In many circumstances, employees’ behaviors are likely to follow their leader. Enron’s leadership has been extremely influential due to exemplified charismatic. For example, Heffrey Skilling and Kenneth Lay, CFO and one of executive member in Enron, greatly encourage employees to follow their lead. Their incompetence accounting profession directly affects lover level of employees. Eventually, those manipulating accounting activities affect company collapse. Once leadership has done unethical professional accounting behaviors, unethical acts become accepted. Employees have many reasons for remaining quiet. While Enron still have ethical internal rules, when leadership in Enron did not abide and did not provide corresponding example of employees to follow (Prentice 2003, p. 417). Which eventually make Enron’s become one of the largest corporate scandal frauds.
Placed in proper perspective, had Enron considered doing the right thing because it was the right thing to do, regardless of outcome, the company may still be in business today (Gilbert, 2012, p. 57). Obviously, in hindsight, doing the right thing may have changed the culture to one more conducive to moral values, which in turn, may have resulted in earlier reports of financial shortcomings. In reality, the company may have prevented its own demise with honest forthcoming reports that could have prevented market panic; thus, preventing the downward spiral that enviable destroyed the company. Point of fact, Enron openly espoused its affection for ethical policies but, in fact, it did not practice ethical behavior. Truly, had the company followed any ethical approach, it may have staved off its preordained destiny. A culture that rewards breaking rules is destine for failure. Though an ethical program may appear to be the solution; however, a moral culture is truly the key to winning the battle of ethics. Moreover, others have suggested that ethical programs may stifle creativity and thus prevent the free exercise of one’s values and moral judgment (Stansbury & Barry, 2007, p. 239). While a program by itself will never be successfully, leadership from the top is instrumental to victory; managers must be known for possessing core values such as honesty and integrity (Nel, Nel, & du Plessis, 2011, p. 59). Albeit, despite the best policies, the proclivities of most subordinates will always drift towards follow the examples of leadership (Mayer, Kuenzi, & Greenbaum, 2010, p. 13). Thus, like the saying goes, an ounce of example is worth a thousand words! The prevention of such needless tragedy lies not in policy or programs but rather in leadership by example. If society truly demands moral behavior within its institutions, then it must expect the same standard from its leaders. Society must demand
In modern day business, there can be so many pressures that can cause managers to commit fraud, even though it often starts as just a little bit at first, but will spiral out of control with time. In the case of WorldCom, there were several pressures that led executives and managers to “cook the books.” Much of WorldCom’s initial growth and success was due to acquisitions. Over time, WorldCom discovered that there were no more opportunities for growth through acquisitions when the U.S. Department of Justice disallowed the acquisition of Sprint.
The Hollate Manufacturing case provided by Anti-Fraud Collaboration has well illustrated how several common issues in an organization contributed to the fraud’s occurrence. These issues can be categorized into two major groups: ethical culture (internal aspect) and internal control system (external aspect). By taking effective actions to enhance these two aspects, an organization can protect itself against the largest frauds, which result in financial and reputational damage.
Unethical leadership in areas of political, industrial, religious, and public safety by just a few in upper management have caused international devastation such as the oil pollution in the Gulf of Mexico, the New Zealand mining disaster, and law enforcement leaders ignoring the unprecedented violence in jail systems. All of these are unethical activities of leadership are contributing to the loss of public trust of leadership. Some of the reasons given by (Perez and Normore 2015) for the loss of confidence were “no leading financier or politician was held legally accountable for his or her unscrupulous role in causing the economic collapse that saw millions of people around the world lose their homes, employment, lifestyle, and dignity” because of this reason I feel in itself is another example of unethical leadership in that the court system for not making these leader accountable for their unethical
Ethical behavior, in a general sense, is a definition of moral behavior in regards to lawfulness, societal standards, and things of that nature. In the business world, ethics commonly refer to acceptable and unacceptable business practices within the workplace, and all other related environments. The acceptance of colleges regardless of ethnicity, gender, and beliefs, as well as truthfulness and honesty in relation to finances within the company are examples of ideal ethical business conducts. Unethical business behavior would include manipulating procedures based on bias or discrimination, engaging in activities that promote political gain, as well as blatant fabrication of monetary factors within the company and “can affect organizational performance and is costly to employers, employees, shareholders, and other organizational stakeholders” (Cox 263). When a corporation practices proper ethics, it is representing not only itself in a positive manner, but its partners, shareholders, and clients as well. On the other hand, when an organization partakes in unethical activities, all parties are negatively affected. The collapse of Enron is a major case of unethical conduct in the corporate world, because the circumstances surrounding the firm’s chaotic plunge where so scandalous that it left “creditors wrangling over Enron's skeletal remains” (Helyar) long after the company had seen its demise. There are numerous instances to be mentioned, including deliberate failure to properly report fiscal losses, insider trading, and overall relentlessness. The inclusive purpose of this paper is to further explore the underlining factors that contributed to the downfall of the once powerful Enron, and how a new way of approaching business ethi...
Leaders who treat their employees with fairness, honesty, and provide frequent, accurate information are seen as more effective. According to Robbins and Judge (2014), “trust is a primary attribute associated with leadership and followers who trust a leader are confident their rights and interest will not be abused” (p.193). The old General Motor Corporation had eleven different CEO’s from 1923 until 2009 each with their own unique leadership style, which directed employees toward the organization goals. Unfortunately, many of the top level managers under the CEO’s had the tendency of filtering out information that did not match up with their pre-conceived notions about a particular issue and they lacked upward communication. One consumer goal of General Motors was to build trust in the company so people would be repeat customers, but building trust between employees and establishing an ethical culture was not a top priority of the organization. Goal directed leadership alone is important, but differs from a structure of leadership based on ethics. It is important to note, that effective leadership may not be the same as leadership founded on ethical principles. Business competence must exist, along with personal leadership accountability in ethical decisions. Within the General Motors organization, ethics and leadership did not interconnect; there were misalignment between the
Enron, one of our nation’s greatest success stories, was riddled with fraud, insider trading and a complex account scheme amongst other things. The board of directors set a standard of business that honored the values of respect, integrity, and excellence. The issue was, the company didn’t follow what it preached and corruption trickled down the corporate ladder. Enron set such a high level of intense competition that it used a system referred to as “rank and yank” which promotes employees to compete not only with rival companies but also with each other. While the board of directors attempted to set ethical business standards they weren’t complying with anything other than their non-existent ethical values. Allowing their employees greed and need for power to overstep the need for ethical compliance throughout the company. This lack of corporate culture at Enron was based off individual factors such as an apathetic culture, intense competition and a lack
The problem to be investigated is the relationship between leadership, trustworthiness, and ethical stewardship; how these virtuous qualities can impact leaders, individuals, and companies. This paper will attempt to provide an academic opinion related to the problem investigated. The evidence of correlation between these qualities will be generated from my own personal experience and perspective as well as the viewpoints of multiple business experts.
It has been concluded that Nortel’s growing dominance in its markets in the 1990s “led to a culture of arrogance and even hubris combined with lax financial discipline. Nortel’s rigid culture played a defining role in the company’s inability to react to industry changes.” (McFarland, 2014). While Nortel was increasing its revenue between 1997 and 2000 through a spree of acquiring other partners and tripling its share price in the same period, the company lost focus on profitability and was in a very tough position (McFarland, 2014). Nortel misread the market and was not prepared to respond to increased competition from Japan and other competitors. The accelerating rate of technological change and the power shift to customers was just too much for them. The bad taste they left in key customer’s mouths made them feel that Nortel would not be around for the long term to fulfill their promises. Their lack of resilience, strategy, structure, poor financial management, business processes, people and culture decreased the company’s ability to adapt to keep up with competitive advantage. (Nisen, 2014). Nortel, made textbook errors like failing to communicate, meet commitments, and possess a firm technology knowledge (Nisen,
“It is important to note that unethical behavior in U.S. business is not a recent phenomenon. Indeed, even before the nation had celebrated its 1876 Centennial, corporations were being charged with substantial misdeeds by both government and society lea...
The Sarbanes-Oxley Act created new standards for the accountability of businesses and corporations and it includes penalties for acts of misconduct. The Act stipulates new financial reporting obligations, including the adherence to internal controls and procedures which are to certify the validity of their financial records. These accounting controls put into place were meant to reduce unethical/ illegal actions within an organization (Mathis & Jackson, 2011, p. 16).
There are unethical leaders from almost every professional, industry, or any type of business. Corporate executives like Kenneth Lay and Martha Stewart were taken before the court for poor ethical practices. Leaders of pharmaceutical companies have been found knowing about distribution of unsafe products. Leaders at Coke Cola were found guilty of racial discrimination and leaders of cruise ships fined for dumping waste in the ocean. News reports exposed Wall Street analysts who created phony reports, made profits, and pushing worthless stocks, left citizens questioning if they should invest their money. Leaders of the world’s largest retailer, Wal-Mart, were cited for practices of employee abuses and gender discrimination. Questions emerged in the news whether leaders of the tobacco i...
The ascent and fall of the combination Nortel Networks Corporation was a counter-illustration of Milton Friedman's viewpoint of social stability regarding organizations. Friedman stated the essentialness of expanding benefits without violating the law (Collins, 2011, p. 374). The moral ramifications inborn all hands on deck and administration show a few variables regarding figuring out what is the right activity and bearing an association is to take rather than what the business sector requests. As such, a business' moral disposition may change as it develops and takes care of shopper demand, yet like engineering, it may progress in ways that surpass the breaking points of the law; and all the more critically,