Bernard Ebbers: Innovative Leader or Reckless Risk Taker

  1. Being named as one of Network World’s 25 most powerful people in the world of telecom Bernard Ebbers was a successful leader. Ebbers displayed a charm and led staff members to believe in his charisma. He managed to earn personal loyalty and high performance from staff members (Trevino, L. and Brown, M., 2005)

On another side Ebbers expressed impatience and arrogance when asked about WorldCom’s direction (Trevino, L. and Brown, M., 2005). To cut down costs he banned color copies, replaced expensive coffee with vending machine and played with the thermostat to save on electricity bill. Even his encouragement to invest in WorldCom stock raises suspicion as his wealth was invested in stock and for his and WorldCom’s success the higher stock price was critical. These were few examples of Ebbers’s display of destructive deviant behavior.

 

  1. Bernard Webbers earned loyalty and high performance from staffs but he tied the success of the company with the stock price and with the Wall Street expectations. Employees faced his wrath when stock price collapsed due to earning miss (Trevino, L. and Brown, M., 2005). Ebbers did not promote an open or healthy work environment by creating a “no room for error” work environment. And this encouraged Ebbers managers and employees to engage in deviant unethical behavior. Since Ebbers did not care how the numbers were being produced, the employees took unethical means to meet Wall Street’s expectation and saved the stock price.

Ebbers could have been clear about his expectations of followers. Not focusing so much on bottom line, could have communicated with the employees about his expectations, and use the reward system to hold followers accountable for ethical conduct while being productive. He already had a loyal and inspired employee following, all he needed to do was be ethical and fair and focus on long term success rather than short term stock price.

 

  1. Being named as one of the 25 Most Powerful people of Telecom, Ebbers had tremendous success, mixed with charisma and charm. He earned loyalty and high performance from managers and employees. Clearly the inspirational motivation part was combined with idealized influence that came from the charismatic side of transformational leadership. As Conger and Kanungo (1998) proposed Ebbers being a charismatic leader, influenced followers by arousing their personal identification with himself (Pratt, 1998). Ebbers evidently linked the company’s mission with employees’ self-image that included sense of moral virtue (Gecas, 1982).

 

  1. Ebbers tried to virtually finish competition for WorldCom and his strategy was to buy out competitors. To execute the strategy he needed to keep WorldCom’s stock price high. To maintain the stock price it was necessary to meet Wall Street analyst’s expectations. Webbers created so much pressure on his employees to meet the Wall Street numbers that they did what it took, and it took “unethical” means and fraudulent information. Wall Street rewarded such behavior and Ebbers promoted and approved such culture of inflating number and lying in the company.

In my opinion the key managers should not have engaged in wrong doing to please Ebbers and help his agenda. They should have done the right thing, as a result the stock price of WorldCom would have corrected, but Ebbers would not have been able to continue what he was doing. Either way, the result was not going to be anything good. I realize some of the managers would have lost their jobs, but at least by doing the right thing, nobody would have gone to prison.

 

  1. An ethical leader leads with example. Personal and professional ethics influences managers and employees, promoting fairness and open culture. Moreover an ethical leader promotes a reward based culture. These leaders are perceived as honest, trust worthy, fair and someone who takes care of his people. They take decisions considering future, values, stakeholder interest and of course the long term outcome. Promoting reward system usually motivates manager and employees also do the right thing and yet open communication sets the tone for expectation the company has from its employees. So employees know what to do, and they do it without violating ethics.

Ebbers could have promoted ethical and promoted sustainable growth of the company. Setting up correct expectation with Wall Street would have brought price stability in the stock and open communication and rewards would have motivated the managers and employees to do their job better boosting the bottom line without engaging into unethical behavior. WorldCom might have grown slower than it grew originally, but the growth would have been sustainable in long run.

 

 

References

Trevino, L. and Brown, M. (2005). The Role of Leaders in Influencing Unethical Behavior in the Workplace.  In R.E. Kidwell and C.L. Martin (Eds.) Managing Organizational Deviance (pp. 69-96). California: Sage Publications

Conger, J., & Kanungo, R. (1998). Charismatic leadership in organizations. Thousand Oaks, CA: Sage.

Gecas, V. (1982). The self-concept. In R. H. Turner & J. F. Short (Eds.), Annual review of sociology (Vol. 8, pp. 1–33). Palo Alto, CA: Annual Reviews

A New Pair of Eyes

  1. 1. A New Pair of Eyes

Mark started his new role as a closing manager, where he had to record the daily sales, returns, tax, etc. on a worksheet. He had been instructed on how to do this earlier, but the training manager said he could look at any of the previous 30 days sheets done by other managers to use as examples. Mark looked at the previous day’s numbers which Barb had recorded and found an extremely high amount of returns that day, but no receipts for these returns were saved, which he was told is a requirement. Mark immediately thought Barb must be stealing.

What would you do? Which approach would you use, individualistic, communal or both? Explain.

 

 

A combination of both Individualistic and Communal approach would be most beneficial for “A New Pair of Eyes”

When Mark finds out that Barb issued refunds without those required receipts, he should not conclude anything immediately. There could be 4 possibilities –

  1. Barb is stealing
  2. Barb made a mistake and she would be more than willing to correct it
  3. Barb was instructed by her manager to do so
  4. Mark made a wrong assumption or did not have complete training

Keeping in mind Mark is just starting, bringing allegation to another employee who might be a long timer and with a great reputation, would not be smart. If Barb is stealing a large amount as observed by Mark, then chances are she did not start it yesterday, she should have started with smaller amount. Mark should investigate works done by Barb is past and try to find a pattern, if Barb had records of return without receipts.

I understand, Mark has his own set of “To Do” list to get to, and he cannot invest all his time in researching Barb’s work. But I would recommend investing some extra time and finding out a logical conclusion before taking this to higher management, because this might potentially dampen his own reputation.

After doing the research if Mark finds out that Barb had done this before –Mark should approach the “Training manager” and try to find out from him if there is any situation where it is possible to issue refund without receipts and inform him / her that he (Mark) has noticed that there are records by other “Closing managers” where they have issued refunds without receipts. Now there is a possibility that the “Training manager” is Barb’s reporting manager. But that should not be a matter of concern. Because Mark is trying to fix something he knows to be wrong. Mark’s training manager can determine with all the information from Mark if Barb was stealing or if she was told to do so by her supervisor or maybe she made a mistake which could be fixed.

Now it was the scenario where Mark found out multiple instances of Barb issuing refund without receipts, but there could be another possibility that he did not find any more instance. In this scenario too, Mark should approach his training manager and explain his observation and let him decide if it was one time mistake by Barb or if it is possible to issue refund without receipts or may be with supervisor approval.

So this would be my suggested individualistic approach, not concluding anything and digging deeper keeping in mind that Mark has his own work to finish. But here investing time is necessary mainly because there is a learning opportunity ( in case he finds out that refunds can be issued without receipts with supervisor approval or some other scenario) and there is a possibility to fix a problem(in case Barb was doing something wrong causing employer suffer a financial loss). And as bonus he might receive a pat on the back for doing the right thing and being through, without risking his own reputation for being hasty to conclude something that might not be accurate.

Now there is an opportunity to implement communal approach for the company leadership. If Barb was properly doing her work, Mark needed proper training, so leadership should make the training program better to avoid such confusions in future. Or under different scenario, if Barb was stealing, then the leadership should implement better review/ audit process to avoid such misconduct from employees.

Examples of corporates with good CSR

I would like to talk about my favorite company Google LLC, a subsidiary of Alphabet. Inc. A multinational in true sense head quartered in Mountain view, CA, USA. Currently Google operates in more than 40 countries, India, Sweden, UK, Australia, Japan just to name a few.

Google LLC (formerly known as Google Inc.) was founded on 4th September, 1998 by Larry Page and Sergey Brin. Currently Google is led by Sundar Pichai who is CEO and Ruth Porat the CFO.

Besides bringing great products like the search engine, Google maps, Google Earth, Google drive, android, google docs which are mostly free to use, Google has a philanthropic wing “Google.org”. Apart from nurturing an open culture at work, Google supports social causes such as education, creating economic opportunity, social inclusion, response to natural crisis and caring for environment. Being a large organization google uses electricity that is enough to power 200,000 houses, and that is it leave a lot of carbon footprint (Wikipedia). But now all these electricity is sourced from renewable energy sources, reducing carbon footprints in long term. Moreover, Google is using machine learning to reduce electricity usage. Google Cafes uses ugly looking vegetables those supermarkets won’t sell, reducing waste. And Google promotes using bike and hybrid or electric vehicles – that’s another way google demonstrates being ethical and being mindful about environment and reducing waste.

There is a Native American saying “We Do Not Inherit the Earth from Our Ancestors; We Borrow It from Our Children”. Being mindful about environment and reducing waste Google sets a great example for other companies too. And the impact is not only environmental, more renewable energy usage means more jobs are renewable sector, using vegetables that supermarkets won’t sell means reducing waste and supporting farmers Lastly, promoting biking is promoting exercise and good health for google employee. The stakeholders promoting these behaviors sets a great example for other companies and helps the community all around. The community does not only benefit from the great product Google produces, or the job Google creates but the greater impact google has.

P.S: I was thinking about 2 more companies and I think they are worth shout out –

KFC India – I do not eat deep fried chicken anymore, but when they first opened restaurants around Kolkata, India (My city) a decade back, I used to visit. I still remember my first visit, the person at check out with a big smile on face did not speak to me, I was bit surprised for a moment, then when he turned back and started communicating with his coworkers, they were communicating in sign language, I did not need any more clue to figure out that they were people with special abilities. They did not speak but the management / leadership made sure the customer did not have problem placing orders yet, creating job opportunities for specially able people. It touched my heart and I used to visit more. To be honest, I have not visited them in last 6 years.

Dakshana – Monnish Pabrai the managing partner of Pabrai Investment Fund started this non-profit to educate/ coach the students in India who cannot afford their own tuition but smart enough to make it to the best engineering colleges in India. Monnish Pabrai is a software professional turned entrepreneur based in California, USA. Dakshana is based in India, founded in 2007. Checkout their oprating model @ http://dakshana.org/programs/#social-performance

 

 

Reference

Google. (2017, November 17). In Wikipedia, The Free Encyclopedia. Retrieved 03:24, November 25, 2017, from https://en.wikipedia.org/w/index.php?title=Google&oldid=810852439