suggests that if the board member’s actions were in line with the company’s top CEO’s than what they were doing was obviously right. They figured if there actions were not in accordance with the CEO’s than they would be told they were wrong and needed to change what they were doing. In the case of Nortel’s board they were never questioned by any of the companies shareholders on their ethical intuition and thus they collected a paycheck for not properly identifying the wrong doings of individuals within the company. When it comes to the meltdown Nortel faced it was a very common site among other companies such as Enron and WorldCom, the one question that needs to be asked is why companies continue to make these poor decisions after seeing …show more content…
These companies lacked corporate citizenship, which describes a business as meeting its “economic, legal, ethical and philanthropic responsibilities” (Collins, 2011, p. 118). In the case of Nortel, its CEO’s were paid very lucratively to equal a one million dollar salary each year not to mention a very nice bonus, which reached an all time high of $5.6 million in 2000 (Fogarty, 2011, p. 541). These bonuses weighed heavily on the operating earning per share which meant the more stock the company had sold the more money there CEO’s were raking in. For Roth all this meant was he had to keep acquiring acquisitions to meet future projections and watch his pockets continue to grow at the expense of others. These actions did not promote proper corporate citizenship because they did not benefit employees, customers, investor relationships and the community in any way. Nortel’s poor corporate citizenship would ultimately lead its primary stakeholders the employees 60,000 in total to lose their jobs and stock holders to lose a great deal of money as Nortel’s share prices dropped from $200 to a mere $0.67 a share (Fogarty, 2011, p. 536). Knowing that history repeats itself and that humans are still going to make poor decisions there are some remedies that can be put …show more content…
One of such remedies revolves around education and instilling organizational trust. Organizational trust “refers to having a positive attitude that another member of the organization will be fair and not take advantage of one vulnerabilities or dependency in a risky situation” (Collins, 2011, p. 170). Take for example had Nortel’s board been educated they may have not been so trusting with the CEO’s to the point that there lack of knowledge was taken advantage of. Instead if they were educated they would have been able to perform their job to the fullest of their ability and keep the company on an ethical path to success. On the other end of that, the CEO’s would have been able to trust in the board instead of relying on their own wants ensuring that what was best for the whole company and not just themselves occurred. Next incentives should be regulated to ensure that they are fair across the whole organization and not just at the top levels of management. Once incentives are deemed fair then an organization must regulate punishment for those who knowingly commit fraud and put the company and it shareholders at risk of negative effects. Finally after all of these measures are put into place an organization will then be truly able to regulate its
• The first is to be profitable, which provides a basis for Boeing's success. • Campbell (2007) defines eight propositions under which companies fail to meet or successfully exceed the minimum behavioral standard for corporate social responsibility. These propositions relate well to Carroll’s four factors in that the first two propositions identify that operating profitably and in a healthy economy increases the likelihood that a company will engage in socially responsible activities (Campbell, 2007). • Boeing is the world's largest aerospace company and the leading manufacturer of commercial jetliners and defense, space, and security systems (Boeing: About us, 2013).
Do you agree with Feinberg’s assertion that “you have to draw the line somewhere?” I totally agree with Feinberg’s assertion that “you have to draw the line somewhere”. But the situation here requires the company to morally act rather than think rationally. This is because, if they act rationally and not morally, then it would go against the image of the company. Thus in this case I agree that the line has to be drawn at humanity and not at rationality.
This proves that throughout the case, Cendant Corporation wasn’t acting fully ethical nor with the desired fiduciary actions to their investors and the auditing team in this case being Ernst&Young. Aside from the trust being broken apart between both, there was never a sign of an internal control inside Cedant. Therefore, there shows that the corporate governance for Cendant Corporation didn’t have signs of existence as well. Most frauds that were occurring before the implementation of the SOX-2002, had top management such as in Cendant that didn’t have care for the ethical performances as much as in today’s corporate world with more regulations in hand by the government. At the end, Cendant had filings against them concerning their corporate governance
He did it by thrashing their accumulation of wealth, the devastation they inflicted on the global economy. They also mistreatment of employee pension funds, Wall Street CEOs apparently still have enough credibility in some quarters to be treated as experts in fiscal responsibility. This writer spent a number of years in the business world during the 1980s and 1990s, as corporate America was transforming itself from a customer-driven set of industries to a greed-driven and conscienceless wealth extraction machine for the investor class. (6 signs our culture is sick with greed,
Human resources personnel are often tasked with using employee and organizational objectives to identify and implement the best employee incentive programs. An effective and efficient incentive system must seek to address employees’ skills and motivation, acknowledgement of employees’ successes, a clearly-defined set of goals, and a means for assessing progress. These systems should be tailored to the needs of the organization as they are often implemented to prevent and overcome poor performance, failure in meeting organizational goals, poor morale, increased turnover, and the stress of increased demands on
Introduction The managers of corporate organization are expected to maximize return of investor while avoiding principal-agent conflicts of interest, complying with regulatory standards, and enhancing the reputational capital of their organization (Marcinko D J & Caplan D H, 2012). The recent resignations and arrests of top U.S. managers, however, point out an increasing level of corporate irresponsibility and managerial negligence on Wall Street and on Main Street that has eroded global and domestic trust in U.S. markets. In the Enron scandal, corporate irresponsibility has provoked unprecedented outrage and multiple lawsuits from a range of stakeholders with demands for democratizing improving managerial accountability, structures of corporate
Disney and its employees are tasked with protective the Disney brand around the world and encouraging the shipping of continuing value. The main aims of Disney’s are satisfying the financial needs of the shareholders. However, Disney goes beyond satisfying for shareholder needs and locations a strong emphasis on moral conduct that affects each households and the environment. The moral standards at Disney do not just apply to the employees, but it also on the Board of Directors. Disney’s “Code of Business Conduct and Ethics for Directors” governs the actions of the Disney board, holds them to high moral standards and makes them accountable for actions taken on behalf of the company.
When creating these steps, there should be representatives from each group that these changes will affect. By involving everyone at the different levels, management will get better buy in. The incentive plan has to be easy for everyone to comprehend and of course, the higher incentives of the plan will require more effort and higher performance. Establish if it will be individual incentives, group incentive, or both. The biggest thing of all is to communicate to everyone and while designing the incentive program, management must be sure to utilize
This shows that as long as the revenues can be churned up and whatever any losses and costs result in negative profits, the executives still get paid. Therefore, Executives may only make decisions according to their own interests and the moral hazard problem is executives may deceive investors to pursue their own
Decisions taken within an organization are made by the leadership in light of the company’s culture, principles and policies. Leaders are the role models as they set the tone for the ethical stance of their individual followers, or the group they lead. As an ethical leader, they are expected to take responsibility and work to correct mistakes. They must ensure the company has an effective internal controls in place to identify unethical practices. In my opinion, big companies in their audit and compliance committees should have members who may act as ethicist to assess whether the actions of the company are consistent with the desired ethical
Several factors that brought down Nortel include analyst growing lazy, financial irregularities, executive compensation and lack of proper earnings management. These items failed Nortel because of two missing traits within of some of Nortel’s key players. These two traits include having ethics and applying principles of moral imperatives to their day to day business actions. Within a company as large as Nortel decisions are part of everyday operations thus it is important to ensure ethics are considered in the decision making process due to the amount of people who may be affected if a poor decision is to be made. Just as important as ethics, confirming implementation of moral imperatives principles ensures the companies best interests are kept in mind.
These attitudes came out in the manner that he conducted business. His various acquisitions demonstrated a will to succeed to matter the cause or consequence. Consequently, if the CEO is demonstrating appropriate behaviors in the company it would be quite difficult of other managers to to try and change that behavior. However his managers could have taken a collective stance in assuming the principled moral development role and convinced him to turn on a ethically path.
The first principle will be proportionate procedures. (Ministry of Justice, 2012) Adequate bribery prevention procedures are supposed to be proportionate to the bribery risks that the organization faces. These procedures are practical, accessible, clear and effectively implemented and enforced. Furthermore, these procedures are crucial measures in preventing bribery; but they will only achieve their objectives if they are implemented properly.
Here you look on the difference between benefits and harms for the society and if the benefits are greater than the decision or an action is considered as ethical, if lower – unethical. Here it is important to identify the stakeholders and an effects on them from actions or decisions of a company. “You can think of a stakeholder as a person or organization that can affect or be affected by your organization. Stakeholders can come from inside or outside of the organization. Examples of stakeholders of a business include customers, employees, stockholders, suppliers, non-profit community organizations, government, and the local community among many others.”
One of the board's most important tasks is accountability and the board should maintain sound risk management and internal control systems. There was neglect within the company's principles and procedures. Managers and responsible persons who did not do the job properly should be terminated at the beginning of