The Virtuous Manager

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The Virtuous Manager

Enron was the model for rapid growth in the 1990’s but part of the culture and ethics of Enron was disturbing. Falsified documents, cutthroat competitiveness among employees and accounting schemes that hid the truth of the company’s indebtedness were just a few examples of the lack of business ethics within the organization. Perhaps a more virtuous management team could have saved Enron from collapse.

Culture of Enron

An Indicator of Corruption

Enron’s management style was apparent from the early years of the organization. In 1987, traders in New York manipulated transactions so it would appear as though volume was higher. Falsified transactions significantly increased the traders’ bonus pay out. A truly virtuous manager would deal with unethical behavior by swiftly dismissing those involved. Sadly, Chairman Kenneth Lay and his management team chose to keep the traders on payroll because “said the company needed the revenue” (Fowler, 2002). This event may have been the earliest indication of unethical behavior within the organization.

Performance Reviews

As Jeffrey Skilling moved into the role of President, the culture became more aggressive as the company established Performance Review Committee (PRC) for evaluating employee performances. In an article written for TIME magazine, John Greenwald wrote about Enron’s PRC.

Wrangling behind closed doors for up to two days at a time, the bosses compare and contrast the performance of workers over the prior six months and rate them on a five-point scale, with the top 5% designated "superior" and the bottom 15% labeled "needs improvement." In between are "excellent" (30%), "strong" (30%) and "satisfactory" (20%). You don't want to be in the cellar: anyone descr...

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...2002, October 20). Enron's corporate tumble was a long time coming - Houston Chronicle. Houston News, Sports, Business, and Entertainment - The Houston Chronicle at Chron.com - Houston Chronicle. Retrieved March 23, 2012, from http://www.chron.com/business/enron/article/Enron-s-corporate-tumble-was-a-long-time-coming-2083723.php

Greenwald, J. (2001, June 11). Rank And Fire - TIME. Breaking News, Analysis, Politics, Blogs, News Photos, Video, Tech Reviews - TIME.com. Retrieved March 23, 2012, from http://www.time.com/time/business/article/0,8599,129988,00.html

Jones, D. (2010, February 15). CEO Loescher uses his moral compass to steer Siemens - USATODAY.com.News, Travel, Weather, Entertainment, Sports, Technology, U.S. & World - USATODAY.com. Retrieved March 23, 2012, from http://www.usatoday.com/money/companies/management/advice/2010-02-14-siemens-CEO-advice_N.htm
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