Ericsson Bribe Scandal
The shares of Ericsson dropped by nearly 15% as their investors reacted to reports that the organization had engaged in payments to the ISIS terror organization to be able to achieve access to specific transport routes within Iraq. This scandal has had a significant negative impact on the organization as it has been the largest share drop in a single day since 2017. The organization conducted an investigation comprised of Ericsson’s employees, suppliers and vendors conduct within Iraq between 2011 and 2019 (Fletcher, 2022). The investigation identified that there were serious breaches of compliance rules as well as it also pointed out significant evidence linked to corruption such as making financial donations without a clear beneficiary, paying suppliers for work without defined scope as well a and documentation, utilization of suppliers to make cash payments, financing inappropriate travel and expenses as well as inappropriate utilization of sales agents and consultants. In relation to the results of the investigation, Ericsson asserted that several employees were terminated from the organization as well as numerous disciplinary actions were taken.
Moreover, reports following the extensive years of investigations on the Swedish company identified that the organization was breaching its corruption settlement as it failed to offer specific documents as well as information as per the U.S. Department of Justice (DOJ). However, in the year 2019, Ericsson paid more than a billion dollars in penalties to resolve bribery and corruption investigations by the DOJ as well as the Securities Exchange Commission for violating the U.S. Foreign Corrupt Practices Act. Fundamentally, authorities have identified that Ericsson had established and falsely recorded millions of dollars in bribes as part of the long-running scheme (Fletcher, 2022).
Disciplining those involved
The organization’s anti-corruption system tends to basically comprise of a written commitment to business ethics in alignment with the organization’s mission, vision, and value statement. In most cases, the organization’s code of conduct tends to offer elaboration statements of policy. Additionally, the issuance of the codes or the public statement allows the organization to be able to honor its ethical commitment in its daily operations. As a manager at Ericsson, I would discipline the various employees involved in the bribery by terminating them from the organization as well as allowing them to be arrested for engaging in corruption activities as well as utilizing the organizational resources to conduct these unethical activities (Pope, 2017).
I suspect that terminating the employment contract f the involved employees and also going the extra mile to ensure that they have been arrested tends to be the most appropriate approach as it will develop an image to the public that the organization was not part of the unethical conduct (Pope, 2017). Also, it will ensure that the entire workforce understands that unethical behavior in the workplace has negative consequences, and it is important to focus on engaging in positive conduct to be able to develop personally and professionally. Fundamentally, it also tends to be crucial for the organization to frequently educate the workforce on the need to engage in ethical conduct to be able to enjoy the various benefits linked to it.
Plan to Limit Future Ethical Issues
Often ethical issues tend to taint the image as well as the reputation of the organization, and it is quite to the organizational administration to address the various emerging issues linked to ethical conduct. The first approach to limiting future ethical issues from occurring is educating the workforce on what really matters to the organization. This approach tends to be quite crucial as it allows the employees to be able to achieve a detailed understanding of what the organization expects from them. On the other hand, this approach also allows the organizational administration to understand the character and conduct of their workforce (De Cremer & Vandekerckhove, 2016). Moreover, this approach also allows the administration to understand whether its compensation strategy rewards the employees appropriately. Furthermore, this approach also allows the administration on how the workforce feels about the company. For instance, if the workforce is ashamed of the organization, the organization may experience numerous issues linked to ethical conduct.
Another step that will follow would be creating an organizational culture that promotes and rewards ethical behavior. This approach tends to be quite effective as it allows the employees to understand the goals and objectives of the organization and the role they need to play to ensure these goals are successfully achieved. Additionally, developing an organizational culture tends to encourage the workforce to speak up if they believe that something is wrong (De Cremer & Vandekerckhove, 2016). It has been identified that encouraging the workforce to speak up allows them to feel as if they are part of the organization, and as a result, it tends to enhance confidence and self-respect, which as a result, promotes a more ethical workplace climate.
In conclusion, ethical scandals tend to have a negative impact on the organization’s reputation as well as they may have more major negative consequences. For instance, Ericsson has suffered from a significant drop in its shares due to providing bribery payments to the ISIS terror organization in Iraq.
References
De Cremer, D., & Vandekerckhove, W. (2016). Managing unethical behavior in organizations: The need for a behavioral business ethics approach. Journal of Management & Organization, 23(3), 437-455. https://doi.org/10.1017/jmo.2016.4
Fletcher, B. (2022, March 30). Ericsson shareholders hold board accountable in face of uncertainty. Fierce Wireless. https://www.fiercewireless.com/wireless/ericsson-shareholders-hold-board-accountable-face-uncertainty
Pope, K. S. (2017). Understanding the challenges and seizing the opportunities to strengthen ethics in organizations and individuals. Five Steps to Strengthen Ethics in Organizations and Individuals, 1-10. https://doi.org/10.4324/9781315192239-1
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