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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.

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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

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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.

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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,

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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

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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?

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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(Acceptability

among employees) + 0.5 (Positive Behaviour)

Decision Criteria is ranked from 1 to 10, 1 being low and 10 being high.

Alternatives

Decision

Criteria

Cost Time for

Implementation.

Acceptability

among

employees

and brokers.

Does it

benefit

investors

and

customers?

Does it

promote

positive

behaviour?

Total

New equipment

and technology

5 2 10 3 1 7.2

Complete

change in

management

10 5 5 10 10 9.75

Changes in

organization

hierarchy

8 8 7 9 8 15.05

Selection and

Recruitment

9 10 0 10 0 7

Change in

Culture

0 10 3 5 10 18.25

Job Satisfaction 6 5 8 7 8 14

Alternative Solution: Change in Leadership

Ultimately to change Stratton Oakmont from an illegal and deceiving organization, into a

legitimate accredited and legal one, there has to be a major change in the leadership. A whole

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new board of directors/executives needs to be brought in. New ethical thinkers and leaders will

have major impacts on how the firm operates and proceeds. Looking to hire leaders who will

come in and turn the firm upside down, in a good way. Making Stratton Oakmont a completely

legal company, with strong employee manager relations. Creating rights and new policies for

employees and doing all this while delivering their investors good returns on their investments.

Although having new leaders may be seen as positive it has pros and cons.

Pros:

-Customers and investors will be seen with value instead of just comissions

-Creating sustainable and ethical business that will continue to grow and survive

-Major benefits to investors who will be receiving valuable and growing investments

-Promote ethical and positive environment for all employees.

Cons:

-High cost of firing executives, large severance will have to be paid out when they are fired.

-A new leader to completely learn everything about the firm and change the policies requires a

large amount of time.

-People in general, not only the employees, are resistant to change. Iit won’t be easy to change

the way the firm operates.

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Alternative Solution: Recruitment and Selection Process

Overall the employees at Stratton Oakmont are not fit for the job, management holds no

education or experience in running a brokerage. They are completely under qualified for their

position, most of the brokers on the floor are just money hungry young people who are looking

to make a quick buck. The hiring process at Stratton Oakmont is non-existent, hiring unqualified

people is common. As long as they would live by the unethical culture at Stratton Oakmont and

buy/sell the stock you were told too you were hired. Instead new recruitment and selection

processes should be implemented. These new policies and practices will help find highly

qualified people who are fit for the job, although this option does have pros and cons as well.

Pros:

-Qualified people in the correct positions

-Cuts down on training costs, these employees are already experienced in their position

-Investors and customers know they are dealing with a highly qualified employee instead of just

a slimy salesman.

Cons:

-Hiring qualified and experienced people is expensive, higher salaries for their experience

-To find and recruit a whole new group of experienced employees ill take years to fill all

positions with the correct people

-Current employees will be resistant to this process as their position will be replaced with a new

higher qualified employee.

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- Current unqualified employees jobs in jeopardy, could rebel against the company

Recommended Plan

Our first priority would be changing the culture of the organization. Changing an organizational

culture takes time, but a combination of short term and long term decisions can help us

implement this change.

Phase I

Changing the mission statement and defining objectives of the organization.

Mission Statement:

To improve the quality of life for our clients and employees by engaging in mutually beneficial

trade. We believe in working towards achieving sustainability and developing partnerships with

our clients remaining committed to our values.

Values:

Service: To provide our clients with the best and most personable service possible.

Integrity: To uphold the highest ethical and professional standards formulated by the American

Institute of Certified Public Accountants.

Teamwork: To work with other service professionals, such as financial planners, attorneys,

insurance representatives and stock brokers in accomplishing our mission statement.

Empathy: To understand our clients’ goals and needs. To formulate a plan from our clients’

point of view, using our knowledge and experience

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Implementation:

Changing the mission statement and values of the Stratton Oakmont would influence a set of

different policies and objectives. To achieve the highest ethical standards, the business model

will be changed from trading of penny stocks too common/preferred stock of registered

companies in the stock exchange. Measures will be taken to rebuild the image of the company

and gain lost reputation.

Changing an organizational culture will lead to ethical practices and discourage the employees to

engage in such trade. Strict monitoring would be done to ensure employees are committed to the

values of Stratton Oakmont.

Phase II

Changing the hierarchical structure of the organization. We recommend that instead of hundreds

of employees working under CEO and board of directors, they should be divided into smaller

groups with a supervisor and assistant. Assistants will provide their respective group with

information and perform clerical tasks. Supervisors of each small group will monitor their

performance and report to their respective managers.

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Implementation:

We recommend changing the organizational hierarchal structure to more bureaucratic form.

Changing organizational culture would require strict monitoring of employees. This is one of the

biggest advantages of bureaucratic hierarchy that it is really effective in implementation of

policies. Individuals with less training can even keep track of policies.

However we also recommend that senior officials CEO, board of directors and managers should

have cross-functional team dynamics among each other. Implementation of bureaucratic

hierarchy has the disadvantage of improper flow of information. As HR consultants we

recommend a combination of both to ensure success.

Phase III

Implementation of training program. In the past scripts were handed to employees but there was

no proper training program for employees of Stratton Oakmont. We have designed this training

program using five steps in the training and development process.

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Needs Analysis:

We found out that skills required for this job are following.

1. Effective communication

2. Understandable accent

3. Industry Knowledge

4. Ability to gain trust.

5. Negotiating skills

6. Multi-tasking

Instructional Design:

We found that there are two aspects in training, communication skills and industry knowledge.

Communication skills will be enhanced by workshops. Also, all calls will be recorded between

brokers and clients for training purposes and for accurate record keeping. Calls that are

extremely well done and have a high degree of effective communication can be used for training

new employees on communication with customers. Scripts will be given to help employees

improve their skills, but creativity will be more appreciated in order to sound more genuine and

professional.

Industry knowledge is the key element for the employees of Stratton Oakmont. We are business

partners with the clients and seek mutual benefit. To achieve competence in industry knowledge,

periodically information manuals will be issued and employees would give online quiz.

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Employees scoring low will be given unlimited chances to pass the quiz, until they clear the quiz

they would not be allowed to operate and hours without work will be considered as absence.

Validation:

We conducted a pilot program and tested the validity of program’s effectiveness. It is ready for

implementation and we are awaiting clearance from the management.

Phase IV

Improving Job satisfaction:

We recommend Stratton Oakmont to purchase new equipment in order to improve job

satisfaction. All communication devices will be kept on silent. Small groups with supervisor and

assistants will sit close to each other in order to reduce yelling at each other. This would reduce

the noise and it will be more peaceful for the employees.

Conclusion:

Through the implementation of this plan, Stratton Oakmont can become a large brokerage

providing a valuable service to it’s customer. This recommended plan will solve the problems

outlined in this report. Not only will the problems be solved, but the company will be aligned in

a position for sustainable growth and development. Steering away from corruption and unethical

behaviour and towards an honourable and ethical firm.