Leadership, Management, and the Failure of Worldcom
World was a big player In he telecommunications Industry. Being the largest telecoms carrier of Internet traffic. In 2002, World joined the ranks of failed companies mostly because of the tactics that management and its accountants used to show that the company was earning more money than it was. This was partly in part because of the CEO Bended Beers and his appetite for money. One could have predicted that the company would fail because of the way the company organized Its financial balance sheets, and showing more profits that It had.
By overstating the profitability of the company, everything coked ideal on paper and to Wall Street, but investors were not able to gauge the actual performance of the company. High-tech consultant Francis McClellan predicted the failure of World in 1997 when World purchased MIMIC. The MIMIC venture contributed a great deal of costs to World in maintaining or replacing its network architecture. The management of World was mainly interested in the short term financial gain and did not even think about the cost It would take to malting the MIMIC structure. Ultimately the combination of high costs with MIMIC, and he financial methods used had a great deal to
Need essay sample on "Leadership, Management, and the Failure of Worldcom"? We will write a custom essay sample specifically for you for only $ 13.90/page
Not only did the management and leadership intentionally alter financial documents for personal gain, but some individuals who tried to tell others outside the company of these accounting issues ere met with termination from their Jobs. There were internal audit staff who began to raise questions about the financial statements, and afterwards were met with resistance and were told to do other work. The management of the corporation Instilled so much fear Into Its workers that the workers of the internal audit group began to work after hours and on weekends so they would not be found out.
Workers new the company would soon be failing but stayed on working because those outside the company were ignoring the signs. An aspect that could predict the failure was there was a poor integration of acquired companies into the organizational structure. Management did not make It a priority to make sure that the customers of the acquired companies were handled make it a priority to combine or merge the numerous computer systems which resulted in various systems being duplicated or systems totally failing.
Because of this poor integration, the organizational structure began to suffer. Senior management didn’t make much effort in trying to get the various divisions of World to cooperate, leading to undermining the affect of providing a unified service network. Without the unity, the various units would not want to work with the other units and things would not get done. For a large corporation such as World, having the different departments get along and cooperate is essential to handle the various global tasks that need completed for the company to be successful.
When managers or leaders of an organization are more concerned with hat shortcuts they can take to make more money, regardless of how it may affect the company or its workers, most likely this will lead to the company’s downfall and failure. Because the leaders of World were so concerned about how they can show the company is making money, even though the company was not performing as well as indicated, they were oblivious to the idea of anything happening to them. These shortcuts or hidden agendas that the management used ultimately violated the General Accepted Accounting Principles (GAP).
The managers had incentives for allotting these principles which led to management to committing fraud and increasing their own salary or stock options, ultimately giving them more income. By violating these principles, a company will fail because of the government being involved in making sure companies are fair and accurate, and if companies are not the government will step in and hold them accountable. Conclusion World, along with Tycoon, Enron, and various other organizations, failed because the management and leaders did not believe they would be held accountable for the performance of the company.