Analysis Assignment 3

United Analysis

You are the internal auditor for a regional airline, Air Appalachia. The CEO, Jordan Bread, calls you into his office and provides you with the attached article about issues at United Airlines. The CEO indicates that Air Appalachia does not want to have the kind of bad publicity that United has had. The CEO also indicates that Air Appalachia will be experiencing growth in the future. Through purchase of gate space and acquisition of some smaller carriers, his goal is that one day Air Appalachia will be a national carrier. The article implies that the problem with United is its corporate culture. The CEO instructs you to determine what culture/corporate governance weaknesses exist at United. This may require additional research on your part beyond the article provided. The CEO then expects that you explain how these cultural factors and/or corporate governance deficiencies could be modified to create more ethical decision making. He informs you that Air Appalachia has modeled much of its corporate governance after United.

The CEO expressed confusion by the article indicating that ethics is an issue for United since United has a detailed Code of Ethics and Business Conduct. You realize the CEO thinks that a code of conduct creates ethical behavior in the employees. You determine that you will need to explain the role of a code of conduct within corporate governance. You will also need to explain that there are different types of ethical approaches that can be encouraged by a code of conduct. You have already determined by reading the article that United has encouraged employees to use an inappropriate type of ethical test in dealing with customers. You should clearly explain what ethical test these employees have been using and what test would be better to use in a service oriented business. Then you should explain how a code of conduct can be created to encourage employees to utilize a more acceptable ethical test when making decisions.

The CEO ends the discussion by asking you to write a memo regarding the issues the two of you have been discussing. Besides the above, the CEO has decided that all employees need to be exposed to ethics training to ensure that these kinds of mistakes are not made at Air Appalachia. You are to develop an outline for the training that should be included in the memo. As you leave the meeting, you recall your ethics course in college and think that you might have learned about some ideas that could be presented to the employees. You realize the one training session that the CEO is looking for could only last for a few hours. Therefore, you conclude that you need to keep the list of suggested training ideas to three or four ideas. You also realize you need to explain why you think each one would be good for the employees to experience and what benefit Air Appalachia will receive from employees becoming aware of these ideas.

Questions:

1. Describe the cultural factors and/or corporate governance issues that exist at United Airlines and how these deficiencies could be modified to create more ethical decision-making.

2. What role does a code of conduct play in corporate governance and ethical decision making?

3. What are the best ethical tests to be used in a training exercise at Air Appalachia?