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FIFA Corruption Scandal Serves Up Ethics Course Material for MBA Students

fifa“Ethics and integrity are essential in the world of sport and are topics that have continued to gain importance for FIFA and the football community in recent years.” These words, spoken by former Fédération Internationale de Football (FIFA) President Joseph “Sepp” Blatter in August of last year, ring somewhat hollow today. At the time, the international governing body for soccer that he then led was preparing to host the first-ever World Summit on Ethics in Sports in Belgium. “We therefore welcome the opportunity to host this special summit and look forward to a fruitful debate among international experts on these important topics,” Blatter continued.

Maybe he missed the conference? Apparently, he either didn’t listen to the international experts or he thought that what they had to say somehow didn’t apply to his own organization. Earlier this week, Blatter announced that he would resign as president of FIFA following the indictment by the United States government of several current and former FIFA officials and sports marketing officials for bribery, fraud and money laundering.

As devastating as the unfolding scandal has proven for Blatter and FIFA’s reputation, there are valuable lessons to be learned, and professors at several leading business schools fully expect to use the FIFA case to teach their MBA students.

“The case will certainly be written for an MBA program!” says B. Sebastian Reiche, an assistant professor in the Department of Managing People at IESE Business School, whose research focuses on cross-cultural management and global leadership, among other topics.

Ross Associate Professor David Mayer

“Many of the things that are playing out here could be a great case,” echoes David Mayer, associate professor of management and organization at the University of Michigan’s Ross School of Business. Mayer, who is also faculty co-director of the Center for Positive Organizations at Ross, notes that issues of cultural relativism, accountability and leadership in crisis that are central to the FIFA scandal are all topics that come up in the classes he teaches on the intersection between ethics and leadership. “Now you’ve got me thinking I should write a case on this,” he says with a laugh.

“The basic lesson for MBAs is that corruption will cause organizations to implode,” says Harvard Business School (HBS) Professor of Management Practice William W. George. “Must practice integrity all over the world,” the former Medtronic chairman and CEO stated in a Twitter exchange with Clear Admit.

A Combination of Factors Contributed to FIFA Corruption

Many factors came together in the FIFA case, creating a scenario ripe for bad behavior. For starters, there are very high incentives for misconduct where international soccer is concerned. Indeed, the 47-count indictment from the U.S. Attorney’s office unsealed last week alleged that $150 million in bribes changed hands between FIFA officials and other parties for vote-rigging to send events to certain countries or business to certain companies.

“There was a LOT of money to be made and very little oversight,” says Mayer. Add to that the fact that people in a competition mode who are high in power are more likely to engage in self-interested behavior. “I do think there was a bit of a perfect storm,” Mayer says.

It’s possible that some of the FIFA officials and others involved may have even rationalized to themselves that they were helping countries who might not otherwise have had a shot at hosting international events like the World Cup, he suggests. “I think oftentimes it is important for all people to feel like they are a good person in some way,” he says. Viewing what they are doing as some type of good could potentially have licensed the unethical acts in some minds, he offers.

The perception that bribery is part of the way business is done in certain regions of the world may also have something to do with how the corruption at FIFA was justified by those involved and continued unchecked for as long as it did. “Believing that bribes are how business gets done other places is a form of morally disengaged thinking,” Mayer says. These kinds of rationalizations can and do affect people’s behavior, he adds.

Some areas of life, such as family, religion and education, are more likely to be imbued with morality, Mayer notes. Sports and business, in contrast, are characterized by competition. “Clearly people do wonderful things in both, but that combination can create a bad synergy that can lead to bad behavior,” he says.

Bribery Benefits No One

Cindy Schipani, a professor of business law at Ross for more than 30 years, takes a starker view. “This scandal is just another example of the high-level greed that’s involved in trying to get business in a way that is completely inappropriate and benefits no on but the greedy parties,” she says.

Ross Professor Cindy Schipani
Ross Professor Cindy Schipani

Most tragic, she adds, are the human costs. In the case of countries that may have paid bribes to host World Cup events, for instance, millions of dollars were wasted that should have been spent on services for their own citizens.

“There is never a benefit to paying a bribe,” Schipani says. “You might get a contract in the immediate future, but the payments that go out are always much greater than the benefits that come in,” she says. Often, she adds, one bribe leads to another and another.

Schipani, who has conducted extensive research on bribery and corruption, says that a Western notion that bribery is part of how business gets done in other parts of the world is harmful. “It’s just not true,” she says. “Bribery is illegal all over the world. When it takes place, it is always under the table, it is always hidden—that tells you something right there.”

Lessons from FIFA for MBA Students

Schipani hopes to drive home to her MBA students that clean business is better business. “What I worry about with my MBAs is that they could go out into the world thinking, “If I just pay this little extra then I’ll get this contract and it will benefit the company, it will benefit the shareholders.’” In fact, the opposite is true, she says. “It never benefits the shareholders, because bribery means that companies are spending money they shouldn’t be spending.”

In the case of German engineering giant Siemens, which was embroiled in a corruption scandal and paid a $1.6 billion fine for bribery in 2008, the company is much more profitable today by operating clean, Schipani says. “It is just a fallacy in thinking that bribery is good for business or good for the company. It’s not.”

Thinking that it is okay in other countries is another fallacy, she adds. “I will dissect this particular scandal as it unfolds as another example of how corruption doesn’t benefit business.”

Mayer, for his part, envisions using the FIFA case as an opportunity to encourage his students to imagine ethical questions they themselves may encounter. Doing so will probably involve presenting a range of conceivable scenarios, he says. For example, he could see himself saying to students, “Maybe no one in this room would take $5 million dollars in a bribe, but what might be something you would be tempted to do?”

“Put this way, I think my students could relate to the idea of feeling pressure,” he says, be it feeling like they could lose their job if they didn’t do something to win a given contract or be it feeling pressure to protect their family.

Classroom discussion will also likely lead to the challenges an organization faces when there is an ethical scandal, Mayer continues. “How does an organization respond? Can you keep the same leadership, does a leader have to go, what kinds of things can you do to renew faith?”

FIFA’s Future Fate

In the case of FIFA, Mayer and Schipani both suspect the organization will rebound. “They are going to take a hit, but I suspect that they will recover from it, especially if they make a commitment to seriously clean up, making sure that the parties that have touched this scandal in anyway are gone and putting in monitoring efforts to show that they are really cleaning up,” says Schipani.

Mayer was not surprised to see Blatter step down, but he was surprised at how quickly it happened. He suspects that the threat of corporate sponsors pulling out may have contributed. “Ousting Blatter seemed like a necessary but not sufficient condition,” he says. “Bringing in a leader who is removed from the scandal, who is untarnished and who has a reputation for high integrity will be really important now,” he says. He also suspects that many more FIFA officials may need to go.

Of course, many of the factors that led to the corruption in the first place will remain. “There will always be money and the incentives will always be high, but if there is more of an ethical culture and more oversight of the people involved, my intuition is that it will rebound,” Mayer says. “Ultimately the product is so good,’” he says. “People love soccer, and they are motivated to want to get to see soccer and see institutions that support soccer on positive terms,” he says. “I really see them recovering.”

Recent events certainly highlight the need for a World Summit on Ethics in Sports. Perhaps, though, an organization other than FIFA would be better suited to host the second annual gathering.