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    Activities - Session 3

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    dansso
    The document discusses three topics: 1. An ethics dilemma about the ethical use of technology in sports competitions. It raises questions about whether advanced equipment gives an unfair advantage and whether inability to afford such gear could affect competition outcomes. 2. A work team exercise where employees may face pressure to donate to charitable causes even if they cannot afford it, and how managers should handle such situations. 3. A case study on the collapse of Lehman Brothers, where an excessive risk-taking culture and questionable accounting practices like hiding debts contributed to its demise, despite past examples like Enron that showed businesses need to act ethically.

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    Activities - Session 3

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    dansso
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    The document discusses three topics: 1. An ethics dilemma about the ethical use of technology in sports competitions. It raises questions about whether advanced equipment gives an unfair advantage and whether inability to afford such gear could affect competition outcomes. 2. A work team exercise where employees may face pressure to donate to charitable causes even if they cannot afford it, and how managers should handle such situations. 3. A case study on the collapse of Lehman Brothers, where an excessive risk-taking culture and questionable accounting practices like hiding debts contributed to its demise, despite past examples like Enron that showed businesses need to act ethically.

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    The document discusses three topics: 1. An ethics dilemma about the ethical use of technology in sports competitions. It raises questions about whether advanced equipment gives an unfair advantage and whether inability to afford such gear could affect competition outcomes. 2. A work team exercise where employees may face pressure to donate to charitable causes even if they cannot afford it, and how managers should handle such situations. 3. A case study on the collapse of Lehman Brothers, where an excessive risk-taking culture and questionable accounting practices like hiding debts contributed to its demise, despite past examples like Enron that showed businesses need to act ethically.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    33 views2 pages

    Activities - Session 3

    Uploaded by

    dansso
    The document discusses three topics: 1. An ethics dilemma about the ethical use of technology in sports competitions. It raises questions about whether advanced equipment gives an unfair advantage and whether inability to afford such gear could affect competition outcomes. 2. A work team exercise where employees may face pressure to donate to charitable causes even if they cannot afford it, and how managers should handle such situations. 3. A case study on the collapse of Lehman Brothers, where an excessive risk-taking culture and questionable accounting practices like hiding debts contributed to its demise, despite past examples like Enron that showed businesses need to act ethically.

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    CLASS ACTIVITIES – SESSION 3

    I. ETHICS DILEMMA
    In many ways, technology has made all of us more productive. However, ethical issues do arise in how and
    when technology is used. In the sports arena, all kinds of technologically advanced sports equipment
    (swimsuits, athlete’s shoes, etc.) have been developed that can sometimes give competitors an edge over
    their opponents. We see them in sports competitions.
    1. What do you think?
    2. Is this an ethical use of technology?
    3. What if your school was competing for a championship and couldn’t afford to outfit athletes in such
    equipment and it affected your ability to compete or win? Would that make a difference?
    4. What ethical guidelines might you suggest for such situations?
    #########################################

    II. WORKING TOGETHER – Team Exercise


    In an effort to be (or at least appear to be) socially responsible, many organizations donate money to
    philanthropic and charitable causes. In addition, many organizations ask their employees to make
    individual donations to these causes. Suppose you’re the manager of a work team, and you know that
    several of your employees can’t afford to pledge money right now because of personal or financial
    problems. You’ve also been told by your supervisor that the CEO has been known to check the list of
    individual contributors to see who is and is not “supporting these very important causes.” Working
    together in a small group of three or four, answer the following questions:
    i. How would you handle this situation?
    ii. What ethical guidelines might you suggest for individual and organizational contributions in such a
    situation?
    iii. Create a company policy statement that expresses your ethical guidelines.

    II. CASE APPLICATION – Lesson from Lehman Brothers: Will We Ever Learn?

    On September 15, financial services firm Lehman Brothers filed for bankruptcy with the U.S. Bankruptcy Court in the
    Southern District of New York. That action—the largest Chapter 11 filing in financial history—unleashed a “crisis of
    confidence that threw financial markets worldwide into turmoil, sparking the worst crisis since the Great
    Depression.” The fall of this Wall Street icon is, unfortunately, not a new one, as we’ve seen in the stories of Enron,
    WorldCom, and others. In a report released by bankruptcy court-appointed examiner Anton Valukas, Lehman
    executives and the firm’s auditor, Ernst & Young, were lambasted for actions that led to the firm’s collapse. He said,
    “Lehman repeatedly exceeded its own internal risk limits and controls, and a wide range of bad calls by its
    management led to the bank’s failure.” Let’s look behind the scenes at some of the issues.

    One of the major problems at Lehman was its culture and reward structure. Excessive risk taking by employees was
    openly lauded and rewarded handsomely. Individuals making questionable deals were hailed and treated as
    “conquering heroes.” On the other hand, anyone who questioned decisions was often ignored or overruled. For
    instance, Oliver Budde, who served as an associate general counsel at Lehman for nine years, was responsible for
    preparing the firm’s public filings on executive compensation. Infuriated by what he felt was the firm’s “intentional
    under-representation of how much top executives were paid,” Budde argued with his bosses for years about that
    matter, to no avail. Then, one time he objected to a tax deal that an outside accounting firm had proposed to lower
    medical insurance costs saying, “My gut feeling was that this was just reshuffling some papers to get an expense off

    MBA: MANAGEMENT of ORGANIZATIONS


    the balance sheet. It was not the right thing, and I told them.” However, Budde’s bosses disagreed and okayed the
    deal.

    Another problem at Lehman was the firm’s top leadership. Valukas’s report was highly critical of Lehman’s
    executives who “should have done more, done better.” He pointed out that the executives made the company’s
    problems worse by their conduct, which ranged from “serious but nonculpable errors of business judgment to
    actionable balance sheet manipulation.” Valukas went on to say that “former chief executive Richard Fuld was at
    least grossly negligent in causing Lehman to file misleading periodic reports.” These reports were part of an
    accounting device called “Repo 105.” Lehman used this device to get some $50 billion of undesirable assets off its
    balance sheet at the end of the first and second quarters of 2008, instead of selling those assets at a loss. The
    examiner’s report “included e-mails from Lehman’s global financial controller confirming that the only purpose or
    motive for Repo 105 transactions was reduction in the balance sheet, adding that there was no substance to the
    transactions.” Lehman’s auditor was aware of the use of Repo 105 but did not challenge or question it. Sufficient
    evidence indicated that Fuld knew about the use of it as well; however, he signed off on quarterly reports that made
    no mention of it. Fuld’s attorney said, “Mr. Fuld did not know what these transactions were—he didn’t structure or
    negotiate them, nor was he aware of their accounting treatment.” A spokesperson from Ernst & Young (the auditor)
    said that, “Lehman’s bankruptcy was the result of a series of unprecedented adverse events in the financial
    markets.”

    Discussion Questions

    i. Describe the situation at Lehman Brothers from an ethics perspective. What’s your opinion of what
    happened here?
    ii. What was the culture at Lehman Brothers like? How did this culture contribute to the company’s downfall?
    iii. What role did Lehman’s executives play in the company’s collapse? Were they being responsible and ethical?
    Discuss.
    iv. Could anything have been done differently at Lehman Brothers to prevent what happened? Explain.
    v. After all the public uproar over Enron and then the passage of the Sarbanes-Oxley Act to protect
    shareholders, why do you think we still continue to see these types of situations? Is it unreasonable to
    expect that businesses can and should act ethically?

    MBA: MANAGEMENT of ORGANIZATIONS

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