Houghton is an experienced corporate executive with over 35 years of corporate and private sector experience, particularly in international commercial aviation. In 2020, he published his very first book, Concerto for a World in Crisis: Lessons Learned in the Worst Economic Crisis in 70 Years. His book was inspired by his experience of covering the largest airline company in the world at that time. He studied all aspects of the operations of this airline before writing the book.
In Houghton’s book, he presented a few facts about Lufthansa, which includes global exposure and non-stop flight service. This company is the second largest airline company in the world. Their financial position is unique.
Houghton also discussed many conflicts of interest and caused difficulties at Lufthansa. He argued that there were conflicts of interest between senior management of the company and the senior management of various aircraft manufacturers that Lufthansa dealt with. He argued that this resulted in poor decision making and hampered growth in the company. He suggested that the company should implement a management system to monitor and prevent conflicts of interest.
When we talk about Lufthansa case study solution, we can use this as a framework for thinking about how to solve similar problems. We need to identify the right kind of conflicts of interest to prevent the weaknesses that come from having a conflict of interest. We can draw from a case study for model conflicts of interest that lead to poor decisions. There are several models that we can consider.
Houghton named several conflicts of interest to consider. They include: taking a decision on behalf of company shareholders, accepting the management’s decisions without questioning them, using marketing personnel to do the work of analysts, assuming the worst, expecting a company to operate at a loss, and assuming everything will run smoothly. Houghton found that the company frequently operated under the fear of being taken over by competitors.
Houghton didn’t suggest that the conflict of interest were the only problem. The systems that he suggested did not work well. The whole structure of the company was such that the top executives had high bonuses for doing things that were important to the company’s survival. Houghton didn’t propose that there be a separation of powers, or a manager for the CEO, to ensure the proper governance of the company.
Houghton recommended that the company hire an outside consultant to investigate conflicts of interest at the company. He suggested that such an independent expert should audit the entire company to make sure no one is being paid to influence the performance of the company. The consultant would look at how many conflicts of interest existed, and then recommend the appropriate measures for controlling them.
Houghton’s recommendations include having meetings where management of the board of directors and senior management of the company are questioned about any potential conflicts of interest. The consultant should be able to detect conflicts early so that steps can be taken to resolve them before they become more severe.
Houghton’s recommendation is a case study solution to the problems associated with corporate governance. If a company has a large number of conflicts of interest that lead to poor decisions, it needs to have a consultant looking into its situation. In other words, it is a big problem that doesn’t involve something as complex as a case study solution. Houghton believed that companies should be required to report the number of conflicts of interest that their CEO had. He advocated that there be a company policy that prevents conflicts of interest. He felt that this policy would create a sense of accountability and self-control at the company.