Rooting Out Corruption at Siemens Global - Case Study Example

Case Studies: Case Studies 9.2 and 9.3 Case Study 9.2: Rooting Out Corruption at Siemens Global The elements ofa zero-tolerance policy should include a clear and explicit enumeration and communication of the policy to all personnel at Siemens Global, as well as a set of sanctions and rewards, consistent with a standardized code of ethical behavior where violations would be dealt with accordingly. This must be integrated with the policy in addition to all the actions that were instituted, including rooting out corrupt personnel; governance from a compliance team; encouraging personnel to report unethical and corrupt activities; instituting antibribery rules; and training personnel to inculcate values and practices of an ethical and corrupt-free work environment. The only lacking portion is the enforcement of strict sanctions and rewards mechanisms which would ultimately deter the employees to even consider bribery or manifesting corrupt behavior. 2. The steps instituted by Siemens Global to root out corruption is already extensive and comprehensive. As noted, there must be a system of rewards for compliance and sanctions for non-compliance. Likewise, since there is an aspect of cultural element that have considered bribery as part of their organizational culture, there should be vigilance and regular monitoring of the performance of all employees regarding conformity to the zero-tolerance policy through performance appraisals, random checking, and imposition of stricter penalties for violations, as deemed necessary. 3. Yes, one strongly believes that given the massive scale of previous corrupt transactions that involved billions of dollars through the years, the financial penalties were merely about 3.75% of their 72 billion annual sales, which was not even commensurate to the usual percentages (a minimum of 5 to 6% of the contract’s value to a maximum of 40%) accorded to bribery in their previous dealings. Therefore, they should have been imposed additional financial penalties to hurt so much that they would not ever consider bribery and corruption in current and future undertakings. 4. Siemens can therefore move beyond compliance to develop a healthy ethical climate by being more vigilant and ensuring through frequent monitoring, training, and performance evaluation that all employees and officers comply with the zero-tolerance policy. A code of ethical behavior should be integrated as part of their organizational policies. Only through a system of regular check and balance, as well as conformity to transparency and accountability, would Siemens Global be able to regain an ethical culture that would be respected and adhered to at all times. 5. The leadership and followership ethics lessons learned from the case included recognizing that the actions and behavior of leaders are usually emulated by the followers. As such, if leaders are corrupt, most likely, followers are also corrupt. Thus, the turn around this corporate image and perception, leaders must exercise due diligence in acting, behaving, communicating, and living an ethical, moral, and legal life. Case Study 9.3: The Failure of Washington Mutual 1. The signs of unethical and unhealthy climate that can be seen at Washington Mutual (WaMu) are as follows: (1) offering loans to borrowers even if these borrowers could not effectively afford paying for the loans; (2) focusing on volume of loans, rather than on quality; (3) inability to exercise due diligence in assessment of qualified borrowers; (4) rewarding personnel according to volume of transactions that invited risk and fraud; (5) penalized employees who are doing the right job; and (6) paying off brokers excessively. 2. The similarities seen in WaMu and in other corporate ethical failure is that the leaders started imposing or implementing unethical activities that were emulated by personnel down the line. Likewise, the leaders, like CEO Killinger received excessive bonuses and compensation packages over and above what is normally the standard compensation package in the industry. In addition, corporate ethical failures manifested an organizational culture that thrived on corruption, bribery, unethical behavior, and conformity to unconventional work behavior that breeds contempt and serving the selfish interests of a few. 3. Homeowners have much to blame for the mortgage crisis and the fall of WaMu, especially those who knew at the onset that they could not afford to pay for the loans they contracted and those who ultimately have no plans to pay off the loans. These homeowners, as borrowers, have the responsibility to pay and any amount applied for should have been determined to be consistent with their capacities for payment. 4. One strongly believes that CEO Killinger should return some of the millions he earned while at WaMu since these were spuriously gained at the expense of other stakeholders: the employees, the society, and the government who had to bail some of these financial institutions. Since these millions were out rightly excessive and not responsibly nor ethically earned, CEO Killinger must actually be ordered by the court or the board of directors of WaMu to return them, as specifically identified. 5. One also believes that the mortgage crisis could have been predicted or at least checked at one point in time. Taking WaMu’s situation, for instance, even prior to 2003, they have started their aggressive loan strategies that encouraged subprime loans in excessive volumes. There are government agencies that are expected to conduct regular external audits to banks and financial institutions, which, at some point, say by 2004 or 2005, should have already understood that this strategy would eventually cause a global financial crisis. It is therefore possible that leaders failed to take action to prevent it since there were no conclusive evidence or proof yet of excessive defaults. Leaders had to contend on seeing the positive side which was rising stock prices and higher revenues that were generated more than the potential failure. 6. The leadership and followership ethics lessons that could be taken from this case include the responsibilities of higher management and employees to discern and report transactions that are unhealthy and unethical and could significantly jeopardize the situation of the organization in the long run. In Wamu’s situation, no employee (managers or personnel) had the courage to report the unethical dealings to external auditors or government agencies governing the performance of financial institutions. As such, the practice of WaMu was even paralleled by other financial institutions that resorted to providing high risk subprime mortgages that led to their failure. Read More