Worldcom's Organizational Culture

Worldcom's Organizational Culture

Worldcom's Organizational Culture

One of the primary purposes a leader has in an organization is to maintain the characteristics that make up the organization. One of the main characteristics that make up an organization is the culture in which the organization operates and the code of ethics (Robbins & Coulter, 2012, p. 165) by which the organization expects its employees to follow. But, what does organizational culture really mean? What influence does it have on an organization and the people within the organization? How do managers/leaders build, influence or alter an organization's culture?

Influence of Culture in an Organization

Organizational culture has been defined as, "the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization" (Hill & Jones, 2001). Our book defines code of ethics as, "a formal statement of an organization's primary values and the ethical rules it expects its employees to follow" (Robbins & Coulter, 2012, p. 165). In the case of Worldcom, it is clear that the organizational culture was heavily impaired and nearly non-existent. The company did not have a formal statement of values or ethical rules it expected its employees to abide by. This is the underlying issue that eventually led to the demise and bankruptcy of Worldcom. As a leader, you are expected to lead by example and set your organization up for long term success. When CEO of Worldcom, Bernard Ebbers, was told about an internal effort, from with Worldcom, to create a corporate code of conduct, he stated that the project was a, "colossal waste of time" (Kaplan & Kiron, 2007, p. 3). It's clear that the organizational culture within Worldcom was condemned from the beginning. Any values or ethical beliefs were corporately unstructured and left to individual morals of the Worldcom employees.

Cultural Influences within an Organization

Worldcom's organizational structure was one of pandemonium and complete lawlessness. Worldcom's CEO, Bernard Ebbers, stated, "Our goal is not to capture market share or be global. Our goal is to be the No. 1 stock on Wall Street" (Kaplan & Kiron, 2007, p. 4). Ebbers was so enthralled with the intention of creating the highest possible stock value for the company that he never thoroughly thought out the structure by which his growing corporation needed to operate under. Kaplan & Kiron state (2007) that Worldcom's growth through acquisitions led to a hodgepodge of people and cultures. One accountant recalled, "We had offices in places we never knew about. We'd get calls from people we didn't even know existed." By this it's clear to see that Worldcom did not have a defined organizational structure that allowed its employees to share the same organizational culture. By having so many people in various locations, it was impossible of every accounting group in the company to know what each accountant was altering or being force to alter.

Influences of Organizational Culture

Ebbers and Scott Sullivan, the Chief Financial Officer at Worldcom, frequently granted compensation beyond the company's approved salary and bonus guidelines for an employee's position to reward selected, and presumably loyal, employees especially those in the financial, accounting, and investor relations departments (Kaplan & Kiron, 2007, p. 3). Ebbers and Sullivan directly influenced the organizational culture by which Worldcom's employees operated in by having them revise the accrual releases and adjust the expense capitalization reports in order to make the expense-to-revenue ratio reflect the desired 42%. At first, the practice of altering the expense-to-revenue reports was met with great confrontation from individual employees. These employees seemed to contain an embedded personal ethical belief that would not allow them to participate in unethical business practices. However, since the organizational culture had become ignoble, entrenched by the senior leaders, these employees satisficed (Robbins & Coulter, 2012, p.