CEO’s Private

Investigation
SRME Case Analysis- FAS 20
Introduction

● Cheryl has take up the role of the new CEO of Hammond Aerospace. She was Preceded by
James Rawlings, who had taken the company to great heights
● She was formerly employed with Boeing, Hammond Aerospace’s competitor Where she was
handling the largest division
● James Rawlings was known to be been a man of immense charisma and iron will, a hard-
charging salesman who’d dominated Hammond Aerospace
Framework for effective, ethical decision making process
Facts
● James rowling, ex Ceo was fostering a work culture where anything went, as long as results
were achieved
● He single-handedly built Hammond aerospace from minor producer of airplane windshields into
one of the world’s leading aerospace companies
● The ends justifies the means and under-the-table transactions were more than anticipated
● Next in line to take James’s place from Hammond were Hank and Geoffrey
● Cheryl who was not a part of Hammond was chosen as CEO by board of directors
Issues
● Cheryl does not have enough information to start an investigation
● Rumours floating in the market about alleged slush funds for the purpose of bribing officials to
win large business contracts
● Could create an impression that the new CEO trying desperately to gain attention, and discredit
the past successful predecessor
● Lack of cooperation from the executive team
Alternatives
● Before actively engaging an internal or external investigation team, She can take some time to
collect information about the company
● She needs to be familiar with the people she is dealing with, their characters and their interests
● Sit with the Board of Directors of Hammond Aerospace to discuss and investigate the issue
● Consult outside help and fix things at her organization
● Stay quiet and do not take any initiative in this regard, unless there is a concrete evidence of
corruption
Stakeholders
● Hank Bodine was a potential candidate to the position of CEO.Having lot of experience and
power, he have a possible motivation to take control of the organization in a foul manner
● He also showed signs of hostility and did not deny any allegations
● Geoffrey Latimer, close to Hank, also tried to discourage Cheryl for obvious reasons. He laid out
various threatening situations in front of her
● His motivation might be to protect Hank
 Impact
1. Reputation of the organisation is at stake - customers will be weary, potential deals could go awry,
shareholders will be suspicious of all monetary activity in the company going forward

2. Reputation of Cheryl -

Negative - She will be known as somebody who is stirring up trouble as soon as she starts the new job,
or trying very hard to make her mark as the new CEO

Positive - She will be known as a no-nonsense CEO who is starting to take the company under her
control, and right the wrongs

3. Employees’ attitudes will change -

Negative - they will question working in an unethical organisation and some employees may also start
expecting under-the-table rewards

Postive - All employees, no matter what their position is, will respect the boundaries of ethics while
conducting business. All systems will become transparent, legal and fair once again
Action
● Cheryl would first need to weigh the risks of investigating her firm. There is already resistance
to a probe and that such resistance is only compounded when carried out by an outsider
● She can first proceed with a discreet investigation from her side to gain insight on know how
sales team operate in Hammond aerospace
● Seeking advice from law firm, given their familiarity to such investigations
Conclusion
● Based on previously made observations under the different heads of the framework, we can
understand that it will be premature to act on rumours
● It would be best for Cheryl to understand the work culture at Hammond Aerospace in order to
identify the problem better(if any)
● There is always a possibility that her hunch could prove to be true. In order to uphold high
standards of business ethics Cheryl could pursue here investigation individually to gather more
evidence before ordering for a full blown enquiry