those years, I’ve helped lots of people stay connected to the company’s goals, but these new tools make us so much more effective; they super charge our efforts.”

Looking back on her and her team’s efforts to give Boeing a world-class recognition program, Coulter credited a fresh perspective for being able to tie all the company’s programs together and build much more value.

“It’s a comprehensive, one-stop solution that is compelling,” she said. “If we had left the service awards, cash awards, and Pride@Boeing programs separate as was the original plan, we would have cut our effectiveness by two-thirds and risked non-compliance for taxes, and real-time data management would have been impossible because of the numerous data sources that we were dealing with.”

For a large American defense contractor such as Boeing, hiring a Canadian firm such as Rideau posed a few more issues. But for a one-vendor approach, apparently some prices are worth paying.

“I came into the group at an opportune time,” Coulter, the mother of two boys and a girl, said with a smile. “Because as a working mother, I think I understand the value of one-stop-shopping.”

Boeing’s Employee Recognition Program

Jacqueline Coulter’s Seven Lessons Learned

1. A recognition culture starts at the top. Lead by example, from the CEO to the shop floor employee.

2. The need for speed.
Today’s workforce demands rapid turnaround and rapid adaptation in your solutions. That means employing technologies that can handle scale and unlimited geographic scope. When there’s a change, you’ve got to make it happen quickly.

3. Don’t assume you know the solution.
Pay attention to the surveys. Ask for people’s input. People will embrace that which they help to create , rather than accepting it in a vacuum.

4. Communicate, communicate.
For a company the size of Boeing, involving people in the process and communicating what is going on—what the plan is—is critical.

5. Variety.
Managers and employees want more options in using awards. Get creative with gift cards, airline tickets, and weekend getaways.

6. Use the golden rule:
Treat your employees the way you want them to treat their customers. The significance of the personal touch can be measured in a marked financial return.

7. Proactive perseverance.
Believing in an approach and passionately sticking with it gives a huge sense of accomplishment. With a company the size of Boeing, we’re executing massive culture shifts—from a culture of entitlement and achievement-based to a performance-driven culture that recognizes the behaviors. It’s not “I do this, therefore I deserve that.” It’s not an entitlement; it’s an encouragement. It’s a focus on the proactive, not management through the rearview mirror. You reinforce a behavior, which eventually delivers results.

 

Provider’s Bird’s Eye View: Peter Hart, CEO of Rideau Recognition

Recognition, ReEngineered
“Boeing is a company of engineers. It had an original S.O.W., or Statement of Work for their old recognition program that was 30 to 40 pages long, documenting every step. Because the old plan operated all the recognition programs separately, managed by different vendors, the proposed solution required throwing out the book.

“There are many stakeholders at Boeing, all with their own interests. So we got them all together—finance, taxation, HR, communications—to agree. If we kept to the old S.O.W., it would have been anything other than a best-practice program.

“Research shows that 90 percent of Fortune 1000 companies have employee recognition programs, but only 60 percent of employees feel recognized. Reengineering the program was essential, and fortunately Boeing is visionary enough to allow us to rip up the old S.O.W. and write a new one. They did not just put paint on the old car. They got a whole new car.

Bundle, Bundle, Bundle
“Boeing is a great example why companies need to look at all their recognition programs together, holistically—for service, performance, instant awards, cash, safety, and customers. What are their objectives? Do they conflict? Are they in sync? Are they tax-compliant? Are they bundled as an online destination for users? Were there enough different disciplines on the recognition teams—IT, finance, payroll, HR, communications? Do managers know the proper way to use recognition to reach their goals?

“Boeing was wise enough to understand the need for this holistic approach. Here’s an example how the old program was out-of-sync. In the old service award program, a hot item was a cooler for five years’ service, but in the performance program, you could get that same item every single day from the catalog. Don’t put lifestyle items (like coolers) in your service award program. Service awards are “estate” items that get handed down to your kids. Our best-practice solution was to take all the programs, make sure they were in sync, then wrap them with an e-commerce solution into a recognition portal. We have other clients who have taken the same approach, such as Royal Bank of Canada. If you look at RBC’s program, it is what Boeing’s program is evolving toward.

Scale Matters
“In recognition programs for big companies, scale matters, both in good and bad ways. In taxation, Boeing’s has reengineered its program to include a tax assist on employee awards. Now, we integrate with their payroll department, and a feed goes out every night. This could never happen if all the programs were separate. With one integrated solution, we have greater opportunities to use data to build and strengthen the program.

“In technology, one company, even one as big as Boeing, would never approve spending to build the technology with enough scale to support a recognition program like the one they have now.”

Tags: Engaged Workforce, Performance Management & Rewards

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