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Ethics values and standards essay
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Ethics values and standards essay
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Jennifer Lee Serna MGMT 3362- 90L Enron, Ethics, and Organizational Culture 04/15/2016 Introduction Enron Corporation was based in Houston, Texas and participated in the wholesale exchange of American energy and commodities (ex. electricity and natural gas). Enron found itself in the middle of a very public accounting fraud scandal in the early 2000s. The corruption of Enron’s CFO and top executives bring to question their ethics and ethical culture of the company. Additionally, examining Enron ethics, their organization culture, will help to determine how their criminal acts could have been prevented. Questions and Answers Based on what you read in this chapter, summarize in one page or less how you would explain Enron’s ethical meltdown. …show more content…
If true, what does that say about Enron’s ethical culture? “Signals that mold a company’s organizational culture include characteristics values, traditions, and behaviors a company’s employees share.” (Dessler. Pg. 466) Enron was once known for having very high ethical standards in which it prided itself on and displayed to the world. However, with irresponsible executives and personal greed the environment rapidly transformed like an infectious disease. For example, “bad barrels” correlation, companies that promote an “everyone for himself” atmosphere are more likely to suffer unethical decisions.” (Dessler, pg.464) Enron Company values became full of corruption, deceit, and inattentive financial transactions. Once Enron was exposed for the accounting fraud scandal of their financial statements. There no longer preserved any ethical conduct or values within the organizational culture. All of this could be a combination of self-greed from top leadership, and company pressure to make Enron look like a sustainable …show more content…
What role do you think culture played at Enron? Give five specific examples of things Enron’s CEO could have done to create a healthy ethical culture. It has been stated that ethical culture can be measured by the following key attributes. “Employees must feel a sense of responsibility, and accountability for their actions and the actions of their peers. Employees must feel secure enough to raise issues, and concerns freely without fear of retaliation. Most importantly managers must lead by example, and model the behaviors that they demand from their employees.” (Dessler, pg.489) The following are examples, of things Enron’s CEO could have done to promote a strong ethical culture. First there must be a checks and balance system put in motion. For example, Office of Inspector General sole purpose is, “OIG’s mission is to (1) conduct and manage independent audit, evaluations, and investigations concerning Agency programs; (2) prevent and detect against Agency fraud, waste, and abuse; and (3) promote economy and efficiency, and effectiveness in Agency programs and operations.” (EEOC, OIG Semiannual report to Congress) “OIG is conducting ongoing investigations in several field offices involving prohibited personnel practices, ethics violations, conflicts of interest, time and attendance fraud, falsification of government records, misuse of government vehicles,
Many organizations have been destroyed or heavily damaged financially and took a hit in terms of reputation, for example, Enron. The word Ethics is derived from a Greek word called Ethos, meaning “The character or values particular to a specific person, people, culture or movement” (The American Heritage Dictionary, 2007, p. 295). Ethics has always played and will continue to play a huge role within the corporate world. Ethics is one of the important topics that are debated at lengths without reaching a conclusion, since there isn’t a right or wrong answer. It’s basically depends on how each individual perceives a particular situation. Over the past few years we have seen very poor unethical business practices by companies like Enron, which has affected many stakeholders. Poor unethical practices affect the society in many ways; employees lose their job, investors lose their money, and the country’s economy gets affected. This leads to people start losing confidence in the economy and the organizations that are being run by the so-called “educated” top executives that had one goal in their minds, personal gain. When Enron entered the scene in the mid-1980s, it was little more than a stodgy energy distribution system. Ten years later, it was a multi-billion dollar corporation, considered the poster child of the “new economy” for its willingness to use technology and the Internet in managing energy. Fifteen years later, the company is filing for bankruptcy on the heels of a massive financial collapse, likely the largest in corporate America’s history. As this paper is being written, the scope of Enron collapse is still being researched, poked and prodded. It will take years to determine what, exactly; the impact of the demise of this energy giant will be both on the industry and the
The Enron Corporation was founded in 1985 out of Houston Texas and was one of the world 's major electricity, natural gas, communications, and pulp and paper companies that employed over 20,000 employees. This paper will address some of the ethical issues that plagued Enron and eventually led to its fall.
After news of the scandal of Enron, one of the hottest items on e-Bay was a 64-page copy of Enron’s corporate code of ethics. One seller/former employee proclaimed it had “never been opened.” In the forward Kenneth L. Lay, CEO of Enron stated, “We want to be proud of Enron and to know that it enjoys a reputation for fairness and honesty and that it is respected (Enron 2).” For a company with such an extensive code of ethics and a CEO who seemed to want the company to be respected for that, there are still so many unanswered questions of what exactly went wrong. I believe that simply having a solid and thorough code of ethics alone does not prevent a company from acting unethically when given the right opportunity.
While this is a type of corporate culture, it plays a significant enough role in corporate crime that I’m going to touch on it individually. The goal of most every company is to make a profit, but when corporate profit is put above all else, it can easily lead to corporate crime. The phrases ‘profit over people’ and ‘money over morality’ come to mind here, especially when thinking about Enron. One example of Enron putting company profits above all else occurred during the California Energy Crisis. Enron traders learned that by manually shutting down power plants they could create artificial power shortages during California’s already occurring energy crisis. This would send energy prices sky rocketing. These traders would then bet on the price of energy rising, which it did, making them around 2 billion dollars. While those at Enron were fixated on the drive for profit, they were unconcerned with the consequences these outages had such as people getting stuck in elevators, fatal car crashes due to traffic light malfunctions, and deadly
Corporate culture refers to an organization that shares the same values or beliefs that are usually instilled or passed down by example from the upper level executives throughout the organization (Thorne, O. Ferrell, & L. Ferrell, 2011, p. 191). Most organizations are molded from ideals set in place by the founders or upper level executives of an organization. In Enron’s case, they believed in doing whatever it took and unfortunately it bread competitiveness throughout the company, which forced employees into making unethical decisions in order to save their jobs. The CEO, Jeffrey Skilling, decided to implement a program that evaluated employees every six months and the bottom twenty percent of employees would be terminated. This created a
Most decisions are not black and white in cultures—there are always grey areas. Pertaining to cultural realativism, “by defending the payment of bribes or ‘greasing the wheels’ of business and other questionable practices in this fashion” Wells Fargo has gone above and beyond with their cultural sabotage. Some other issues with sustaining a culture in ethically transforming companies include things like employee resistance, which did not seem to happen much in the Wells Fargo credit scandal. Most employees seemed to have done what they were told, out of fear of losing their jobs. Another issue sustaining culture in ethically transforming companies could be corrupt management from the start.
I certainly agree to the author and McNerney that the unethical dysfunctional company norm is the root cause of the ethical issue. It is this norm created by the predecessors who never set good ethical examples that influences the employees. They believed the politically safest way of executing tasks would be mimicking how their superiors get their jobs done.
However, there are more questions to ask than were answered by the court case. Were the executives making moral decisions? Whose fault was it; the individuals, the company culture, or the system of capitalism as a whole? What were the most nuanced causes of Enron 's failure? Throughout Enron 's history, Lay hired people who were willing to take risks until the line. The people he formed his team with, Skilling, Fastow, and more, we 're only concerned with making money and nourished to cut-throat survival-of-the-fittest culture that encourages employees to break the law. Skilling created a wild risk-taking environment by often taking dirt-biking and racing trips in exotic far out places. More often than not, the men were hospitalized for near-fatal injuries from collisions and crashes. These stories became urban legends at Enron and the team of men was soon idolized as macho men who knew no limits. Recklessness and risky behavior began to be seen as a positive, and led to an unhealthy company culture. The culture created by the executives led to incredibly immoral decisions by many of the lower-tier
The three main crooks Chairman Ken Lay, CEO Jeff Skilling, and CFO Andrew Fastow, are as off the rack as they come. Fastow was skimming from Enron by ripping off the con artists who showed him how to steal, by hiding Enron debt in dummy corporations, and getting rich off of it. Opportunity theory is ever present because since this scam was done once without penalty, it was done plenty of more times with ease. Skilling however, was the typical amoral nerd, with delusions of grandeur, who wanted to mess around with others because he was ridiculed as a kid, implementing an absurd rank and yank policy that led to employees grading each other, with the lowest graded people being fired. Structural humiliation played a direct role in shaping Skilling's thoughts and future actions. This did not mean the worst employees were fired, only the least popular, or those who were not afraid to tell the truth. Thus, the corrupt culture of Enron was born. At one point, in an inter...
middle of paper ... ... They had complete disregard for ethical standards that they should have looked towards when making their decisions. They allowed greed, and notoriety, to take over their basic perceptions of what is right, and what is wrong. So in conclusion, I have provided my analysis of ethical behavior that surrounded the financial events of Bernie Madoff, and the events that surrounded Enron.
Louis Borget, the president of Enron, stole $3M from the company and transferred into his personal offshore account. The men of this company never considered the consequences their actions would have on stakeholders, such as the employees. Step #3 tells us to consider all stakeholders involved in a decision, but we saw that Enron was clearly blinded ethics. The company encouraged all employees to put all of their money into stocks, even though they knew the company was collapsing. 4. List the points of the movie you agreed with and state why. a. Rappaport said, “ Ultimately, the fatal flaw with Enron was a sense that brains and wiliness could out think the way that system will eventually work.” I agreed with this assumption because throughout the movie this was a common theme. For example, Enron made a deal with Blockbuster to try and sell movies online. When a Canadian bank heard about this they gave Enron a loan of 115 million dollars, in exchange for the profits. When the plan tanked, they counted the loan as a profit from the venture. 5. List the points you disagreed with or found unhelpful. a. The whole was able to give me a general understanding of what happened to
According to Byrne (2002), a strong organisational culture that reflects moral values will have a potent, positive impact on its position within the industry. Business ethics derived from corporate culture has come to be considered a management discipline as managers are the ones who regularly faced with ethical decisions within the company, which may affect the business’s social responsibility. Hewlett Packard (HP), a multinational information technology company, as a leader in its market demonstrated its strong commitment to ethical integrity and business culture under the management of Carly Fiorina who stated “Some of the most important choices I ever made were firing people who weren 't conducting themselves with integrity.” This establishes that a business with the right management structure with a strong commitment to the business culture can in fact remain competitive without tarnishing the reputation. This can be contrasted with the actions of the tobacco company R.J Reynolds, who neglected to follow its business culture when they were caught in a cover up scandal. It was revealed the company had hidden knowledge about the addictiveness of the nicotine within their cigarettes in order to maintain their profits and improve the bottom line (Stephen E. Brimmer, 2007). Although some companies are able to maintain a competitive spot in the market, corporate culture is sometimes overlooked as unethical decision making can be seen as a solution to short run business problems in order to maximize
In short, it was determined that communication ethics lay at the crux of these cases and others (Neher, W. W. Sandin, P.J., 2007, p. 253). In the process, these companies reputation is been damage and spend millions of dollars to repair their image and spending millions of more on court battles. In the public response, Enron scandal rippled through financial markets an Enron stock fell from $85 to 30 cents in 2001 which can be attribute to communication in the work place (Neher, W. W. Sandin, P.J., 2007, p.
The main ethical issue with the Enron scandal is that Enron allowed legal loopholes to supersede ethical principles (Bowen & Heath, 2005). Enron used legal principles to justify what they were doing instead of acknowledging that the accounting processes they were using were unethical. Another one of the ethical issues is that Enron faced was that
Through an organizational culture that focused on financial greed for self, illegal accounting practices, conflicts of interest partnerships, illegal business dealings, fraud, negligence, and massive corruption at all levels, the Enron scandal help to create new laws and regulations with stiff penalties if violated (Ferrell, et al, 2013). The federal government implemented the Sarbanes Oxley Act (SOX) (Ferrell, et al, 2013).