Desperate Air Case Study

The case study ‘Desperate Air’ sees George Nash facing a dilemma characterized by ethical decision-making that managers and executives need to make in a business environment. The ethical issue relates to the disclosure of an environmental problem connected with the sale of a property for DAC, that could delay potential cash inflows needed for the company to overcome “substantial losses, bankruptcy, and restore consumer confidence” 1.

After the first week of this class, my learning experience has taught me that facing an ethical choice is difficult and it’s paramount to build an ethical business environment, appropriate framework, and values that will in the long run support positive business results and build a favorable public image. Therefore, Nash as a representative of DAC’s stakeholders and community should have embarked in an ethical decision that would have considered the danger from these hazardous materials. DAC’s executives Williams and Nash should have shifted their focus on long-term sustainability and public safety, and not solely on DAC’s financial results.

There are similarities between the case study ‘How to Make Tough Ethical Calls’ by J. Seglin and ‘Desperate Air’ in terms of decision-making and stakeholders that benefited by these choices. In the first case, the CEO avoided disclosing a problem related to aircrafts’ malfunctioning parts, for the security of the company’s financials, safety of employees, and future business opportunities. The CEO final decision was driven by a focus on the company’s wellbeing and not on the risks associated with public safety and airline’s customers security. In the case of DAC, Nash “consulted with the DAC lawyer who told him that Florida law does not require the disclosure of hazardous substances”1, but disregarded the ethical perspective of caring for the lives of many communities unaware of such dangerous situation.

As in the Saglin’s case, this decision was focused on the financial performance of DAC and the need to close a vital sale of a property to avoid bankruptcy. To analyze the ethical decision considered by Nash and the most ethically sounded choice applicable to this case, the ‘mirror test’ mentioned in Saglin’s case offers an important perspective that “suggests four questions to ask yourself to determine a course of action”

Is it legal?

Based on Florida’s law there are no legal repercussion in avoiding the disclosure of such information. If they did it to you, would you think it was fair? No because it could distress the property appeal, purchase price, and create potential liabilities. What if it appeared on your hometown newspaper? This would develop a negative imagine for the company. Would you like your mom to see you doing it? She would not support it based on the outstanding controversial aspects.

The next step to deepen my analysis of this case relates to the RDCAR framework. The recognition and reflection aspects should have been addressed by raising this matter to upper management and understand their opinions. Additionally, Nash should have conducted an examination of risks versus benefits in case of disclosure, along with an analysis of repercussions on DAC and stakeholders such as cleanup and legal costs in case these hazardous materials were discovered after the fact.

As part of the discovery phase, DAC’s executives should enhance ethic audits procedures and revamp current environmental audit process, which failed to flag these hazardous materials. Also, transparency is key in this case, and Nash should embark into an honest (not secretive) decision, also to avoid allegations and repercussion for hiding this situation. In terms of cognition, Nash could have developed an ethical breakdown framework to present to the legal and management teams to discuss repercussions.

In fact, even though Florida’s law does not require disclosures, there are assumptions for probable litigations that might financially impact the company. In terms of actions, there is a need to “recognize unethical behaviors with suitable feedback, warning, punishment, or dismissals”3 with this framework DAC can establish principles and a code of conduct for all stakeholders. The RDCAR framework and the ‘mirror test’ would have supported the choice in selecting an ethically sustained and informed decision.

The repercussions of deciding not to sell the property can be negative for DAC with impactful financial and reputation risks. However, it’s paramount for the company to foresee a transformative change through tools like the RDCAR framework. With the development of a code of conduct, DAC would likely avoid a decline in stakeholders’ confidence and the development of future ethically controversial decisions.