Nortel

suggests that if the board member’s actions were in line with the company’s top CEO’s than what they were doing was obviously right. They figured if there actions were not in accordance with the CEO’s than they would be told they were wrong and needed to change what they were doing. In the case of Nortel’s board they were never questioned by any of the companies shareholders on their ethical intuition and thus they collected a paycheck for not properly identifying the wrong doings of individuals within the company. When it comes to the meltdown Nortel faced it was a very common site among other companies such as Enron and WorldCom, the one question that needs to be asked is why companies continue to make these poor decisions after seeing

These companies lacked corporate citizenship, which describes a business as meeting its “economic, legal, ethical and philanthropic responsibilities” (Collins, 2011, p. 118). In the case of Nortel, its CEO’s were paid very lucratively to equal a one million dollar salary each year not to mention a very nice bonus, which reached an all time high of $5.6 million in 2000 (Fogarty, 2011, p. 541). These bonuses weighed heavily on the operating earning per share which meant the more stock the company had sold the more money there CEO’s were raking in. For Roth all this meant was he had to keep acquiring acquisitions to meet future projections and watch his pockets continue to grow at the expense of others. These actions did not promote proper corporate citizenship because they did not benefit employees, customers, investor relationships and the community in any way. Nortel’s poor corporate citizenship would ultimately lead its primary stakeholders the employees 60,000 in total to lose their jobs and stock holders to lose a great deal of money as Nortel’s share prices dropped from $200 to a mere $0.67 a share (Fogarty, 2011, p. 536). Knowing that history repeats itself and that humans are still going to make poor decisions there are some remedies that can be put

One of such remedies revolves around education and instilling organizational trust. Organizational trust “refers to having a positive attitude that another member of the organization will be fair and not take advantage of one vulnerabilities or dependency in a risky situation” (Collins, 2011, p. 170). Take for example had Nortel’s board been educated they may have not been so trusting with the CEO’s to the point that there lack of knowledge was taken advantage of. Instead if they were educated they would have been able to perform their job to the fullest of their ability and keep the company on an ethical path to success. On the other end of that, the CEO’s would have been able to trust in the board instead of relying on their own wants ensuring that what was best for the whole company and not just themselves occurred. Next incentives should be regulated to ensure that they are fair across the whole organization and not just at the top levels of management. Once incentives are deemed fair then an organization must regulate punishment for those who knowingly commit fraud and put the company and it shareholders at risk of negative effects. Finally after all of these measures are put into place an organization will then be truly able to regulate its