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Lehman

In: Business and Management

Submitted By jacquelinelow
Words 768
Pages 4
Question 1:

From this case study, it showed how Lehman Brothers walked down to the end of it business. Through Lehman Brothers’ case, it reflects the ugly side of a corporate. A big recognized company collapse due to it unsuccessful leadership management, culture and dishonesty by it people caused the company walked down to the end of it business. There are several points showed how it gone bankrupted. By using the ethical perspective to look at Lehman Brothers’ situation, it showed that the company being dishonest to it clients, failure in the company leadership and corporate management are the major problems that lead to the company downfalls. As a Wall Street icon, they disappointed the public and being irresponsible towards their actions, against the ethnical issue by not being honest to review the actual situation of the company, but using others method to cover it annual report. In my opinion, the top management is the main issue that caused the downfall of Lehman Brothers. According to the case study, it mentioned the major problem at Lehman was culture and reward, it showed the top management of the company did not have a structure way to motivate and guide their employees on the appropriate way of doing tasks. For example, individuals who makes questionable deals were hailed and treated as “conquering heroes” and the others who questionable the decision was often being ignored. This shows that the company only wants to have short term earning instead of gaining long-term relation with the clients by encourage the employees to take excessive risk, closing “risky deal” instead of consider deeper of the consequences might happen with the questionable deal. This might against the value of the company and affect the value the employees that caused it lose faith with the company. Besides, the employees who doubt about the deal and voice out personal opinion get ignored from the higher management are the main point that showed the communication and the relationship between employers and employees in Lehman Brothers is not view as an importance issue. This may caused the unwillingness and disobedience of some employees in Lehman because their opinion did not get the attention from the management, whereas only those who did their job just to achieving their personal values and goals get good rewards from the company. They use to reward employees with lots of money for taking risks, to encourage risk taking to earn better profit. Because of the rewards, Employees has drive to work harder to get better money but has forgotten to put their clients into consideration by lower down the risk and to do better and deeper analyses before taking every move. Furthermore, in the case of Lehman Brothers, it showed a company that did not put his people/ employees into consideration or as assets of it company. This showed when Lehman decided to lower the medical insurance costs just to get an expense off the balance sheet, and rejected the suggestion of a loyal consultant than has been worked sincerely 9 years with Lehman just to cover the company’s ass with some unethical decision. Moreover, the third party, Ernst & Young aware of the use of Repo 105 by Lehman but did not voice out or report to the related association. Being a top professional auditor firm, E&Y did not perform it professionalism to show responsibility to it firm and try to help the unethical party to hide it true situation of it company. In this scenario, it showed the unethical issue that always happens in the business industry, Corruption. In my opinion, the structure of the company and the communication in a corporate is very important. For example, if Lehman did concerns and take the suggestions and comments of it employees, the company might not have to go bankrupt. As a big corporation, Lehman should have a better structure of rewarding take can help the company to gain value between itself and the employees instead just concerns about the company value itself. Try putting it this way, if Lehman has better controls in his internal risk limits, and by giving rewards to the employees that really perform well but not based on just to get the high incentive, closing the right deal, Lehman might gain the respect from all the employees and the employees will have higher motivation and personal value to work for the company.

In conclusion, the factors that caused Lehman Brother to bankrupt heavily caused by the good incentive that the employees could get and the encouragement of risk taking by the employer of the company.

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