WorldCom: How Leadership and Management Contributed to the Company's Failure
LDR/531
October 29, 2012
The genesis of WorldCom began in 1983 when businessmen William Rector and Murray Waldron mapped out a plan to create a long-distance telephone service provider on a napkin over coffee in Hattiesburg, Miss. Their new company, Long Distance Discount Service (LDDS), began operating as a long distance reseller in 1984. Early investor Bernard Ebbers was named CEO the following year ("Daniels Fund Ethics Innitiative: WorldCom’s Bankruptcy Crisis", 2011). WorldCom evolved into the second largest long distance telecommunications company in the United States and one of the largest companies handling worldwide Internet data traffic (Moberg, 2006). WorldCom achieved its position as a major player in the telecommunications industry through the successful completion of 65 acquisitions (Moberg, 2006). WorldCom was in position to become one of the largest telecommunication corporations in the world. Instead, it became the largest bankruptcy filing in United States history at that time.
WorldCom was operated by CEO Bernard Ebbers, and CFO Scott Sullivan. They operated WorldCom using an executive leadership style which was deterministic and results-oriented. They were able to create an environment where the leaders and management staff were not to be questioned and employees would do what they were told. According to "Why Smart Executives Fail: Worldcom" (2011), “WorldCom leaders bred a culture of cutting corners to meet business needs. Customers, employees, and shareholders were all pawns in the game of making money”. Worldcom was an ethically challenged company that was concerned about only one thing; which was making money.
In addition to WorldCom’s leadership and management style the company was also found to be guilty of fraudulent actions and improper conduct such as manipulating financial statements to capitalize line costs that had been treated as expenses in...