What the FAA Can Teach Us About Compliance

Posted on July 22, 2008 by mmjdiary

A report from Inspector General IG Calvin Scovel of the Department of Transportation on the FAA’s recent kerfluffle over the treatment of inspectors who threw down the flag on airlines’ safety inspections is a must-read.  IG Scovel understands culture, ethics, coziness, and all the related issues that get in the way of compliance.  There is nothing new in his recommendations, but therein lies the beauty of his report.  Doesn’t matter whether it’s a government agency struggling with safety and inspections or a company grappling with accounting standards and financial disclosures — there are checks and balances that can foster ethics, compliance, and truth. In his report, Mr. Scovel recommends the following:

  • Rotate FAA supervisory inspectors so that they don’t get too cozy with the airlines
  • Establish an independent group to review concerns raised by inspectors about airline compliance with FAA safety and maintenance requirements
  • Using a risk-based model vs. a rules-based model is indeed risky because standards slip when those affected by honoring standards and rules make their own determinations of risk for non-compliance.  That is, if you get to decide whether to do maintenance based on your own assessment of how risky a pass on the maintenance is, you probably won’t do the maintenance.  Fox guarding the hen house and all!
  • “A wink and nod” is not appropriate for regulators who see airlines that are not in compliance
  • “True will” is the stuff of effective regulation when it comes to demanding compliance from those who are regulated

There is some “push back.” as it were, from the airlines on the Scovel recommendations because of cost.  However, the FAA has been increasingly active in the last month, taking action on longstanding issues.  The FAA will spend $400 million over the next three years to add new lights to runways for the purpose of preventing on-ground crashes and has now finalized rules on fuel-tank flammability — at an estimated cost of $1.5 billion to airlines.

The IG has thrown down the flag, and the agency is responding.  The story is the same — honor the rules, encourage employees to speak up when those rules are violated, protect employees who do raise issues, and keep those who supervise circulating so that the laxnes of cozy relationships does not set in and usurp independence.   

 

About mmjdiary

Professor Marianne Jennings is an emeritus professor of legal and ethical studies from the W.P. Carey School of Business at Arizona State University, retiring in 2011 after 35 years of teaching undergraduate and graduate courses in ethics and the legal environment of business. During her tenure at ASU, she served as director of the Joan and David Lincoln Center for Applied Ethics from 1995-1999. In 2006, she was appointed faculty director for the W.P. Carey Executive MBA Program. She has done consulting work for businesses and professional groups including AICPA, Boeing, Dial Corporation, Edward Jones, Mattel, Motorola, CFA Institute, Southern California Edison, the Institute of Internal Auditors, AIMR, DuPont, AES, Blue Cross Blue Shield, Motorola, Hy-Vee Foods, IBM, Bell Helicopter, Amgen, Raytheon, and VIAD. The sixth edition of her textbook, Case Studies in Business Ethics, was published in February 2011. The ninth edition of her textbook, Business: lts Legal, Ethical and Global Environment was published in January 2011. The 23rd edition of her book, Business Law: Principles and Cases, will be published in January 2013. The tenth edition of her book, Real Estate Law, will also be published in January 2013. Her book, A Business Tale: A Story of Ethics, Choices, Success, and a Very Large Rabbit, a fable about business ethics, was chosen by Library Journal in 2004 as its business book of the year. A Business Tale was also a finalist for two other literary awards for 2004. In 2000 her book on corporate governance was published by the New York Times MBA Pocket Series. Her book on long-term success, Building a Business Through Good Times and Bad: Lessons from Fifteen Companies, Each With a Century of Dividends, was published in October 2002 and has been used by Booz, Allen, Hamilton for its work on business longevity. Her latest book, The Seven Signs of Ethical Collapse was published by St. Martin’s Press in July 2006 and has been a finalist for two book awards. Her weekly columns are syndicated around the country, and her work has appeared in the Wall Street Journal, the Chicago Tribune, the New York Times, Washington Post, and the Reader's Digest. A collection of her essays, Nobody Fixes Real Carrot Sticks Anymore, first published in 1994 is still being published. She has been a commentator on business issues on All Things Considered for National Public Radio. She has served on four boards of directors, including Arizona Public Service (1987-2000), Zealous Capital Corporation, and the Center for Children with Chronic Illness and Disability at the University of Minnesota. She was appointed to the board of advisors for the Institute of Nuclear Power Operators in 2004 and served on the board of trustees for Think Arizona, a public policy think tank. She has appeared on CNBC, CBS This Morning, the Today Show, and CBS Evening News. In 2010 she was named one of the Top 100 Thought Leaders in Business Ethics by Trust Across America. Her books have been translated into four different languages. She received the British Emerald award for authoring one of their top 50 articles in management publications, chosen from over 15,000 articles. Personal: Married since 1976 to Terry H. Jennings, Maricopa County Attorney’s Office Deputy County Attorney; five children: Sarah, Sam, and John, and the late Claire and Hannah Jennings.
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