As the theoretical and practical efforts in the field of business ethics surround virtually all aspects of business conduct, there is also a great variety within this science. Some of the main issues that occupy business ethics scholars are:
Third, a new wing of economic and legislative thinking in all fields of ethics (e.g. in medicine and environmental issues) has also transformed the line of thought towards businesses, from perceiving them as mechanisms for creating value to active members of the society with individual sets of responsibilities.
Lastly, while Enron holds many valuable lessons as an organizational success, it ultimately created a toxic culture that encouraged its employees to be dishonest and rewarded greed at the expense of long-term corporate results. It is important that all managers remain cognizant of the values promoted by their organizations and to assess, using tools such as the “Vocation of the Business Leader: A Reflection” (Pontifical Council for Justice and Peace, 2012), the fit between their personal and ethical values and those of their organization.
Enron’s early success and later failure offers many valuable mechanisms for managers to explore in building their leadership capacities and in developing the organization that they serve. Enron illustrates the tremendous leadership role that managers have in establishing the culture of the organization and in understanding the mechanisms for how organizational culture evolves. Currently, many managers deny the existence of a corporate culture in their organizations or view it as something they cannot control, instead of leveraging the opportunity to shape the formal culture of the organization (Grey, 2009, p. 73). Enron succeed because it established a strong corporate culture through the organization’s response at critical junctures of the organization’s history and in the actions of its leadership in embracing and communicating key values, such as innovation, ambition, and adaptability.
Despite Enron’s well-known weaknesses and egregious ethical lapses, Enron had key areas of organizational strength in which the organization stands as an exemplary model for organizational development. These areas of strength contributed to the organization’s extraordinary success but were overdeveloped and eventually led to the downfall of the company.
An assessment of the managerial competencies of Enron managers depends on the manager—and the model. The CVF competencies represent management practice and theory and are derived from the research (Quinn et al., 2011, p.20). The CVF, as its name suggests, places greater emphasis on specific values in evaluating managerial competencies. Enron’s managers, for example, would not be highly rated on their ability to communicate honestly because they withheld information from employees as they neglected to communicate the true status of the company on the eve of bankruptcy (although they may have been effective communicators) or the ability to use power ethically because they used it for retaliation (although they may have wielded power effectively). Mintzberg’s model of managing places an emphasis on the roles and sub-roles that managers play and lists competencies that accompany these roles. This model is detailed, prescriptive, and action-oriented and would tend to favor Enron’s managers who excelled at competencies such as mobilizing, which includes “firefighting, project managing, negotiating/dealing, politicking, and managing change” (Mintzberg, 2009, p. 91). Although there is convergence between the competencies in these models, their divergence makes these models somewhat less valuable in defining specific skills for effective management.
The desire to sustain these rewards encouraged employees to engage in deal making and complicated, questionable accounting procedures that would help the company meet its quarterly earnings, with little concern about how this would impact the long-term financial health of the company. Enron rewarded increased revenue, which is more easily measured, instead of rewarding profitability, a more desirable outcome (Kerr, 1975).
The ninth essay contest calls participants to share their opinion about what the greatest ethical challenge facing the world today is. In your opinion, what is the world’s greatest challenge, and how does it affect your local community and/or the world? What are the ethical issues involved and how can we work together to overcome this problem?
Carnegie Council for Ethics in International Affairs is please to announce its ninth annual International Essay Contest, open to teachers and students anywhere in the world. From climate change, to refugees, to terrorism, many of the greatest problems facing us in the 21st century transcend national borders. All involve ethical issues, such as fairness, rights, and responsibilities.
Many of the top managers were up and coming, under-40 professionals who lacked the ability and interest in managing their young and ambitious often 20-something staff. Chief Financial Officer Fastow was described as a “PowerPoint executive whose number-crunching talent far exceeded his managerial and people skills” (Saporito, 2002). Lou Pai ran Enron Energy Services and “dispatched enemies with incredible skill” but the business was all about the numbers to him, according to the movie. Despite having a staff, he was seldom seen in the office (Gibney, 2005). Other executives were playful but also prone to unleashing temper tantrums in the office (Schwartz &Watkins, 2004).
Many of Enron’s top leadership as well as their employees had a constellation of very similar personality characteristics, educational backgrounds and life experiences. These corporate leaders came from families that were not well-off and they had tremendous motivation and drive to overcome the past and make a better life for themselves in the world. Enron Chairman and CEO Ken Lay was the son of a Baptist preacher and had been poor all of his life. His parents had little formal education, but Lay dreamed of the world of business and went on to earn a Ph.D. in economics (Gibney, 2005). Sherron Watkins, a company vice president, was born in Tomball, Texas, and was raised by a single mother who taught business at the local high school and encouraged her to go into accounting, which Watkins did, earning a master’s degree in accounting (Swartz & Watkins, 2004).
Within the broad frameworks of these models, the peer-reviewed literature will be used to highlight specific managerial successes and mistakes and the positive and negative effects on the organization and culture of Enron. This will be illustrated by examples drawn from the movie, “Enron: the Smartest Guys in the Room” and augmented with other accounts of Enron in the trade and mainstream media as well as the peer-reviewed literature.
What ethical issues were involved (refer to chapter 1)What suggestions do you have for accountning and auditing profession? You can place an order similar to this with us.