A Look Inside The WorldCom Scandal

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WorldCom was the ultimate success story among telecommunications companies. Bernard Ebbers took the reigns as CEO in 1985 and turned the company into a highly profitable one, at least on the outside. In 2002, Ebbers resigned, WorldCom admitted fraud and the company declared bankruptcy (Noe, Hollenbeck, Gerhart, &Wright 2007). The company was at the heart of one of the biggest accounting frauds seen in the United States. The demise of this telecommunications monster can be accredited to many factors including their aggressive-defensive organizational culture based on power and the bullying tactics that they employed. However, this fiasco could have been prevented if WorldCom had designed a system of checks and balances that would have helped them avoid fraudulent reporting. The Sarbanes-Oxley Act has been instituted as a result of the major corporate fraud cases in an attempt to eliminate the possibility of similar cases in the future.

WorldCom’s aggressive-defensive culture based on power led to a chaotic organizational structure, many unethical practices and fostered bullying. This type of culture tends to be found in companies that experience exponential growth and are fast-paced (The Five-Minute Guide to Culture, 2001). WorldCom had acquired companies from all over the country to become the second largest long distance phone company in the United States (Burch, 2009). However, WorldCom’s rapid growth was not handled methodically. They were careless in their acquisitions. In fact, most offices were unaware that other offices existed (Kaplan & Kiron, 2007). Another characteristic of the aggressive-defensive culture is the general employee belief that they must be responsive to the demands of their superiors (Kinicki & Kreitner,...

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