Worldcom’s Collapse and Corporate Greed

WorldCom’s Collapse and Corporate Greed

Bernard Ebbers was an enigmatic visionary who who was able to grow his small business into an empire in a fairly short period of time. With his ability to inspire others to believe in him and his direction and the confidence that he possessed in being able to pursue bigger and better things, he was able to quickly set goals and create a means to achieve them. His decisive nature allowed him to make quick work of his acquisitions and allowed for immense growth. Unfortunately, this fast-path to success made it difficult for him to have reasonable control over the direction of those working under him. Although he was a charismatic in nature, “there is a great deal of controversy about whether... charismatic leaders are actually effective” (Riggio, 2012). He made rash decisions and put people of questionable character in positions of power. In the end, Ebber’s greed and an inability to effectively manage created a culture that made it easy for people to justify unethical actions and commit fraudulent activities.

Ebber’s influence on his managers was transformational, but very much hands off. Idealized influence and inspirational motivation are both qualities of transformational leaders (Riggio, 2012) that Ebbers appeared to possess, but he was so consumed by what was coming next that he lost sight of what had already happened and left those in charge to handle whatever came of it. These quick acquisitions made it easier for the newly acquired workers to feel displaced within the newly established company and possibly even a sense of entitlement for having been wronged in the process. “Perceived unfair treatment can provoke strong negative reactions from employees” (Trevino & Brown, 2005, p. 75), and in seeing how well Ebbers was doing for himself through growth and acquisition with little or no regard for the people who may lose their jobs in the process, it was easy for those in other leadership positions to not only emulate to emulate Ebber’s selfish nature, but also feel entitled to some of what he had. “If leaders are rewarded for unethical conduct, the lesson for followers becomes particularly strong” (Trevino & Brown, 2005, p. 72). As a result, they had little issue in taking advantage of the situation.

However inspiring and charismatic some may have found Ebbers to be as an entrepreneur, others found his business practices to be distasteful. Ebbers had a social exchange relationship with many who worked for him. In offering loans between $80k and $300k loans to as many as 50 of his top executives (Trevino & Brown, 2005, p. 92), he was in a position of immense power over these workers. There was no specific terms of repayment, which further reinforced his position of authority. This sense of perceived Interactional Fairness, where these employees believed that they were being treated well because they were receiving special privileges, could have easily been used to Ebbers’ advantage at any given time. Even if the original intent was to provide for his employees in an unconventional manner and not to be manipulative, perception is reality.

Taking this unconventional corporate culture into consideration,