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Enron Ethics Essay

1816 words - 8 pages

Kathleen Waddington
BLW 411
Rough Draft

Corporate culture has a top down affect on everyone in a company. Top management sets a clear example of the expectations for its employees by the actions they engage in and the choices they make. Actions clearly speak louder than words and role-modeling behavior is a very powerful tool that leaders should use to develop and influence their corporate culture. Leaders can use role modeling, teaching, and coaching, to reinforce the values that support the organizational culture. Employees look to leaders for cues as to what is truly appropriate behavior. Corporate cultures must reward ethical conduct while penalizing any wrongdoing at all ...view middle of the document...

“Ethics and integrity are at the core of sustainable long term success,” says Richard Rudden, managing partner at Target Rock Advisors in New York State. “Without them, no strategy can work and, as Enron has demonstrated, enterprises will fail. That’s despite having some of the ‘smartest’ guys in the room.”

Research shows that corporate codes are clearly used as practical approaches to everyday situations that implore workers to do the right thing. Systems need to be put in place that encourage employees to come forward with concerns that they know will be heard and acted upon. These types of systems allow management to address and handle issues that will ensure a strong ethical health. With the demise of Enron, the Sarbanes-Oxley Act was created with the intent to encourage employees to report suspected illegal or unethical auditing and accounting practices without fear of the finger being pointed at them for exposing their concerns. Employees should be able to question a company’s code of conduct without feeling inhibited for trying to do the right thing.

Using a moral minimum approach in developing the culture expectations might keep employees from breaking any laws, but it’s strictly the minimum expectation for any company. The goal should always be to set the highest standards for all stakeholders and that begins with top managers setting good examples for all employees. You don’t need to break a law to be unethical, being honest and doing the right thing in all situations should be the minimum expectation.

At one time Enron was the nation’s seventh largest publicly-held corporation, on the Fortune 500, and ranked as the sixth-largest energy company in the world. Enron began business in 1985 with the merger of two Houston pipeline companies. In the early years they financially struggled but managed to survive. With the deregulation of the electrical power markets Enron quickly changed from a surviving company to a thriving one. Deregulation allowed Enron to become more creative hence they could innovate and test limits. As Enron’s services and products expanded, so did their culture. Enron embraced innovation and had a culture that pushed its team to be clever and experiment. “Enron’s former President and CEO Jeffrey Skilling actively cultivated a culture that would push limits- “Do it right, do it now and do it better” was his motto.” In the short term this approach can be very rewarding but long term this strategy of upping the ante is hard to maintain. It’s this type of cultural atmosphere that can cause employees to stretch the rules and ethical conduct can get overlooked.

Enron success created a competitive culture that put pressure on their executives to sustain the explosive growth they had been experiencing up until the late 1990’s. Logically all growth reaches a plateau but Enron’s greedy executives were not willing to accept a slowdown in their upward success. Their greed allowed them to justify...

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