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Corporate Malfeasance

December 14, 2008

Business executives like Martha Stewart have gone to jail for malpractice. Company executives of Enron and WorldCom smeared their corporate images due to an accounting scandal. The leadership practices are based on greed. It’s scandalous and questions the institutional integrity. Ethics consideration should be an important criterion in organizational decision making. Many organizations unfortunately have downplayed, or even ignored the role of ethics. Corporate scandals involving accounting manipulations, cover ups and conflict of interest certainly suggests decline in business ethics and trustworthiness. Ethics in business is about the essence of connection between individual and institutional integrity. It is an intellectual tragedy when a leader chooses greed over a role of a visionary.

Traditional approaches to decision making in organizations has emphasized rationality. Although the issue is debatable, there is a reality in business that often requires a lie to provide better circumstances for negotiations. At times, it can be difficult not to lie. But I believe that for some of us, it’s our personal upbringing’s that shine through above all. By focusing on goals and increasing options in hand, rationality would always help through in a worst of scenarios during tough decision making’s. From my experience, some look at it as their personal victory or profit to lie by making unethical decisions. Mostly, unethical actions in business are simply the result of rotten apples in the corporate barrels.

Aside from just the embarrassment and black marks that accompany headline exposure of a companyโ€™s unethical practices, the hard fact is that many customers and many suppliers are wary of doing business with a company that engages in sleazy practices or that turns a blind eye to illegal or unethical behavior on the part of employees. They are turned off by unethical strategies or behavior and rather than become victims or get burned them selves, wary customers will quickly take their business elsewhere. Moreover, employees with character and integrity do not want to work for a company whose strategies are shady or executives lack character and integrity. Thereโ€™s little lasting benefit to unethical strategies and behavior, and the downside risks can be substantial. Besides, such actions are plain wrong.

I believe we always have a choice. Choice in good decision making or otherwise. Choice in lying or speaking the truth. Choice in conducting an ethical business or otherwise. The problem is the demon in all of us. We act on personal biases, what we believe is right on the basis of profiteering, selfishness and satisfying organization obligation. We sometimes get caught in between of making a good decision based on personal ethics or making an unethical decision just to maintain the image created and demanded by the superiors in the organization. Often we believe what we are doing is “right” just for that moment. But sadly, no one thinks of the long term consequences as decisions are often based on profit and cost marginalized and not on the basis of individuals or manpower at stake. Changing circumstances and ongoing management efforts to improve the ethical way of conducting the business is a condition that also makes the task a work in progress, not a one-time event.

Based on the outcomes of the current economic turmoil, the CEO’s and management team of organizations should take these instances of corporate malfeasance, ethical lapses and fraudulent accounting practices at Enron, WorldCom and Arthur Andersen as a lesson and learning experience. There is no room to doubt the damage to a company’s reputation and business. It’s the decisions that we take, either it would make or break us. To meet the standard of being ethical, a decision must entail actions that can pass moral scrutiny and that are aboveboard in the sense of not being shady, unconscionable, injuries to others or unnecessarily harmful to the environment. That said, enough of government bail-outs, let’s bail the citizens who deserves it ๐Ÿ™‚

7 Comments leave one →
  1. December 15, 2008 12:39 am

    Yup, reminds me of that quip about the $2000 toilet seats on Air Force One! ๐Ÿ˜€

    me: I know, it’s really sickening! The top management are recouping benefits beyond their capability with sleaziness and the middle-management workforce are threatened with higher taxes, pay cuts, job loss or no bail-outs from the govt.

  2. December 15, 2008 10:54 am

    responsibility ,authority and accountability .. ๐Ÿ™‚

    ha well I have a business Studies exam day after tmro ;P

    me: Properly worded ๐Ÿ™‚ Indeed there are very few responsible, authoritative and accountable leader these days. It’s almost impossible to be led by example. Good luck in your exams ๐Ÿ™‚

  3. December 15, 2008 2:47 pm

    Corporate Corruption they call this and it happens everywhere a lot.

    me: Sadly, but true.

  4. December 16, 2008 7:35 am

    you are tagged ๐Ÿ™‚

    me: hehe.. thank you ๐Ÿ˜€

  5. December 16, 2008 7:43 am

    You are supposed to know about Business Ethics only when you are the lowest one in the pyramid. It gets worse as one moves up.

    me: I disagree. Everyone should be aware of business ethics, be it low, mid or upper-management. Though many chooses to ignore it. Constant awareness of this issue is important.

  6. December 17, 2008 6:32 am

    no matter what u do, the rich will find a loophole in any public welfare policy and will use it for their own selfish means

    me: Welcome Ankur, and Thank you for visiting C h a t t e r B o x! Totally agree with your opinion. Sadly, the rich are taking more advantage of the weak system. I am hopeful for a change. Do return here for more Chat’s! ๐Ÿ™‚

  7. December 20, 2008 3:27 pm

    When you put in certain amount of experience, it is easy to identify what actions are done with what intentions. When the middle management is involved in fradulent activities, the top management ought to take immediate action. It is as much the in action of the top management that is responsible. For eg, in Enron, one Finance Director, to a large extent was responsible for bringing down the whole company. If that link was established earlier, things could have been better. Nice article.

    Destination Infinity

    me: Welcome Destination Infinity, and Thank you for visiting C h a t t e r B o x! I agree that if proper protocols were in place, perhaps this fraud could have been detected earlier. But sadly, in the real world, top management are not involved in the day-to-day activities. Thus, laying the ground rules can prove tricky. Do return for more Chatโ€™s ๐Ÿ™‚

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