Business Failure 1

Running head: BUSINESS FAILURE

Business Failure
Miriam Sanchez

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Corporations nowadays take for a fact that, in order to succeed, they must adapt a
mindset that profit although vital is not the only concern. They are realizing the long-term
corollary of satisfying consumer needs and societys welfare in every decision they make. The
term social responsibility came into existence just to describe this relatively new way of doing
business. Doing the right thing undoubtedly brings benefits, whether a positive image, or in
having a sense of purpose beyond just monetary gain that steer and inspire people throughout the
organization. Long-standing selfish views being the center of any organization is slowly being
eroded by the enlightenment brought about by accounts of exemplary companies being socially
responsible and making money at the same time.
Many corporations are now learning that profits naturally follow when one practices
social responsibility. Regrettably, some still do not subscribe to this line of thinking. Former
WorldCom CEO Bernard Ebbers opted to be branded as an incompetent leader rather than a
criminal genius in his failed attempt to get out of one of the biggest bankruptcy case in the
United States unscathed. Fortunately, the federal jury did not buy such a weak defense. After
careful deliberations, Ebbers was found guilty on March 15, 2005 of masterminding a fraud so
vast that losses amounted to $11 billion. The I-don't-know-anything defense seems dumb from
the get-go, said Duane Windsor, a professor of management at Rice University who specializes
in business ethics (Lazarus 2005). It is indeed hard to believe that a senior executive the CEO
at that is uninformed about his own companys finances and accounting. Simply put, he had
command responsibility and thus can never claim that his subordinates are doing things behind
his back. Borrowed from the military, command responsibility basically states that whatever
ones subordinates does, a leader is the one ultimately responsible for whatever circumstances

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that may result from such actions. The use of this concept in business will effectively stop the
widespread use of a defense that insults the intelligence of whoever hears it.
An organizations ideology often determines the business decisions that it makes, and
through these decisions, the ideology influences individual behavior. Management ethics usually
suffice in ensuring that people act in accordance with the organizations values simply by good
example alone but not if management itself is the one going off doing unethical things. Those
at the top have the ability to influence what is perceived as right or wrong simply due to the
power that they wield. Ebbers violated this duty and is to be considered negligent when he chose
to deliberately put his interest before that of the majority ironically, a majority that trusted him
to protect their interests. Ebbers is rightfully sentenced guilty by the jury because any reasonable
person could have used his position and power to prevent others from being harmed. This
responsibility does not rest solely with him though the government too, has a moral obligation
in that it is the one responsible for overseeing that people like Ebbers do exercise due care. It has
to ensure that adequate steps to prevent whatever injurious effects their decisions do produce are
taken.
The main duty of managers is to work towards the goal of the firm and to avoid any
activities which might hinder those goals. Other companies have established a formal code of
ethics, publicized statements of ethical values, provided ethics training, rewarded employees for
notable ethical behavior, and set up internal procedures to handle misconduct (Newstrom &
Davis, 1997, p.14). Just like any aspect of business, ethics have to be managed. The organization
needs to give a conscious effort of running it lest it wants it to go out of control. Management of
ethics have various ways of making people conform and should these fail, there is always the
possibility of more drastic measures. What happened to Bernard Ebbers is a start. Instead of just

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a reprimand and a token slap on the wrist which happens most of the time with similar cases, the
size of the fiasco and Ebbers sheer audacity in his reasoning led the government to wise up and
make an example out of him.

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Reference
Lazarus, D. (March 16, 2005). Worldcom Verdict Shows Ignorance is No Defense. San
Francisco Chronicle. Retrieved January 26, 2010 from: http://articles.sfgate.com/200503-16/news/17363732_1_worldcom-s-ebbers-billion-accounting-scandal-worldcom-ceobernard-ebbers.
Newstrom, J.W. & Davis, K. (1997). Organizational Behavior, Human Behavior at Work 10th
Edition. McGraw-Hill Company Inc.