United CEO Fired: Decision-Making Off Course

As collateral damage from the government probe into the New Jersey urlBridgegate scandal, United Continental Holdings Inc. CEO Jeff Smisek and two top lieutenants have been permanently grounded, told by United to resign following an internal investigation.

While all of the facts of this matter are not publicly known, this much is. The United States Attorney’s Office for New Jersey has expanded its probe of the politically motivated lane closures on the George Washington Bridge, which occurred in September, 2013. The investigation now includes looking into other possible misdeeds by officials at the Port Authority of New York and New Jersey, including the former head of the agency, David Samson.

It appears that in negotiations for a favorable extension of lease terms at Newark Airport, United created a once-a-week non-stop route from Newark to Columbia, South Carolina, where Samson had a vacation home. After Samson resigned in late 2014, United cancelled the route. The indications are that United created the route just for Samson, to gain favor in its negotiations.

We can only guess at how all of that led to the career terminations of three promising and talented executives. The odds are that United’s internal investigation revealed approval or knowledge by Smisek and the others of a deal by United to get a sweet airport deal by doing a favor for Samson.

Whether that conduct was illegal on the part of the airline executives will be for the U.S. attorney and the judicial system to decide. It is possible, but unlikely, that the ousted executives considered their conduct to be a bribe—an explicit understanding that addition of the route was in exchange for a benefit—but did it anyway because it was unlikely to be discovered.

More likely is that the executives decided the favor to Samson to be an act more in the nature of normal business activity, like taking a prospective client to a ballgame or to dinner, hoping it puts the prospect in a better mood for negotiations.

But if that is what occurred, the decision making was certainly irresponsible and flawed. And it got the United CEO fired.

So why do smart people at a brand-name company like United make that kind of bad from-the-moment-it-was-made decision?

The answer: a conspiracy of human nature flaws and cognitive and psychological traps that we humans are prey to, and which cause executives in zealous pursuit of their employers’ interests to sometimes unintentionally and unknowingly cross lines.

If we speculate that the United executives had to decide the propriety of adding a route as a favor for an airport executive in order to get a better lease deal, we can imagine a thought process like the following: Since the route could have been added for legitimate business reasons and is available to the public at large, adding it to gain favor with Sampson could not have been unethical or illegal.

But what that thought process—if that was the thought process—ignores is that if the only real reason for adding the route was to benefit David Sampson, it looks scarily close to a bribe. In our highly overlegalized and overcriminalized business environment, anything that smacks of quid pro quo with a public official is the equivalent of touching the third rail.

Why didn’t the United executives see this? Likely, they suffered from overconfidence bias—a human condition which tends to cause us to overstate our ability in certain areas—in their ability at being able to discern acceptable conduct from unacceptable conduct.

Also, there was a dose of conflicted self-interest involved. In balancing the interests of their employer (to get a favorable lease) with the interests of the public at-large (having a bribe-free administration of airports,) the executives favored their employer’s interests. It is human nature, and the way our brains are wired, to favor our own interests when they conflict with the interests of others. This happens naturally, and often unconsciously.

How can executives combat this decision-making flaw? By engaging in an active process of evaluating all of the impacts on all of the stakeholders to a decision, even those not in the room. This exercise has a tendency of making decision makers conscious of the impact of conflicted self-interest, allowing them to steer away from bad decisions.

If decision makers sat around a table and ticked off the impact on the public, they would have a better chance to see a potential bribe for what it is.

The practice of responsible decision-making can help decision makers navigate around the unfriendly skies that got Jeff Smisek and his colleagues off course.

-Bob Greisman

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