But even though he was able to use the elusive language that was standard operating procedure in dealings like this--and tantamount to not saying anything about anything--the CEO was still grappling with having to make a decision without knowing all that he needed to know. "I was frustrated that we weren't in control of the problem," he says. "It was in control of us. It was far beyond us, far beyond us. One of my biggest fears was that the groundings wouldn't stop with those 11 planes and that it would spread to all the airlines. After a while I knew this wasn't likely to happen, but it was a real fear, and it still ate away at me."
But that was not reason enough for him to risk his company and disclose everything he did know. "If you have a business that's going to react to remote possibilities, then everybody's going to be nervous, and nobody's going to be able to do anything," says BDO Seidman's Graham. It's certainly true that the CEO's actions kept the company in operation. "I didn't inform everybody about everything," the CEO says. "Of course, the situation would have been different if an engine had exploded in air."
Not that that was likely to happen--or was it? At the time, press reports pointed out that there was the remote yet daunting possibility that engine fragments could break off, hit the fuselage, and cause a crash. A critical factor to consider, you would think, yet one the CEO admits he chose to ignore. Yes, he weighed the consequences of having his bankers and employees know. But as he tells it now, several years later, he never considered the lives that could be at stake. While he was valiantly fighting to save the jobs of his employees, shouldn't he have weighed his responsibility to passengers boarding other possibly defective planes? That, he claims, was the FAA's burden.
This CEO was concerned about the impact his decision would have on some of his constituencies--his bankers, his employees--but he neglected to consider the constituency with potentially the most to lose: airline passengers. As a frequent flier, a user of headache remedies, a driver of cars, a consumer of meals, I'd like to believe that standard ethical behavior calls for companies--and certainly the people at the top--to always consider the vulnerability of consumers in their decisions. Had he acknowledged that angle, would it have changed what he told his auditors? Not likely, and that, as it turns out, might have been appropriate, since the FAA exonerated his company of direct responsibility for the groundings and even concluded that passengers were never in danger. But safety should have been among his considerations before he signed that auditors' statement.
It's natural for leaders of fast-growing companies to become desensitized to certain outgrowths of their actions. But CEOs shouldn't allow themselves to become so numb that they can ignore situations in which the consequences are of potentially vast proportions.
Looking at every issue through the lens of a seasoned business owner who's conditioned to do what's necessary to keep a company alive and thriving, a CEO like this one can all too easily hide behind the regulator's responsibility, or boilerplate language, or standard operating procedures, and forget that sometimes there are much bigger issues to weigh in the equation. "What do I know about engines?" he asks now, by way of defending his reasoning. "As a businessman, I was looking at this in terms of my survival."
Jeffrey L. Seglin, an executive editor at Inc., has been named a 1998-99 fellow at Harvard University's Center for the Study of Values in Public Life.
Bulletin Board
Readers' Debate: Is it 'right' to go bankrupt?
April's Black and White feature (" Brother, Can You Spare 30¢ on the Dollar?") discussed the ethical implications of walking away from debt when your company goes bust--even when you have the personal assets to pay creditors back. George Naddaff, of Boston Chicken fame, defended his decision to pay about 30¢ on every dollar owed after liquidating an ill-fated coffee venture, arguing that he acted as the system requires. "When these laws were put into effect," he said, "you have to assume a lot of smart people gave thought to this." But do entrepreneurs in Naddaff's situation have a responsibility that extends beyond any legal requirements? Several company builders insisted that they do, arguing that it was just plain wrong not to pay people back in full, as they had chosen to do after their own ventures collapsed. "I have to sleep at night," noted one of them. In an on-line poll, voters sided with such pillow talk, with 58% of them agreeing that ethics demand that individuals make good on the debts their bankrupt companies leave behind. By comparison, 42% believed that assets other than those in the venture that goes belly-up aren't relevant. Here's a sampling from readers on both sides:
Todd Landrum, owner of Paladin Programming, a software developer in Denver, felt strongly that when a business tanks, its founders ought to suffer at least as much as any creditors: "George Naddaff is wrong, and he knows it. The law may be on his side, but he's confusing what is legal with what is right. Just one question for you, George: When the lawyers arranged for your creditors to be paid 30¢ on the dollar, did you adjust your salary accordingly?"
