Ethical culture and accountability at Lehman Brothers

Ethicality at Lehman Brothers

In response the question, what was the culture at Lehman Brothers like? How did this culture contribute to the company's downfall? The most visible attribute of just how convoluted and unethical the culture had become was the willingness of senior management to redefine the organizations' reality to fit their specific needs. Modifying balance sheets, the creation and often-used Repo 105 financial transaction and belief by senior management that the means justified the ends all contributed to create a culture devoid of ethics. The lack of accountability and transparency at the senior-most levels of the company led to a culture of invincibility and ethicacy above the law (Murphy, 2010).

Analysis

At the center of the Lehman Brothers financial collapse is a disintegration of accounting, financial and operational controls that reflect regulated approaches to accountancy and financially sound reporting. This lack of accountability and fidelity of financial and operational controls is predicated on a core set of senior executives who increasingly chose strategies that deliberately benefited them at the expense of others. By doing this, they had intentionally created a pattern that crushed utilitarianist-based approaches to ethics, and in so doing, created a culture of unethical values and behaviors (Fernando, May, Megginson, 2012).

It is often said what gets measured gets better, and in a paradoxical way this is also exactly what happened at Lehman Brothers. Measuring just how far balance sheets and other financial instruments could be manipulated and modified to meet the firms' specific needs with no regard of how these actions would impact their shareholders, employees or the national economy shows that these constituents were never part of the decision-making process to begin with (Murphy, 2010). With this foundation in place of no accountability and a financial reporting system designed to further reinforce the management teams' views of opportunity as unbounded by ethics, unethical behavior flourished. When there is a lack of accountability in measuring the ethicacy of an organization, behaviors flourish that seek to capitalize on the weaknesses of others. In short, a lack of accountability makes a predatory, toxic-like nature of people emerge as it did at Lehman Brothers with people who took exceptional risks at the cost of others being called "conquering heroes." This aspect of corruption and lack of ethicacy is what makes ironically forces a company into its own death spiral. When an organizations' business model is predicated on trust as Lehman Brothers was, and the trust is violated through willful acts that illustrate how senior management willingly violates the confidence of customers, its destruction is imminent (Fernando, May, Megginson, 2012).

Conclusion