Case Study Report on Fraud Scandal of Olympus Company and Role of HR in Overcoming the Situation

This report discusses the fraud scandal of Olympus company and the role of HR in overcoming the situation by applying ethical, stakeholder and human relation theory along with change management in the organization. It assesses the drawbacks of Olympus Company by applying theories of ethical, lawful and professional practices, analyses lawful practices of the Olympus company, and assesses the change management in the organization. The subject of the report is HR management and the course code is not mentioned. The report is relevant for business management and ethics courses in any college or university.

Individual Case Study Report

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................3
OVERVIEW OF THE CASE STUDY........................................................................................3
MAIN BODY...................................................................................................................................4
Assessing the drawbacks of Olympus Company by applying theories of ethical, lawful and
professional practices...................................................................................................................4
Analysing lawful practices of the Olympus company.................................................................5
Human relation theory.................................................................................................................7
Assessing the change management in the organization...............................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

EXECUTIVE SUMMARY
The following report will illustrate the roles played HR in managing finance structure of
an organization by regulating rules and regulations and regular check fraud ism by conducting
surveys and meetings. This report will also highlight fraud scandal of Olympus company along
with discussing the use of ethical, stakeholder and human relation theory by providing the
importance of change management theory assisted by the role of HR.
INTRODUCTION
For every organization to run smoothly and successfully it is very important to proper
management of it by different team members and the HR of the organization. A good flow of
information regarding the profit in funds or any change in policy of the organization builds up
the trust level among the employees. The HR plays crucial role in dealing with the problems of
the organization by choosing between the right and wrong strategies which will further help in
the growth and development of the business (Kreismann and Talaulicar, 2021). For managing the
different responsibilities at the organization the HR plays crucial role in hiring the employees
and give them proper training sessions to understand the policies and strategies of the business
by proper staffing and assigning work to the employees according to their capabilities.
Maintaining the security of the organization is also a crucial role of the HR. The following report
will illustrate the case study of Olympus in which the company was held accountable for massive
fraud. Along with this the report will also highlight the important role-played by HR in
overcoming the scandal situation by the use of various ethical, inclusive and professional
practises that the company should follow along with the adopting change mangement in the
organization.
OVERVIEW OF THE CASE STUDY
The case study is about the fraud finance scandal of the Olympus company which deals
in manufacturing cameras and medical equipments. The company faced major downfall in the
year 2011 when Michael Woodford exposed the illegal finance methods that the company was
following to hide the huge investment losses from 1990s (Gottschalk and Benson, 2020). Very
few executives of the company were aware about the finance scandal but did not reveal these
illegal means of payments. It is also suspected that the company is involved in paying payments
to the criminal organization which totally against the law and will have to face the consequences
if found accused.

MAIN BODY
Assessing the drawbacks of Olympus Company by applying theories of ethical, lawful and
professional practices
Ethical theory
This theory of ethics states the moral values of an individual to see and focus on the right
and wrong actions of people. The morality of peoples actions is measured by their role of duties
towards other human beings in carrying out any process by legal means. This theory highlights
the importance of the duties that an individual performs in an organization and the outcome is
based on rules to compare between the right and wrong actions performed by an individual.
Role of ethical theories
As found from the case study that the Olympus company was involved in illegal and
inappropriate methods of fraud in the finance management. It was involved in hiding the losses
and covering them which is ultimately led in creating bad reputation of the company along with
accused of criminal payments (Küberling-Jost, 2021). It's been found through the case study that
the company's higher authorities used their power to oppress the employees and other executives
to not reveal the looses the company was concealing which also caused huge loss to the
stakeholders of the company who had invested in it. The dominating power by the higher
authorities led to hide the company's fraud means. This theory has to be mainly understood in
opposite to the consequentialist as the deontology theory is concerned with judging morality of
the choices by the criteria that is distinct from states of the affairs. One of the familiar form of
the deontology is that that it is accounts of the morality and the agents cannot make the choices
which are wrong and if it is being done, then the number of the types of the choices which are
wrong shall be minimised. This is so that the other agents are being avoided from getting
engaged in the similar kind of the wrongful choices. This theory mainly emphasises on the
morality and asks the people to just obey the norms so that the right can have the priority over
good. Whenever any act is not being committed as per the right or is not according to the right, it
should not be undertaken and no matter how much good it is going to produce.
The deontology ethical theory can be applied in this case study which will help in setting
out rules to compare between what is right and wrong for the company. According to this theory
it is totally wrong actions of the executive authorities to abuse other people at the work with their
power and oppress them to hide the fraud illegal actions of the company. Which is totally unfair

for both the company employees and the stakeholders who invested in the company (Hughes,
2019). The moral actions of the company's President Tsiyoshi Kikukawa were totally wrong and
inappropriate in following unfair means like Tobashi schemes to hide the losses and not taking
any actions on the violation of company's rules.
The Consequentialism ethical theory plays role in determining what is right for everyone and
focuses on the outcomes of the actions. This theory directly targets the bad consequences faced
by wrong actions of the team executives in fraud and hiding clients losses since 1990s which led
to downfall of the company.
Role of HR in overcoming the problems of OLYMPUS company
The above two theories can be applied in this case study in following a rational attitudes
by the executives and the HR of the company in determining illegal and unfair means that being
followed in the company, the HR should take action on the ethical and unethical means in the
transactions and payments of the clients. By following and adopting the principle of transparency
in ethics the company should make the information of transactions available to the employees as
well as to the stakeholders with detailed information which will lead to building the feeling of
trust and faith among the employees and the stakeholders.
The HR can apply the theory of ethics to overcome the fraud ism faced by the company by
taking proper control and management of the internal actions of the employees by ensuring that
whole finance control power is not given to one person of the company. To manage this HR can
conduct meetings to set out rules and regulations to receive monthly report on finance structure
of the company to keep a track on the wrong actions of any company employee and by guiding
the newly appointed employees about the finance policies so that he is reported about each and
every transaction made by the company and by this the HR is aware about the wrong and
unethical means that has been adopted by any employee or executive of the company. The HR
should also develop a good cooperation feeling among the people so that they feel safe to share
problems and discuss their problems. In the above case study it is seen that the people at the
Olympus company were oppressed by the higher authority in this case the HR should have
played a major in conducting meetings to share the problems faced by the people at the
organization so that he can take timely and effective actions against the company.

Analysing lawful practices of the Olympus company
The stakeholder theory includes the employees, workers, customers and various groups
who invest in the business of the company. Any false or illegal action has direct effect on the
stakeholders of the company (Hörisch, Schaltegger and Freeman, 2020). The company or
organization should follow professional and ethical means which are not against the law in terms
of keeping the all the stakeholders safe and protected along with giving them the right amount of
the profit share made by the company along with making them aware about the policies. This
leads to achieve success and new level of heights.
The Olympus company faced major consequences and loss due to the dominance by the
company's chairman in fraud payments and use the power to abuse the employees to hide the
company's losses and support the wrong and unfair means by the vice-president, president of the
company.
The stakeholder theory can be applied in the case of Olympus company which states that
stakeholders of the company like the employees were not treated well by the authorities and
misguided them. They were not valued in making decisions for the company which ultimately
led to the precipitation of the company in 2011 and created a bad reputation (Gbadamosi, 2020).
It weakened the company's potential and made it difficult to overcome the problems. The co-
workers and other employees of the company felt betrayed and faced humiliation by the
customers due to the bad reputation the company faced. Many workers and other executives
resigned due to loss of trust and loyalty among the employees. The Olympus company made the
use of acquisitions to cover the losses faced by it which is totally against the law and illegal
which affected many shareholders who invested in the company to gain profits. It was found that
company lost 75-80% of the stock value in the market (Othman and Ameer, 2020).
The stakeholder theory can support the company by stating that it is very important for
the company to be fully supportive to the stakeholders to gain profits for which it is important to
value the employees, investors and customers who play an important part in smooth running of
the company and to achieve success. The decisions made for the evaluation and changes of the
company by the employees should be supported by the company's executives. This theory helps
in detecting the accounts and finance misuse which can help the company organization to charge
the person found accused in using acquisitions to hide the losses faced by the Olympus company.
Role HR in taking effective decisions

The HR plays an important role in maintaining a healthy environment within the
Olympus company. He should focus on improving the culture within the company by removing
the dominance and power of the president in carrying out illegal means to hide the loss faced by
the company. The HR should conduct meetings to engage more employees to understand the
new strategies and policies of the company so that he can take necessary actions to
mismanagement of the company by fair decisions. He should conduct regular surveys to keep a
check on the finance structure of the company (Meeks and Meeks, 2020). If any fraud is
observed by any employee of the company he should directly inform the HR to take strict actions
against it. Since many people in the Olympus company were aware about the fraud but concealed
it from others in this area the HR should focus on hiring and selecting people who have ethical
and moral values who will strictly abide by the rules and policies of the company.
Human relation theory
The main objective of this theory is to have a healthy relation between the individuals of
the organization who should be fully supported and motivated by other proper cooperation of
work with the help of teamwork.
The Human relation theory in the reference to the Olympus company shows the poor relationship
among the employees (Weller and et.al., 2019). The vice president and the president of the
company are not at all supportive in motivating the people at the company. This is seen when the
chief executive of the Olympus company Michael Woodford tried to blow the whistle he was
supported by people of the company in supporting his legal actions and was dismissed by the
president Tsuyoshi Kikukawa who came into position again (DeCesare, 2018). This reflects the
poor policies of the company. The unsupportive and misguided environment of the company led
to future consequences and later the president admitted to the accusations of the fraud ism.
Assessing the change management in the organization
Change management has been considered as the concept in which different approaches
has been taken in terms to ensure the change in the organization. In the given case, it has been
clearly depicts that, the internal culture of the organization was completely misguided. The
internal culture of the organization needs to adopt the concept of change management. The
change in the organization can be resisted by the HR department (Jayatilleke and Lai, 2018) HR

department is accountable to assure the mandatory change in the organization. Here are the eight
steps of the Kotter's change management theory that can improve the organization culture of the
Olympus.
Creates a sense of urgency- This step refers to identifying the threat and the strategies which
have to made so the threat cannot create the risk for the organization. In Olympus there is
already an urgency for implementing the change in the organizational culture. Thus, in this step
the HR must implement the strong ethical policies in the organization that can guide to all the
members and no fraud has been ensured in the organization.
Form a powerful coalition- This refers to identifying the true and honest leader in the
organization. In terms of adopt the change in the organization it is highly important that in the
company there must be loyal leader who can guide the rest of the people in the organization. In
case of the Olympus, it is highly important to identify the honest leaders. So, the implementation
of the ethical practices can be done.
Create a vision for change- In this step, the central values of the change is determined. This
refers to analysing the values that are concerned with the change. For example: In Olympus, the
values related to the change are entitled with the fair practices in the organization (Riana and
et.al., 2020). Thus, in this manner, change needs to be concerned with the values.
Communicate the vision- This step refers to communicating the change with the people in the
organization. There are large number of honest employees working in the Olympus and due to
some of the executives and employees the allegations has been made on all the people in the
organization. During this step, the vision and values of the change must communicated with all
those employees.
Remove the obstacles- In this step, the obstacles or the barriers that are coming in adopting the
change should removed in the organization. HR department plays a crucial role in this. The HR
mangers must openly communicate about the change with the employees. In case, the employees
has doubt then, the doubt is solved by the HR department. Open communication in the Olympus
needs to done among the employees and the HR mangers about the change that to taken in
consideration.
Crate short-term wins- This step says that, for adopting the change in the organization the
starting is done within creating the short-term wins in the organization. So, the small goals can
be achieved and it can lead to achieve the final goal in the organization (Buschow and Suhr,

2022). Furthermore, short-term wins creates the effective environmental in the organization and
boost people to accept the change. In similar manner, In Olympus, the change must be
introduced within introducing the short-terms wins. Directly jumping over the big goals can lead
to create the failure.
Build on the change- After experiencing every short-term win it is highly important to identify
that what went right and what not. It provides the idea about the things that to be taken in
consideration for the coming scenarios. This step is highly important for Olympus as the
company has faced numerous situation regarding the internal culture of the organization. In such
situation, there might be a situation arise in which the things does not be on track. Therefore, it is
highly important to analyse the short-term wins in regards of getting the idea.
Anchor the change in corporate culture- This is the final step under which the change taken as
the part of the organizational culture. In this, the change becomes the integrated part of the
culture. Furthermore, the change has been communicated with the new people that has been
hired in the organization. This is the duty of the HR department that., they must communicate the
change with the new staff in the organization and guide them to adopt that change (Cameron and
Green, 2019). In Olympus, the change that has been adopted must communicate with the new
staff while appointing them. So, they can also contribute in creating the effective environmental
in the organization.
CONCLUSION
From the above report it can be concluded that HR plays an important role in overall
management of the organization by laying out strict rules and regulations to avoid any fraud ism.
To maintain a healthy environment within the organization the HR should conduct regular
surveys to track the changes for taking effective decisions by supporting and motivating the
people at work place also listening to their problems. The HR should assist the employees to
adopt ethical values and morals to make right decisions to achieve profits both individually and
at an organizational level. the HR of the company is required to follow the deontology theory so
that the morals can be uplifted and the wrongful choices can be eliminated and the right is given
priority over the good. Hence, the ethics of the company must be uplifted so that there is priority
given to good and morals.

REFERENCES
Books and Journals
Buschow, C. and Suhr, M., 2022. Change management and new organizational forms of content
creation. In Media and change management (pp. 381-397). Springer, Cham.
Cameron, E. and Green, M., 2019. Making sense of change management: A complete guide to
the models, tools and techniques of organizational change. Kogan Page Publishers.
DeCesare, M.A., 2018. A Comparative Analysis of Corporate Scandals under Japanese and
American Corporate Law. Journal of International Relations. 6(2). pp.1-21.
Gbadamosi, A., 2020. Notes from Internal Auditors: Issues in Combating Fraud. Review of
Business, Accounting, & Finance. 1(01). pp.14-28.
Gottschalk, P. and Benson, M.L., 2020. The evolution of corporate accounts of scandals from
exposure to investigation. The British Journal of Criminology. 60(4). pp.949-969.
Hörisch, J., Schaltegger, S. and Freeman, R.E., 2020. Integrating stakeholder theory and
sustainability accounting: A conceptual synthesis. Journal of Cleaner Production. 275. p.124097.
Hughes, R.C., 2019. Exploitation, deontological constraints, and shareholder theory. Geo. JL &
Pub. Pol'y. 17. p.1007.
Jayatilleke, S. and Lai, R., 2018. A systematic review of requirements change
management. Information and Software Technology. 93. pp.163-185.
Kreismann, D. and Talaulicar, T., 2021. Business ethics training in human resource development:
A literature review. Human Resource Development Review. 20(1). pp.68-105.
Küberling-Jost, J.A., 2021. Paths of corporate irresponsibility: A dynamic process. Journal of
business ethics, 169(3). pp.579-601.
Meeks, G. and Meeks, J.G., 2020. Managing earnings through M&A. In Accounting for
M&A (pp. 172-188). Routledge.
Othman, R. and Ameer, R., 2020. Cultured Crime of Obedience and Fraudulent Financial
Reporting in the Time of Crisis. In Transcending Cultural Frontiers (pp. 69-89).
Springer, Singapore.
Riana and et.al., 2020. Human resource management in promoting innovation and organizational
performance. Problems and Perspectives in Management. 18(1). p.107.
Weller, I. and et.al., 2019. How matching creates value: Cogs and wheels for human capital
resources research. Academy of Management Annals. 13(1). pp.188-214.