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

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