...Enron as an ethical dilemma can only be described as a travesty. The violations of ethical code and moral obligation ceased to exist while the company was alive. A tremendous contributor to the scandal is Arthur Anderson, who was Enron’s outside auditor since 1985. Arthur Anderson was able to hide major losses from Enron. Many projects that had failed through Enron seemingly went unnoticed as they were covered up by Anderson. Not only was this illegal, but it was ethically wrong of Anderson and Enron to do. Most of what Enron did violated business legality. The decision to break these laws is surrounded by the unethical approach the company took in order to maintain company power. The categorical imperative of the energy giant is that in order to maintain power, we as a company must hide our losses. This is one of Immanuel Kant’s theories that focuses on imperatives and what human beings deem as necessity, and what actions must occur in order to reach ones goal. So in this case it is clear what Enron deemed as necessity. Next, I will talk about the utilitarian theory and how it relates to the ethical dilemma at Enron. Utilitarian is the theory in which we as people attempt to minimize the harm in our decision making process while also maximizing the good. In the case of Enron, executives, on the surface, may have acted in a utilitarian manner, but ultimately created more harm than good. The deeper levels of unethical behavior and illegal activity would show that Enron was...
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...significance to Enron. When the President of Enron, Kenneth Lay, hires new CEO Jeffrey Skilling, a very energetic and a “dreamer” who joins Enron on the condition that they utilize mark-to-market accounting, allowing the company to book potential profits on certain projects immediately after the deals are signed. To keep its stock price going up par example Enron began a venture that might make $50 million 10 years from now, it could claim the $50 million as current income. However, this projects turn out to be successful. This gives Enron the ability to subjectively give the appearance of being a profitable company even if it isn't. 2. Describe the Enron culture. The culture of Enron was very competitive and all the employees had the same attitude of their bosses. Par example Jeffrey Skilling imposes his idea on Enron by establishing a review committee that grades employees and annually fires the bottom fifteen percent. This creates a highly competitive and brutal working environment. 3. What is Andy Fastow's significance to Enron? Andy Fastow’s was the Enron’s CFO. He helped the company, hiding the losses with a “Tom Ponzi’s scheme”. One of Enron tactic was to create phony offshore corporate shells and move their losses to those companies, which were off the books. The film shows a schematic diagram tracing the movement of debt to such Enron entities. Two of the companies are named "M. Smart" and "M. Yass." 4. What is Sherron Watkins significance to Enron? She was the Vice...
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...Examining a Business Failure: Enron Examining a Business Failure: Enron Most people today have heard of the big Enron scandal through various different forms of entertainment such as television, radio, and the internet. Even those business people that never have time to watch the news heard some bits and pieces of the rise and fall of Enron. The basic issue that got Enron in trouble to begin with was the lack of good leadership and management. We know that insider trading is an unethical business practice. With that said, the big business executives and other members of the administration team at Enron had unethical business practices, and only one of those being insider trading. This paper will discuss the contributions of leadership, management, and organizational structures that led to the demise of Enron. Leadership, Management, and Organizational Structures Leadership has many definitions. According to Yuki, (2006) “leadership is behaviors, influence, interaction patterns, role relationships, and occupation of an administrative position” (p. 2). With this definition in mind, the average person can see the clear issues behind the fall of Enron. Csorba (2006) states that Enron’s management was built based on deception and lies. Even though some of the Enron leaders knew fraud and deception was taking place, like lifting conflict of interest rules for the CFO, they continued to look the other way and continued their employment and working dishonestly. One of the many...
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...exaExamining a Business Failure: Enron Examining a Business Failure: Enron Most people today have heard of the big Enron scandal through various different forms of entertainment such as television, radio, and the internet. Even those business people that never have time to watch the news heard some bits and pieces of the rise and fall of Enron. The basic issue that got Enron in trouble to begin with was the lack of good leadership and management. We know that insider trading is an unethical business practice. With that said, the big business executives and other members of the administration team at Enron had unethical business practices, and only one of those being insider trading. This paper will discuss the contributions of leadership, management, and organizational structures that led to the demise of Enron. Leadership, Management, and Organizational Structures Leadership has many definitions. According to Yuki, (2006) leadership is behaviors, influence, interaction patterns, role relationships, and occupation of an administrative position (p. 2). With this definition in mind, the average person can see the clear issues behind the fall of Enron. Csorba (2006) states that Enron’s management was built based on deception and lies. Even though some of the Enron leaders knew fraud and deception was taking place, like lifting conflict of interest rules for the CFO, they continued to look the other way and continued their employment and working dishonestly. One of the many...
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...EXECUTIVE SUMMARY This report will analyse the groupthink’s concerns in the collapse of Enron. The collapse of Enron is less than three months, which Enron from a very prosperous company to a bankrupt enterprise. The collapse of Enron is one of the most grievous business failures in United States. This disastrous business failure had causes a large number of employees lost their jobs and retirement savings. Groupthink leads groups to make faulty judgments. Groupthink occurs when a group make wrong decisions as the pressures of group lead to deterioration of “mental efficiency, reality testing, and moral judgment”. There are several symptoms of groupthink. The issues to be resolved for Enron are collective rationalization, stereotypes of out-group, illusion of invulnerability, deceit to increase shareholders’ investments and self-censorship. The causes of the case study are illusion of unanimity, self-appointed mindguards, complicated transactions, belief in inherent morality of the group and direct pressure in dissenters. The solutions to the case study are challenge the norms, discuss with trusted associates, forbid related-party transactions for the senior officers, monitor the power of CEO and assign the role of critical evaluator. When there are symptoms of groupthink, there must be solutions to prevent and solve. TABLE OF CONTENTS EXECUTIVE SUMMARY 1.0 INTRODUCTION 1.1 Purpose of the report 1.2 Company Background 2.0 SUMMARY OF THE CASE STUDY 3...
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...company will do if those policies are violated (McNamara). A code of ethics is a guideline of expectations and the values the company holds important. When a company has employees that question if something is wrong or not then the code of ethics can be a useful guide but doubles as an orientation tool to show employees what the repercussions are of violating those rules. In today’s failing economy it is obvious to see the repercussions of unethical behavior and how not just the company, the employees and the stakeholders are affected but how that failing of a major business ripples into the general population. There is no greater example of unethical behavior than the lesson that can be garnered from the company Enron. Exactly what was the problem with Enron and where did it all go astray...
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...Ethics Student Name MGT/498 Due Date Instructor Ethics A business must operate with ethics as a guiding principle to be successful and profitable. A company that is publically traded bears a responsibility of being a good steward of the profits the company earns, for the stakeholders, employees, and clients. The social aspect of a company and ethics go hand-in-hand. If a business fails to act ethically responsible, the result of that behavior can affect it socially. “The concept of social responsibility proposes that a private corporation has responsibilities to society that extend beyond making a profit” (Wheelen & Hunger, 2010, pg. 72). When a company is established, it begins with a foundation constructed from an idea. The idea evolves and must blossom for the business to grow and make a profit. When a business attains the soliciting stakeholders phase, there must be strategic plan in place. An effective strategic plan requires that a model is developed in order for the business to operate. Running a business requires the owner to have a plan that will include the mission, vision, code of conduct, and ethics that it will go by. A code of conduct and ethics is what the organization expects from the employees. It should also have a written policy of what the consequences are for violating any of the policies. Code of Ethics “A code of ethics specifies how an organization expects its employees to behave while on the job” (Wheelen & Hunger, 2010, pg...
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...Ethics A business that expects to turn a profit and have sustainability in the market must operate ethically. A company that trades publically has the responsibility of handling the profits of the company for the clients, stakeholders, and employees. The company also has the responsibility of earning money for the clients, stakeholders, and employees. Ethics is the social aspect of business, when a business does not act ethically responsible there are ramifications socially for the company also. A company forms its foundation from the idea of a person and transforms it into a business, and when that idea blossoms the business grows. A business eventually reaches the stage of needing to solicit stakeholders and the company needs to put a strategic plan in place. The company must develop a model the business will operate under. An integral part of running a successful business is implementing a plan that incorporates the company’s vision, code of conduct, and mission as well as a code of ethics. The code of ethics and conduct is the expectation the company has for its employees and the consequences for violating them (McNamara, n.d.). The code of ethics a company implements is a guideline of the expectations for employees and the values the company holds is extremely important. When an employee questions what is right or wrong within the company, the code of ethics and values are a useful guide to answer the employees’ questions. The code of ethics and values also can be used...
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...Ethics in Accounting By Pace University – New York Accounting for Decision Making, MBA 640 Fall 2011 Required Research Paper Page 1 of 11 Table of Contents Number Content Page Number 1 Introduction 3 2 Ethics in Accounting 4 3 Enron Scandal 6 4 Satyam Scandal 8 5 Conclusion 10 6 References 11 Page 2 of 11 Introduction • What is “Ethics”? Ethics, also known as moral philosophy, is a branch of philosophy that addresses questions about morality—that is, concepts such as good and evil, right and wrong, virtue and vice, justice and crime, etc. Source: http://en.wikipedia.org/wiki/Ethics • What is “Accounting”? Accounting is basically maintaining and providing records of transfer of funds for an individual or business. All the data collected from these records are then summarized in form of reports and statements, which are used by outside parties and the company itself for various uses and analysis. Source: http://www.investopedia.com/terms/a/accounting.asp#axzz1fbCBL2q0 Page 3 of 11 Ethics in Accounting With many scandals and scams coming out regarding the unethical behavior of firms in terms of Business and accounting, higher authorities in governments across the globe are worried. These scams are disturbing and damaging the economy at large. When the economy is already sliding down, governments have started taking extra care and strict rules are being applied to control the damage...
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...On March 5, 2002, the Markkula Center for Applied Ethics convened a panel of four Santa Clara University business ethicists to discuss the Enron scandal. Panelists included Kirk O. Hanson, executive director of the Ethics Center and University Professor of Organizations and Society; Manuel Velasquez, Dirksen Professor of Business Ethics, Department of Management; Dennis Moberg, Wilkinson Professor of Management and Ethics, and Martin Calkins, S.J., assistant professor of management. Edited excerpts from their conversation appear below: Manuel Velasquez: What went wrong at Enron? In ethics, explanations tend to fall into three categories: personal, organizational, and systemic. Personal explanations look for the causes of evil in the character of the individuals who were involved. Did this happen, for example, because the people involved were vicious? Were they greedy? Were they stupid? Were they callous? Were they intemperate? Were they lacking in compassion? Organizational explanations look for causes in group influences. They take seriously the ways that we influence each other when we do things as a group. These influences include the shared beliefs that groups develop about who is important, what is permissible, and how things are done here in this group. These include also the shared values that we call a group culture, the rules or policies groups develop to govern their interactions with each other and the rest of the world. Finally, systemic explanations look for causes...
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...Wayne Grudem’s Business for the Glory of God: The Bible’s Teaching on the Moral Goodness of Business analyzes a myriad of misconstrued facets of business and how these facets are rather intended and are able to be implemented as acts that glorify God. Primarily, these various components of business carry negative connotations, because, it seems, more often than not that businesses fall into corruption and scandal due to greed and lust. Grudem does an exceptional job in explaining that it is not the concepts of business themselves, such as money or owning multiple possessions, that are evil, but rather the acts of coveting, idolizing, or being wicked stewards of money or possessions. In business, Grudem articulates, the main position supported...
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...Abstract Trust between employees and management within an organization directly affects the organization’s ability to perform the function for which it was created. In addition trust directly affects the well being of employees as well as their ability to perform their tasks. Recent historical events suggest that trust between employees and management has been negatively affected however, with the enactment of new laws and ethics policies has there been a strengthening of this trust relationship in recent years? This paper discusses the history effecting trust between employees and management and the related changes that have been implemented in attempts to improve this relationship. This examination suggests that although there has been improvement in the recognition of the importance of improving trust between the employee and management within many organizations, there has been little overall improvement in the trust of management by employees. However, this observation recognizes that many companies value building trust between employees and management more than other companies and that it will take additional time before this concept is globally accepted. Why the Topic is Important The topic of our research paper is the evolution of employee trust with corporate management. We will specifically discuss the history of management and employee trust relationships, give examples of scandals which led to distrust in management, and subsequent legislation and ethics...
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...employees to exceed expectation? What must a supervisor or manager do to increase performance and exceed goals? What leadership skills or traits affect the company’s culture and ethics? Can leadership style be demonstrated through the organization? Management uses several ways that lead to successful performance such as initiating structure, emotional intelligence, and thoughtful and ethical leadership (Robbins & Judge). Leadership has been defined as the ability to influence others. “We define leadership as the ability to influence a group toward the achievement of a vision or a set of goals.” (Robbins & Judge pg.368) A leader can use his or her power to affect the behaviors of others. In this report we will compare two companies, Enron and Google, with vastly different cultures and the effectiveness of their leadership style. Our goal is to determine whether different leadership styles affect the company’s culture and overall performance. Leadership and Motivation Style in Google Larry Page and Sergey Brin founded Google in September 1998. Since then, the company has grown to more than 40,000 employees worldwide, with a management team that represents some of the most experienced technology professionals in the industry (Google Website). Key influential elements shaping Google's culture of positive attitudes and behavior begin with their core philosophy and extend throughout their...
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...University of Technology, Espoo. CHAPTER 11 Reasons of Systemic Collapse in Enron Matti Rantanen This article studies the moral development at Enron from the perspective of its long-term CEO and chairman Ken Lay. I focus on some critical decisions in the early years of Enron and speculate why Lay chose in favour of non-systems intelligent solutions in leading morale. According to the outlook developed it is plausible to think that immoral behaviour at Enron stemmed not so much from Lay’s immoral character but from his Christian values. Neglecting opportunities to change his value structure Lay avoided tough decisions that marked loss for others. Consequently, unable to make decisions objectively based on systemic rather than individual motives, he lost his opportunity in creating coherent corporate values promoting moral integrity. If the suggested causality is true, it underlines the importance of conscious moral leadership as an everyday discipline. Introduction This article discusses the story of Enron, the infamous American energy company that December 2, 2001 filed the largest bankruptcy case in US history, totalling losses around 66 billion US dollars,1 forcing 4,000 unemployed,2 and bringing down Arthur Andersen, 3 its auditing company. For many of the “bad” and publicly convicted Enron executives it has been the worst nightmare come true, a personal travesty. Cliff Baxter, an Enron executive, has committed suicide and Ken Lay, after being found guilty of conspiracy...
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...rarely followed and sometimes not followed at all. The risks that companies have been taking to increase profits and put more money into the CEO’s pockets use illegal actions. In recent times, companies such as Enron, Wal-Mart and BP have been guilty of multiple charges against ethical principles which have led to bankruptcies, housing market crashes and environmental disasters. The most famous case related to Enron and their aggressive accounting practices of reporting losses as profits to keep the stock price high. This act ultimately led to the bankruptcy of the company. Enron was founded in Omaha, Nebraska by Kenneth Lay in 1985. It was an American energy, commodities and services company based in Houston, Texas. Enron was once viewed as one of the best companies in America during its initial years of operation. Fortune magazine named Enron “America’s Most Innovative Company” for six consecutive years. Enron employed 20,000 employees, owned multiple pipelines and power plants in addition to a stock price that hit a peak of $90. Enron had an extensive code of ethics policy. This policy was 64 pages long and described each policy and the consequences for breaking them. All aspects of the company made it look like the shining star they wanted to people to believe. What was actually going on...
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