Worldcom Failure

1194 WordsJul 24, 20115 Pages
Examining a Business Failure: WorldCom WorldCom was one of several large companies that failed because of inadequate organizational leadership, fraud, conspiracy, falsifying documents, and embezzlement. WorldCom has been classified as being “one of the biggest corporate scandals in Unites States history” (Zekany, 2004, p. 101). In 2001, the company’s financial condition began to decline due to the slowing telecommunications industry, which eventually put pressure on the company’s executive officers to increase profits (Jonesington, 2007, p. 1). Unfortunately, the executive officers made decisions to commit accounting fraud by falsifying documents to reflect a positive cash flow rather than a negative one. All the individuals…show more content…
5) before using rationale. Based on this viewpoint, only emotionally based influences can generate outstanding achievements of organizations (Yukl, 2006, p. 5). Management The role of a manager is not as easy to define as the role of a leader. Researchers use descriptive methods such as interviews, diaries, and observations to discover the roles and responsibilities of a manager (Yukl, 2006, p. 23). The research results indicate managers work long hours, give and receive large amounts of information, and spend a substantial amount of time with people other than direct subordinates (Yukl, 2006, p. 23). Research also indicates the common practice of making important decisions with the support and authorization of different people at different management levels in different subunits of the organization (Yukl, 2006, p. 26). In contrast, Ebbers and Sullivan established a “corporate culture in which leaders and managers were not to be questioned or second-guessed” (Zekany, 2004, p. 103). As a result, no single leader or manager was held accountable for his or her decision to falsify documents, commit fraud, and conspiracy. In a crisis situation such as WorldCom’s, the pressure to perform the task of increasing revenue was evident. Research indicates when a group of people is under tremendous pressure to perform a difficult task, they expect their leaders and managers to be
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