Lessons From the Rise and Fall of WorldCom

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Aug 5, 2002 by Sean Luce

After the fall of Enron, the 7th largest corporation in the country last December, the auditors were hot on the trail of such Fortune 100 companies as Tyco, Dynergy and, yes, even WorldCom.

In February, I learned that the SEC had just notified WorldCom shareholders that the company had to secure $1 billion in loans to stay afloat. Though I'm not a Warren Buffet by any stretch of the imagination, I thought it looked a little suspicious, as WorldCom had a profit sheet of $2.3 billion throughout 2001. If WorldCom seemed to be only a few fries short of a Happy Meal, why would they need to borrow $1 billion? Then, of course, the news popped on June 26 that WorldCom had misrepresented $3.8 billion in expenses, reporting it as profit.

I wanted to find out what happened to WorldCom as much as I had wanted to know about K-Mart (Lessons From K-mart, Radio Ink, April 1, 2002) after its fall from grace. Whether you are one of the smallest stations or one of the largest Radio stations in the country, we should all avoid these 10 WorldCom management mistakes and make sure they don't apply to us:

1) Casper the Friendly Ghost Syndrome: Upper-level managers disappear, and the inmates start running the asylum. Poor decisions are made with no accountability.

2) Gossip runs rampant: Open doors are suddenly closed. Information, formerly shared with everyone, now is locked away. People crave workplace information; when there is none, they tend to make up their own.

3) No accountability reviews: Once there were quarterly reviews; now there are none. There's no process for measuring productivity. Even top-level managers are not being held accountable.

4) Michael Jackson Syndrome: Hunker down behind the desk, wear a glove, and don't get your hands dirty. Managers now hide behind their doors and rarely come out.

5) Sitting on information: Once data is collected on competition or new technology, managers sit on the information, delaying change and thereby losing their competitive advantage.

6) No batteries: Once-fast-moving managers now lack the energy to motivate their troops. Peter Drucker said, "A manager's No. 1 priority is to control his or her own energy, and No. 2 is to control the energy of others."

7) No more kudos: Monthly recognition awards fall by the wayside, and lack of reward affects company morale.

8) Managers play favorites: What once was a team has turned into a group of haves and have-nots - and the have-nots have stopped producing.

9) Nikita Kruschev managers: Once-benevolent managers come out from behind the desk and wreak havoc on their employees, causing mistakes and huge insurance claims from stress.

10) Mixed messages: Managers forget what they told to whom, and credibility evaporates behind lies and deceit. Honesty is the best policy! In the end, remember that the worst mistake of all is the mistake we don't admit until it's too late - and therefore we can't correct it.

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