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Human Resources and Organizational Behaviour
HROB 2100
Tom Medcof

Film Case Assignment “The Wolf of Wall Street” by GROUP 9 Section (02) HROB 2100 Andrew Eberhard 0784720 Robert Morris 0847114 Tristan Mckone 0835227 Jitin Luke 0759425 Muhammad Ali Ajmal 0778977 Ashley Royale 0750587 Executive Summary: The purpose of this report is to explore the organization of Stratton Oakmont. This report scrutinizes the organizational culture, the unethical business practices, and extrinsic motivation for wealth at Stratton Oakmont. After reviewing all the problems within the firm, two alternative solutions are given: to change the leadership of the company, introduce a new recruitment and training process to create a more professional workplace. We came to these solutions because the unethical business practices at Stratton Oakmont are not sustainable. We need to create long term business solutions in order to preserve and continue growth at Stratton Oakmont. Our recommendations are: changing the dominant organizational culture and promoting ethical business practices. Also, purchasing new technology to create high job satisfaction for employees. Recreating the hierarchy within the company and introducing new training programs to create productive and qualified employees. This new plan will steer Stratton Oakmont toward sustainability, high productivity and profitability. 1 Introduction of Stratton Oakmont: It is a brokerage company which deals with stocks as well as penny stocks. Multiple times referred in the movie as "pink sheets", which have a commission of fifty percent as compared to common stocks which only have one percent of commission. Business model of Stratton Oakmont is based on trading of penny stocks. Initially they sold penny stocks to poor people. Later they targeted people of affluence of the and made 28.7 million in commissions during one accounting cycle of the organization. Problem Statement: "Stratton Oakmont Inc. is struggling with absence of organizational culture which has led to unethical operations and methodology to conduct business. Employees are motivated by monetary benefit. There is low job satisfaction, lack of training and Human Resource policies." 1. Organization Culture Although it may seem like a strong ethical brokerage, giving investor’s great returns on their investments, it really is just a big scam. A firm that is loud and corrupt. The organization culture is not the normal business culture. Lavish office parties, drug abuse, use of prostitutes are common. Stemming from the organizational culture on Wall Street, Stratton Oakmont builds a similar culture, but yet more unprofessional and improper. This stems from what management deems as “normal.” Also, included in this culture is the need to continuously grow and attain more wealth, not for Stratton Oakmont’s investors, but for the brokers and management. This stems from management's views on customers. This creates set of values that are toxic, with employees who 2 are encouraged to engage in illegal activities from drug use to insider trading. Creating brokers who disregard the law and just concern themselves with creating personal wealth. This unethical scheme can’t be kept up. Such unethical practices ultimately lead to the downfall of the company. 2. Unethical Business Operations Customers are not valued; they are just a vehicle for brokers to obtain personal wealth. Everyone one of Oakmont's brokers is told to only care about themselves. They use investors’ money to make money for themselves which comes from their massive extrinsic motivation to create their own wealth. Wealth was never created for investors, nor was it ever a goal. In order to create large amounts of personal wealth, the brokers and management use unethical and corrupt strategies for personal gain. Deception, lying, pumping and dumping, money laundering are all practices used by employees and management to create personal wealth. This unprofessional culture and management and employees view on customers, create a toxic brokerage. These practices bring unwanted attention from authorities who start looking into the practices of the company. 3. Need for Sustainability For every organization there is a need to be sustainable. Organizations make profit by doing business and making use of the resources. These resources are environmental, social and economical. It is responsibility of the organization to avoid doing damage to these resources. Stratton Oakmont's unethical business practices are doing harm to the society. Their business model of pumping and dumping can cause economic instability. 3 4. Lack of Job Satisfaction Employees at Stratton Oakmont are not satisfied with their job environment. It is a very stressful job. It is observed that employees yell over each other and hundreds of telephones are ringing every minute. This job also requires lot of concentration as stock prices constantly rise and fall due to continuously changing demand and supply. There is always a pressure to sell in order to earn greater commission. People get fired over little mistakes, so there is always fear to lose job. 5. Training and Development Employees at Stratton Oakmont lack training. They were given a scripts about how to talk to customers. All the brokers followed the same script and were trained to use deception, and lying in order to sell junk securities to gullible investors. The lack of training was evident as employees were never actually trained other than a script and the motto to sell. This created brokers who were never actually doing what they were intended to do; analyze companies and find a good investment for customers. Instead they were just given instructional training, when the job of a stock broker requires a lot more than just being instructed and restating what you were told. 6. Employee Rights and HR policies Policies within the office are almost non-existent. When it comes to firing employees, no such procedures even exist, employees rights are not being taken into account. Instead employees are forced to swallow a goldfish then told that they’re fired and have to get out of the office. It is an office of free rein, where managers can do whatever they want whenever they want because no procedures or policies even exist. Basic structural framework of an organization is non-existent, 4 this creates a stressful environment for employees. They don’t know of any corporate procedures and have no rights to protect themselves from managers. Not only does this create a stressful environment, it also causes mental and physical stress on employees. Causes of the Problems: Many of these problems stem from the unethical framework or structure that Stratton Oakmont is built on. The countless number of unethical business policies, and practice occur at the brokerage happen because they are built on corrupt values. All of these practices are deemed “normal” at Oakmont because it is the structure of the firm, since everyone supports and practices these methods it must be deemed ethical. Even though it is completely corrupt and wrong it is so deeply embedded in the values of the company that everyone thinks it is correct. A majority of these problems stem from management's view on employees and customers. Management preaches their views to all the employees, they are seen as leaders, people to inspire to, employees follow their views. The board creates the culture of the firm, they want to be seen as a “loud” company so they go and construct a culture that just does that. Management implement and establish the culture that all employees adhere too. Not only do they create a dominant culture within the firm, the executives also shape all the business practices within the company. Senior managers are seen as the voice of the company, the tone and path is set by them. At Stratton Oakmont all the managers follow and push unethical business practices on all their brokers. They don’t care that the practices are illegal, as long as commissions are being made and there take home pay is increasing. With Stratton Oakmont being a huge brokerage that it is these unethical policies to drive up stock prices and sell 5 investors junk has a large effect on the economy, created stock bubbles and loss of wealth for investors. Management forms the office environment which all employees are exposed too, they form not only the culture, but the environment as well. Executives company are suppose to adhere and create employee policies, at Stratton Oakmont these are non-existent and this is because management created it to be like this. They don’t want policies about hiring and firing employees. None of them want policies to follow, they much rather just do what they want to do. They don’t want to train employees and set up programs for their brokers. This creates the stressful environment which all the employees have to be exposed too. Management isn’t concerned for these things, but are more concerned with creating personal wealth as this is their only motivation to be a part of the firm Decision Criteria: We have identified five important criteria to evaluate before making a business decision: Cost: How much will undertaking the alternative affect the company in dollar values? Time of Implementation: How long will it take to carry out the alternative? Acceptability: Will current employees agree and follow the new alternative purposed? Does it benefit customers: Will investors and customers have a higher satisfaction with new policies? Does it promote positive behaviour: Will the new alternative promote new and positive behavior from employees? 6 An equation has been created based on weighting the criteria to rank alternatives: = (-1)(Cost) + 1 (Benefit to customers) + 0.75(Time for Implementation) + .6(Accept
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