Worldcom: Organizational Culture and Unethical Safeguards
WorldCom: Organizational Culture and Unethical Safeguards Organizational culture is one of four influences whether an ethical or unethical behavior will be made. WorldCom’s demise, deliberately overstating their income by $7 billion between 1999 and 2002; and their once valued stock of $180 million becoming nearly worthless, can attribute a significant amount of their failure on their “dis”organizational culture. Corporations worldwide who do not think this type of fraud can happen at the hands of a relatively small amount of people, are completely wrong. Bernie Ebbers, Chief Executive Officer, and Chief Financial Officer, Scott Sullivan’s classical view of social responsibility was the beginning of the end for WorldCom; this classical view shaped WorldCom’s organizational culture, and blinded how WorldCom should have safeguarded against unethical accounting breaches.
Ebbers and Sullivan’s Classical View of Social Responsibility
Ebbers was one of nine investors of Long Distance Discount Services (LDDS) whom was appointed to run the fourth-largest long-distance telecommunications company, and after a shareholder vote in 1995, become WorldCom. “While he lacked technology experience, Ebbers later joked that his most useful qualifications was being ‘the meanest SOB they could find,’ [he] took less than a year to make the company profitable” (Kaplan & Kiron, 2007, p. 2). As a result of the Telecommunications Act of 1996 permitting long-distance carriers to offer local services, WorldCom used its highly valued stock to outbid British Telephone and GTE to acquire MCI for $42 billion in 1997. Ebbers and Sullivan were viewed as industry leaders after the MCI and dozens of other mergers; it was clear they had money on their mind, “Our goal is not to capture market share or to be global. Our goal is to be No.1 stock on Wall Street” (Kaplan & Kiron, 2007, p. 4).
Moreover, when the U.S. Justice Department refused the merger of WorldCom and Sprint in July of 2000,
Ebbers and Sullivan’s Classical View of Social Responsibility
Ebbers was one of nine investors of Long Distance Discount Services (LDDS) whom was appointed to run the fourth-largest long-distance telecommunications company, and after a shareholder vote in 1995, become WorldCom. “While he lacked technology experience, Ebbers later joked that his most useful qualifications was being ‘the meanest SOB they could find,’ [he] took less than a year to make the company profitable” (Kaplan & Kiron, 2007, p. 2). As a result of the Telecommunications Act of 1996 permitting long-distance carriers to offer local services, WorldCom used its highly valued stock to outbid British Telephone and GTE to acquire MCI for $42 billion in 1997. Ebbers and Sullivan were viewed as industry leaders after the MCI and dozens of other mergers; it was clear they had money on their mind, “Our goal is not to capture market share or to be global. Our goal is to be No.1 stock on Wall Street” (Kaplan & Kiron, 2007, p. 4).
Moreover, when the U.S. Justice Department refused the merger of WorldCom and Sprint in July of 2000,
References: Breeden, R.C. (2003). WorldCom: The Governance Lessons. Corporate Board, 24 (143), 1. Retrieved from EBSCOhost. Kaplan, R. & Kiron, D. (2007). Accounting Fraud at WorldCom. Retrieved from http://csuglobal.blackboard.com/bbcswebdav/courses/KEY_ORG500/WorldCom.pdf Lewis, Mark. www.Forbes.com. (2002). The Rise and Fall of Bernie Ebbers. Retrieved from http://www.forbes.com/2002/04/30/0430wcom.html Robbins, S. & Coulter, M. (2012). Management (11th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.