7-1 Discussion: Worldcom: What happened? PDF

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Summary

Communication and group dynamics are important elements within the leading facet of the P-O-L-C framework. Identify which two barriers to effective communication were the most prominent within WorldCom and explain how these barriers led to the downf of the company. Be specific and identity the commu...

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The WorldCom scandal led to one of the toughest laws for corporate governance in US History. Called the Sarbanes-Oxley Law, it requires the CEO to bear criminal responsibility for false regulatory documents. With new regulations in place, now these heads of companies must stop ignoring these crimes and take responsibility for what is happening right under their noses. Filtering and selective perception are the most prominent communication barriers that led to the downfall of the company. Filtering occurs when messages pass through an intermediary in the communication channel, which then alters the intended message. Essentially, it is the holding back of information to avoid the consequences, which skews the reality of what is going on in the company. Selective perception occurs when one perceives what they want in messages while ignoring opposing viewpoints. It is filtering information to suit our needs. (K. Crawford, 2005). In the WorldCom scandal, Ebbers used filtering and selective perception to protect his fortune by hiding the fraudulent activity WorldCom was involved in. “Ebbers allowed the accounting fraud because he wanted to protect his personal fortune, which consisted mostly of WorldCom stock. In addition, WorldCom has made loans of $400 million to Ebbers.” (K. Crawford, 2005). An example of selective perception as it relates to the article “Ex-WorldCom CEO Ebbers Guilty,” is Bernard Ebbers taking the stand at his trial and insisting that he knew nothing of the fraudulent actions taking place because he left much of the day-to-day operations to the underlings. “WorldCom’s management worked to falsify financial results in increasingly desperate bids to keep its sagging fortunes concealed from investors.” (K. Crawford, 2005). According to the Wall Street Journal, dozens of people knew about the fraud, including the company’s top management. This scandal was unfortunate for innocent employees and tragic for the economy, but at least Ebbers was found guilty of his negligence. He was convicted and sentenced to 25 years at a minimum-security prison. Crawford, K. (n.d.). Ex-WorldCom CEO Ebbers found guilty on all counts. CNNMoney. https://money.cnn.com/2005/03/15/news/newsmakers/ebbers/. Blumenstein, R., & Pulliam, S. (2003, June 11). Reports say Ebbers and others conspired in worldcom fraud. The Wall Street Journal. https://www.wsj.com/articles/SB105516925669770600....