Abstract
Bernard Madoff was sentenced to 150 years for running one of the country’s biggest fraud schemes. The scheme involved a breach of trust. It affected the ability of individuals to trust one another. It also outlined the need for organizations to remain true to their purpose and for the society to exercise vigilance. The terminal values that may have influenced Madoff’s decision-making include leading a comfortable and exciting life, security, a sense of accomplishment, and social recognition. The instrumental values that he may have used to accomplish his goals include ambition, imagination, capability, and courage. Ethical Egoism theory of ethical behavior is best applicable to Madoff’s behavior because he defrauds his clients to achieve personal goals. Many cultures would consider his behavior considered as unethical because it involves cheating, theft, and a breach of trust, which they discourage. Finally, my organization uses discipline for ethical misconduct and includes ethical behavior in performance ratings of its leaders as strategies of holding leaders accountable for adhering to ethical principles.

You're lucky! Use promo "samples20"
and get a custom paper on
"Developing Ethical and Authentic Leadership Behaviors"
with 20% discount!
Order Now

The Bernard Madoff Sentenced to 150 Years for Fraud Scheme case is a news report that describes the sentencing of the perpetrator of one of America’s biggest Ponzi scheme. It consists of a newsroom reporter, a field reporter, and various victims of the scheme. The newsroom reporter describes the sentencing before inviting the field reporter, who is stationed outside the courthouse where the sentencing is taking place, to provide more details. The field reporter then asks some of the victims to express their views and opinions about the sentencing. The sentencing has various implications for individuals, organizations, and the society. The case involves a breach of the trust that investors had in Madoff, which may limit the ability of individuals to trust in others. The case may also outline the importance of corporate integrity and social responsibility for organizations. It may help organizations understand the need to provide their customers and clients with the actual goods or services that they purport to provide. Finally, the case outlines the need for vigilance for the society. It is important to note that Madoff would not have run the scheme for long had members of the society been vigilant enough and not trusted him based on his social status.

Various values, as proposed by Rokeach in the Gamble & Gamble text, may have guided Bernard Madoff’s decision-making process. They fall into two categories, which are the terminal values and instrumental values categories. The earlier category refers to the goals and objectives that a leader would like to achieve during his or her lifetime while the latter category refers to the means that leaders or individuals use to achieve their terminal values. The terminal values that may have guided Madoff’s decision-making include leading a comfortable and exciting life, security, social recognition, and a sense of accomplishment. He may have established the fraudulent scheme to steal money from investors and use it to fund a comfortable and exciting life for himself. According to Henriques (2009), Madoff may have used the money obtained fraudulently to finance his luxurious lifestyle, which included yachts, a penthouse, and a French Villa. His decision-making may also have been influenced by the desire to secure his future in financial terms. He may have anticipated using the fraud money to finance his luxurious life in the future. Finally, Madoff’s decision-making may have been influenced by the desire for social recognition and a sense of accomplishment. He may have hoped to gain social recognition and a sense of accomplishment for promising and providing investors with high returns on their investment. He may have used the money from new investors to pay high returns to older investors, which is the mode of operation for most Ponzi schemes. The provision of high returns may have made him very popular among investors, which explains the fact that he collected approximately $65 billion from his clients (Yang, 2014). Ambition, capability, courage, and imagination are the instrumental values that best explain Madoff’s decision. The desire to lead a comfortable and exciting life may have given rise to the ambition to obtain money, from whatever source, to fund such a life. In turn, the ambition may have led to the imagination and implementation of the Ponzi scheme. According to Yang (2014), investors and other members of the public had a lot of trust in Madoff because of his broad knowledge and experience in the financial industry. For example, he helped establish the Nasdaq stock market, sat on the board of National Association of Securities Dealers, and advised SEC on trading securities. The experience may have provided him with the capability to run the scheme undetected. Finally, Madoff had the courage to run the scheme and defraud his clients.

Philosophers have advanced various theories over the years to explain ethical behavior. Some of them include Kantianism, Utilitarianism, ethical egoism, virtue ethics, altruism, and servant leadership. Ethical egoism is most applicable to the leader in the Madoff sentencing case. According to Gamble & Gamble (2013), ethical egoism is based on the notion of self-interest. Ethical egoists focus on personal goals such as winning, being the best, and profit maximization. Madoff was interested in creating good for himself. He defrauded his clients to increase his personal wealth. According to Yang (2014), he stole around $20 billion of the $65 billion that he collected from his clients.

Madoff’s behavior would have been considered unethical in other cultures. It involved cheating and stealing from clients. It also involved breaching the trust that his clients had in him. Most of the cultures around the world discourage the three elements involved in the case. therefore, they would consider Madoff’s behavior as unethical.

The application of Sissela Bok’s model of ethical decision making, which is described in the Gamble & Gamble (2013) text, might have resulted in a different outcome for Madoff. The model helps leaders consider all alternatives as opposed to making uninformed and premature decisions. It uses three steps to analyze ethical decisions. They are asking one’s conscience about the rightness of the decision, considering alternative means of achieving one’s goals without raising ethical issues, and consulting with the parties involved to determine how one’s actions could affect them. The use of the model could have discouraged Madoff from establishing and running the fraudulent scheme. For example, the first step could have helped him realize that the scheme was not right. For this reason, he could have considered alternative means of raising money to fund and secure his luxurious life without raising ethical issues, which is the second step of the model. In the third step, Madoff could have compared and contrasted the effects that the different means of achieving his goals would have on his clients. For instance, he could have realized that the scheme would shatter the lives of many people, which could discourage him from establishing and running it. Therefore, Madoff would not involve himself in fraudulent activities had he used Sissela Bok’s Model of decision making. Consequently, he would not have been jailed for the fraudulent activities.

Different companies use different strategies to hold their leaders accountable for adhering to ethical principles. For example, my organization uses the discipline for misconduct strategy and includes ethics in the performance rating of leaders. The organization has laid down disciplinary actions that are taken against leaders and employees who violate its ethics and rules. Some of the actions include financial penalties, demotions, termination of employment, and civil or criminal penalties in severe cases. The company encourages its employees and other stakeholders to report any suspected violation of its ethics and rules. It does not permit any retaliation against whistleblowers who report suspected violation. The organization also includes measures of and adherence to ethical behavior in the performance ratings of its leaders to help focus their attention on its importance. The strategy helps incentivize leaders to adhere to the organization’s ethical standards (Ferrin, 2016). It also serves as a tool for rewarding ethical behavior.

    References
  • Ferrin, S. (2016). Successful HR Strategies for Building an Ethical Workplace Culture (1st ed., pp. 16-23). SHRM. Retrieved 19 January 2017, from http://nnhra.org/wp-content/uploads/2015/12/NNHRA-Ethics-Presentation-091416.pdf
  • Gamble, T. & Gamble, M. (2013). Leading with communication (1st ed., p. Leading With Communication: A Practical Approach to Leadership Communication (). Thousand Oaks, Calif.: SAGE Publications.
  • Henriques, D. (2009). Madoff Is Sentenced to 150 Years for Ponzi Scheme. The New York Times. Retrieved 19 January 2017, from http://www.nytimes.com/2009/06/30/business/30madoff.html
  • Yang, S. (2014). 5 Years Ago Bernie Madoff Was Sentenced to 150 Years In Prison – Here’s How His Scheme Worked. Business Insider. Retrieved 19 January 2017, from http://www.businessinsider.com/how-bernie-madoffs-ponzi-scheme-worked-2014-7