FIFA Controversies and Recommendations to Effect Reforms - Case Study Example

FIFA Controversies and Recommendations to Effect Reforms By student’s name Course code+ name Professor’s name University name City, state Date of submission Executive Summary The International Federation of Association of Football (FIFA) has recently been rocked by corruption scandals involving the top management. The scandal has led to the push by stakeholders such as the main sponsors for reforms to ensure transparency, accountability and fairness. This report provides a discussion on the issues facing FIFA through analyzing the decisions and judgments made by the FIFA management against key organization theory perspectives such as the agency theory, stewardship and organizational culture. The report finds that the lack of transparency in the operations and decision-making of the organization contributed to the failure in the management of the organization. The lack of a strong organizational culture also contributed to the management woes of the organization. Based on the analysis of the decisions made by the top management, the report then makes recommendations which can help the FIFA management to effect reforms in the organization and restore public confidence in its ability to manage football worldwide. Background The International Federation of Association of Football (FIFA) is the body responsible for the administration of football all over the world. The organization was founded in 1904 with its objective being to extend the reach of football globally. Today, the world football governing body has grown from its seven European members to 208 member nations reflecting the influence that football has across the globe (Rummenigge 2012, 1). Recently, FIFA has come under close scrutiny as the organization has been faced with allegations of corruption ranging from vote buying in the presidential election to bribery in the bidding process for the World Cup. Previous corruption allegations against FIFA have been met by an unwillingness by FIFA executives to allow public scrutiny of its activities. However, recently executives of the organization have been accused of accepting bribes from suppliers of materials, selling their votes to the countries intending to host the World Cup and bribery in the election of the FIFA president. The situation has been made worse by further allegations that the former FIFA president knew of the bribery and corruption issues affective other executive members but took no steps to curb the vices. Previous allegations of corruption in the organization over the years have been dismissed without investigations due to the efforts by the management to avoid transparency. However, these fresh allegations have led to public criticism and the call for reform of the world football governing body. Its main sponsors such as Adidas and Coca-Cola have also been in the frontline in the push for reforms in FIFA. Identified Issues and Analysis The issues facing FIFA relate to the failure to observe corporate governance principles that are crucial for every organization. Specifically, there are issues of transparency, accountability, discipline and ethics and fairness. The height of the controversies facing FIFA arose when the body decided that Qatar would host the World Cup in 2022. Numerous allegations of bribery surfaced after the voting signifying that the decision may not have been based on fairness. Further, the decision was followed by a change in the period when the World Cup would be held due to Qatar’s weather and the fact that Qatar does not have the required football facilities. There are several perspectives of organizational theory that can help analyze the issues facing FIFA. These perspectives are stewardship, agency theory and organizational culture. Stewardship refers to behaviors and attitudes that prioritize on the best interests of an organization or group over personal goals or individual interests (Hernandez 2007, 122). Stewardship emphasizes on focusing on others rather than self. For organizations such as FIFA, stewardship means that those involved in management must commit themselves towards securing the welfare of all stakeholders by advocating for behaviors that place the long-term interests of the organization ahead of self-interest (Brockner 2006, 124). FIFA executives, including the former president, Sepp Blatter, were arrested due to corruption allegations regarding the award of 2018 as well as the 2022 World Cup hosting rights to Russia and Qatar respectively. Such actions do not reflect stewardship as bribery is meant to serve personal interests. The executives ought to have ensured that their decision is purely based on fairness for the sake of all its stakeholders (Hernandez 2012, 172). Stewardship includes advocating for behaviors that give priority to the long-term interests of the organization. Such behavior builds an organizational culture where all the stakeholders of an organization work towards achieving the goals of the organization. Organizational culture refers to a system based on shared beliefs and values that govern people’s behavior in an organization (Nikolova and Jarvis 2016, 68). The involvement of the top management of FIFA in the corruption scandal signifies the lack of an organizational culture that can spearhead the achievement of the organization’s goals. Such an organization needs a culture that is based on ethics and accountability to ensure that their decisions reflect the desire of the global football community they represent. FIFA represents the interests of the football community all over the world. This means that they need to be accountable to the people they represent. Such accountability requires building a culture of transparency where the decisions of the governing body are accessible and can be scrutinized by the public and other stakeholders. The agency theory is also closely connected to stewardship and organizational culture perspectives. Agency theory suggests that both the principal and the agent have common interests. In an organization perspective, the principal is the shareholders while the agent is the management. Agency theory seeks to create an environment where the management acts in the interests of the shareholders rather than following personal interests (Ghoshal 2005, 80). The management, being an agent of the shareholders, must be accountable to the shareholders. FIFA has on other occasions prevented any external investigations into the bribery scandals that have been reported over the years. Such lack of accountability and transparency has culminated to a full-blown corruption scandal that has led to legal sanctions against the senior executives of FIFA. The agency theory requires the management to inculcate moral and ethical values in the entire organization as part of ensuring that the interests of the principal are met. One of the challenges facing FIFA is the fact that its shareholders, which are the national football associations, have major differences based on financial strength. The lack of a proper organizational culture has led to FIFA management leaning towards representing the needs and interests of the richer members (Youd 2014, 6). This explains the increase in the cases of bribery and corruption involving the executives. The foundation of the agency theory is the fact that the management must have common interests with the shareholders. The interests of the management must be those of the organization (Ghoshal 2005, 81). The stewardship and the organization culture perspectives coupled with the agency theory show the need for accountability, transparency and fairness by the FIFA management. The decisions of the management must be guided by the organizational objectives and goals. High-Level Recommendations According to Nonoka and Toyama (2007, 379), proper leadership by managers lies in their capacity to select the right goals for an organization and how to reach them. Managers must be leaders capable of identifying the problems facing an organization and developing successful ways to deal with the problems. The FIFA management must come up with strategies to deal with the management problems affecting the organization. This section outlines some of the recommendations that the FIFA management can adopt to steer the organization in the right direction. The FIFA management needs to incorporate key leadership principles that can help build a positive organizational culture. The FIFA leadership must first take responsibility for the mess in the organizational leadership and move to set the pace in the creation of an ethical culture in the organization. The top management and all members of the organization must be ethical in their decision-making (Cunliffe 2014, 6). Unethical behavior should no longer be tolerated. One of the key governance reforms is to ensure that the management functions of FIFA are separated from the political functions. The FIFA president has been serving as the CEO as well as the Chairman with no clear division of responsibilities. The President should chair the Executive Committee of FIFA which is responsible for supervising the committees and the FIFA administration. The executive and managerial responsibilities should, however, be restricted to the standing committees and the FIFA administration and not the Executive Committee. The FIFA president should also be accountable to the Executive Committee. The FIFA management must be quick to ensure greater financial transparency and allow accountability of the management. Further, the salaries or compensation of the senior executives of FIFA should be disclosed to ensure transparency. The terms of the FIFA Executive Committee and the president should also be reduced to two-four year terms. This will prevent complacency of the management which opens the door for corruption. FIFA must also seek to involve more of its members in the decision-making process to ensure that the global outlook of the organization is represented. This means that the committees must be inclusive of all members as much as possible. Conclusion FIFA has recently been hit by corruption scandals with the top executive members being associated with cases of bribery in the assigning of world cup hosting rights. The scandal has been precipitated by the lack of proper corporate governance characterized by the lack of transparency and accountability in the organization. The application of the agency theory, the stewardship and organization culture perspectives of organizational theory reflect the poor state of the management of the organization. The management had failed in driving the organization in line with the interests of the shareholders or stakeholders and instead pursuing their selfish interests. The report recommends the need for leadership principles to lead the organization in the building of a strong organizational culture based on ethics. The report also recommends greater financial transparency and accountability for the FIFA management and a change in the management structure as some of the ways to ensure reforms in the organization. References Brockner, J 2006, Why it’s so hard to be fair, Harvard Business Review, 84(3), 122-129. Cunlife, A 2014, Management, management studies and managerialism, SAGE Publications Ltd. Hernandez, M 2007, Promoting stewardship behavior in organizations: A leadership model, Journal of Business Ethics, 80(2), 121-128. Hernandez, M 2012, Toward an understanding of the psychology of stewardship, Academy of Management Review, 37(2), 172-193. Nikolova, N and Jarvis, W 2016, Managing, leading, stewardship, Foreign Trade University. Nonaka, I and Toyama, R 2007, Strategic management as distributed practical wisdom (phronesis), Industrial and Corporate Change, 16(3), 371-394. Rummenigge, K 2012, FIFA- Absolutely corruptible? Available at: http://www.iodonline.com/Articles/Tom%20Mortimer%20%20FIFA%20SEPT%2017.09.pdf [Accessed 24 April 2017] Youd, K 2014, The winter’s tale of corruption: The 2022 FIFA World Cup in Qatar, the impeding shift to Winter, and potential legal actions against FIFA, Northwestern Journal of international Law and Business, 35(1), 167-192. Read More