Ethics and Harvard Business School

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WorldCom Critical Thinking Case Study

Not only did WorldCom’s organizational culture contributed to the accounting breaches, in my opinion it was the catalyst to its ultimate demise in July 2002. Richard Thornburgh stated that “WorldCom could not have failed as a result of the actions of a limited number of individuals. Rather, there was a broad breakdown of the system of internal controls, corporate governance and individual responsibility, all of which worked together to create a culture in which few persons took responsibility until it was too late.”1 The premise of Thornburgh’s statement is flawed because I believe WorldCom’s failure is a direct result of a culture created by a handful of top executives. Proper system of internal controls and corporate governance were never in place. “In addition to a culture of anything goes accounting, Ebbers was strongly against producing a corporate code of ethics. According to the SEC report, Ebbers described efforts to produce a corporate ethics code as a colossal waste of time.”2 Fraudulent behavior at WorldCom was wide-spread because its culture established what is appropriate and expected behavior. Culture comes from what “top management says and how they behave, which establishes norms that filter down through the organization.”3 Moreover employees “learn an organization’s culture through stories, rituals, material symbols and language.”4 So what did WorldCom employees learn? They learned the company encouraged “a systemic attitude conveyed from the top down that employees should not question their superiors, but simply do what they were told.” Over time, these messages became “the basic assumptions which are widely held as truth within the organization and anyone who disagrees is seen as idiotic or foolish and automatically dismissed."5 Although the following two examples are specific to WorldCom, they illustrate when employees belonging to a culture believe what others believe and doing as they do....
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