“Wright Medical CEO Resigns After Doctor Kickback Settlement”
Bloomberg: April 5, 2011
By: Alex Nussbaum
Leaders are always the driving force of an organization. The way these individuals plan, organize, lead, and control the company is indicative their success. Often, such leaders are faced with ethical decisions; since the Sarbanes-Oxley Act of 2002, companies have been held to higher standards of decision making.
At Wright Medical, the company came under scrutiny because of allegations that Wright was paying doctors to use its replacement hip and knee devices. Regardless of the case’s outcome, upper management knowingly implemented or turned a blind-eye to the matter. Wright Medical’s leaders used not only legitimate power to enforce these decisions, but they also used reward power in an unethical manner to compensate the doctors to implement Wright’s medical devices.
As we continue to study bases of power in our Organizational Behavior class, we will become more familiar with the sources influencing leaders to use their powers. To further analyze the bases of power in Wright Medical, we can examine how upper management used its legitimate, reward, coercive, expert, information, and referent powers to engage in unethical behavior of paying doctors to use Wright’s products.
Legitimate power and reward power was used in ways indicated above, but coercive power can be viewed as being used to control subordinates. Similarly to Enron or Arthur Anderson, there is simply no way that not one employee at Wright Medical did not know any details about the unethical decisions being made by upper management. Coercive power could have possibly been used to punish an employee for noncompliance or whistleblowing.
Obviously the individuals making the decisions to engage in such behavior had sufficient knowledge and skills, or expert power, and special access to specific information, or information power, which allowed them to implement such decisions.
Lastly, employees could have viewed these leaders as not only superiors, but also as mentors; the level of respect and admiration among employees gave upper management referent power to implement unethical decisions to pay doctors to use Wright’s products. Regardless of what the leaders of Wright Medical did with the business, their subordinates may have followed simply because they saw their superiors as great leaders.
These categories of power and their uses are important to understand because the connotation of their implementation can have both positive and negative effects. In the case of Wright Medical, those bases of power were used in an unethical manner to increase profitability.
- Jon Worthey
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