(a) What appears to be the ethical issue involved in this case?
Companies are in business to make money, yet can a moral and ethical company compete in the 21st century? According to Mendonca (2001), ethical behavior is that which is "morally good and morally right, as opposed to legally or procedurally right" (p. 268). What is morally good and right; however, is subjective and may differ based on cultural, economic, or religious upbringing and traditions (Hosmer, 2003). The sec Report (2003) on WorldCom identified fraudulent behavior in three main areas: the unauthorized movement of line costs to capital resulting in decreased expenses, the improper release of accruals reducing current expenses, and questionable revenue entries producing an increase to earnings. While these three areas highlight the seriousness of the activities, the sec Report (2003) indicated numerous other questionable questionable activities by members of the executive team and the board of directors. Figure 1 depicts an organizational organizational chart indicating many of the senior executives identified in the sec Report (2003). It is uncertain if any of the WorldCom executives followed any of the ethical theories however, it is clear that they did not follow Mendonca's (2001) definition of ethical behavior by doing what was morally good and morally right. Scharff (2005) posited that much of WorldCom's unethical unethical behaviors may have been caused by groupthink. Groupthink is caused when concurrence seeking becomes paramount in team decision-making. decision-making. Janis (1982) defined groupthink is a "mode of thinking that people engage hi when they are deeply involved in a cohesive in-group, when the members' strivings for unanimity override their motivation to realistically realistically appraise alternative courses of action" The characteristics characteristics of groupthink include a feeling of invulnerability, ability to rationalize rationalize events and decisions, moral superiority superiority within the group, group pressure on dissenters, dissenters, use of stereotypes, self-censorship within the group, and unanimity (Janis, 1971, 1982). While groupthink may have contributed to the number of people involved in the unethical behaviors as well as the length of time over which WorldCom's fraud occurred, groupthink groupthink does not resolve the ethical concerns with the senior level executives or the board of directors responsible for creating the culture which led to these events. WorldCom has been just one of many companies caught in ethical quandaries and predicaments predicaments over the past few years. It appears that while some companies and their executives have maintained a strong focus on ethical behavior regardless of economic conditions, conditions, others have h ave not. Hosmer (2003) identified an ethical dilemma in business as one where the economic and financial performance of the business is hi conflict with the organization's social obligations. obligations. He theorized that moral issues are best identified by researching four main components. These elements include who will gain benefit, who will be harmed, whose
rights will be upheld, and will anyone's rights be infringed upon or wronged. By this definition it is clear that Ebbers and Sullivan faced a serious ethical dilemma. The guiding principles include building trust and credibility, respect for individuals, creating a culture of open and honest communications, setting the tone at the top, avoiding conflicts of interest, reporting accurately, promoting substance over form, being loyal and doing the right thing. Now the executive's challenge is to make ethics and values stand out from a business landscape that is laden with messages about beating the competition and achieving quarterly goals and profits" The answer seems to lie partly in a culture emanating from corporate headquarters that emphasized making the numbers above all else; kept financial information hidden from those who needed to know; blindly trusted senior officers even in the face of evidence that they were acting improperly; discouraged dissent; and left few, if any, outlets through which employees believed they could safely raise their objections. Following this line of argument, a management theory built on a lack of trust would lead to untrustworthy behaviors. (b) Is Troy Normand acting improperly or immorally?
Ethics and moral judgment are not new concepts for leadership. They have been identified as critical characteristics of leadership over the last century (Fayol, 1925/1991). An organization's leaders help define the culture, values, standards, and moral character of the organization having ramifications both inside and external to the organization (Mendonca, 2001). Early leaders or founders within an organization are not only responsible for building the climate and culture of the organization along with setting the mission, values, goals, and ethics of the organization but selecting the group members responsible for making the organization a success. The persons responsible for manipulating the data appear to have been more interested hi then- own financial success and image than hi doing what was right, regardless of ones definition of right. Additionally, they did not adhere to any of the definition of ethical conduct identified by Mendonca (2001). Then- decisions were neither morally right, morally good, legally right, nor were they procedurally good. They appear to have taken an individualistic philosophy whereby they pursued then* own self-interests regardless of the cost to others or the future success of the company. Mr. Normand was raised in the kind of economic environment where fraudulence is permitted by his bosses, who are in fact catalysts of unethical behavior thus, keeping him doing jobs which are immoral. Being compelled to do such jobs by his boss, made him act properly as an employee but immorally as a professional being who should have
been protecting the truth, pushing through objectivity and practicing professional behavior in all aspects of his career. Since he is dependent on the company’s hierarchy of position, fearfully, he is complied to do his job even though it is contradictory with his will and conscience. However, the principle of fear tells us that any action done with fear, in fear, through fear and because of fear is an action voluntarily done thus, making him morally unjustified of such acts. (c) What would you do if you were Troy Normand?
Being in the position of Mr. Troy Normand is like having one foot on earth and the other on the grave. His fate lies particularly on his hands, since it is an arduous decision between the call of his needs and the whisper of his conscience. As for me, if I were in his place, I would stand as a being and not as a mere puppet of the company. I would follow the direction set by morality and not by the pressure set by neither my colleagues nor my boss. For me, it is not just enough to refuse or to resign just to escape from responsibility. It is also everyone’s responsibility to make a difference. And there will be no difference if I just quit. There should be something done, and it will involve sacrifice in its entire means. I would report such frauds to the authority. Being under the protection of the Sarbanes-Oxley Act, a bill designed to protect whistle-blowers, or lower-level employees who sound alarms over actions by their superiors. Through this, many employees who can’t stand deaf against their conscience could take necessary actions to do something about the corporate wrongdoings. In my own means, I didn’t stand deaf and dumb of my responsibility as a person and as an employee who yearn no more than to serve the public faithfully and with integrity. (d) Who are the major stakeholders in this case?
Many were affected in this case not only the internal nor the external backbone of Worldcom, but also the competitors who have exhausted their means to expand in order to cope up with the leading company. However, it is not only the guilty employees who are affected but the company as a whole; primarily the major stakeholders are "those groups without whose support the organization would cease to exist." They are the people who will be affected by an endeavor and can influence it but who are not directly involved with doing the work. In the private sector, people who are (or might be) affected by any action taken by an organization or group. Examples are parents, children, customers, owners, employees, associates, partners, contractors, suppliers, people that are related or located nearby. Market (or Primary) Stakeholders are usually internal stakeholders, are those that engage in economic transactions with the business. (For example stockholders, customers, suppliers, creditors, and employees) They influence programs, products, and services. Major Stakeholders in this case may include shareholders, directors, management, suppliers, government, employees, and the community.
