Madoff Securities
EXECUTIVE SUMMARY
In the aftermath of the revelation that Bernard Madoff 's investment fund was a tremendous Ponzi scheme, businesses have fallen under heavy scrutiny and continue to be challenged by the public as the result of a growing mistrust in the way business is conducted. Issues in management practices, like conflict of interest, can be raised from this debacle.
Madoff developed a culture of individualism and arrogance that silenced any insurgence. His communication and manipulation skills helped him generate income for himself, while keeping any suspicion of fraud away. Formal control mechanisms and transformational leadership skills may have avoided such an unethical attitude.
Madoff’s scam has been impacting several charities, private investors as well as the health of the financial markets. Madoff’s low moral development stage and his well oiled reputation management skills were reasons for his long lasting success. In actual fact, Madoff disregarded social impact management.
Unless radical changes happen in the institutional due diligence, in risk assessment practices and in ethical leadership training, we will see more and more such cases, especially during uncertain times.
TABLE OF CONTENTS
Introduction page 4
1. The internal and external environments
1.1 Organisational culture of Madoff Securities page 4 1.2 The external environment page 5 1.2.1 General environment page 6 1.2.2 Specific environment page 6
2. Ethics page 7
3. Corporate social responsibility page 9
Conclusion page 11
References
INTRODUCTION
This report discusses and illustrates the role of the internal and external environments, ethics and social responsibility in a modern organization. The main case study used is Madoff Securities, the US finance company that collapsed last year after a web of fraudulent and unethical activities were exposed. The discussion blends theory and facts, from which
In the aftermath of the revelation that Bernard Madoff 's investment fund was a tremendous Ponzi scheme, businesses have fallen under heavy scrutiny and continue to be challenged by the public as the result of a growing mistrust in the way business is conducted. Issues in management practices, like conflict of interest, can be raised from this debacle.
Madoff developed a culture of individualism and arrogance that silenced any insurgence. His communication and manipulation skills helped him generate income for himself, while keeping any suspicion of fraud away. Formal control mechanisms and transformational leadership skills may have avoided such an unethical attitude.
Madoff’s scam has been impacting several charities, private investors as well as the health of the financial markets. Madoff’s low moral development stage and his well oiled reputation management skills were reasons for his long lasting success. In actual fact, Madoff disregarded social impact management.
Unless radical changes happen in the institutional due diligence, in risk assessment practices and in ethical leadership training, we will see more and more such cases, especially during uncertain times.
TABLE OF CONTENTS
Introduction page 4
1. The internal and external environments
1.1 Organisational culture of Madoff Securities page 4 1.2 The external environment page 5 1.2.1 General environment page 6 1.2.2 Specific environment page 6
2. Ethics page 7
3. Corporate social responsibility page 9
Conclusion page 11
References
INTRODUCTION
This report discusses and illustrates the role of the internal and external environments, ethics and social responsibility in a modern organization. The main case study used is Madoff Securities, the US finance company that collapsed last year after a web of fraudulent and unethical activities were exposed. The discussion blends theory and facts, from which
References: Many people think that Madoff was selfish and heartless and put profit before people (Harburg, 2009). On his credit, humans are blinded by their self interest. We have little time worry about the morality that affects the common good. Misleading the market, inflating revenues through fictious sales, market manipulation and forged documents were examples of Madoff’s unethical conduct. Ethics refer to the principles that define right or wrong conduct (Robins et al. 2009, p. 183). Madoff knew that by recruiting feeder funds from different customer bases, he could increase the number of circles he could tap into for new victims (Wells, 2009). Through donations to charities, Madoff was supporting his desired public image. Madoff would be an advocate of another theory, the classical view, which says that management’s only social responsibility is to maximize profits (Robins et al. 2009, p. 167).