Ethics and Enron
Question 1: How did the Corporate Culture at Enron contribute to its bankruptcy?
The corporate Culture at Enron could have contributed to its bankruptcy in many ways. Its corporate culture supported unethical behavior without question for as long as the behavior resulted in monetary gain for the company. It was describe as having a culture of arrogance that led people to believe that they could handle increasingly greater risk without encountering any danger.
Its culture did little to promote the values of respect and integrity it instead rewarded ‘innovation’ and punished employees deemed week. The performance evaluation process for employees that was dubbed “rank and yank” utilized peer evaluations, and each of the company’s divisions was arbitrtly forced to fire the lowest ranking employees. This created cut-throat competition not only against Eron’s external competitors but also within the organization. It pitched employees against each other. The internal rivalry created in turn contributed to less communication between operations for fears of being fired. The “survival for the fittest” atmosphere reached the point where illegal activity was deemed necessary to stay on top of the game.
Enron’s compensation plans also seemed less concerned with generating profits for shareholders than with enriching officer wealth. Its culture encouraged flaunting the rules and even breaking them.
Each Enron division and business unit was kept separate from the others and as a result very few people in the organization had the big picture perspective of the company’s operations.
All these aspects of the corporate culture at Eron contributed separately to its eventual bankruptcy.
Question 2: Did Enron’s Bankers, auditors and attorneys contribute to Enron’s demise? If so, what was their contribution?
Yes the bankers, auditors and attorneys contributed to Enron’s demise. This is because they took sides with Enron’s management instead of
The corporate Culture at Enron could have contributed to its bankruptcy in many ways. Its corporate culture supported unethical behavior without question for as long as the behavior resulted in monetary gain for the company. It was describe as having a culture of arrogance that led people to believe that they could handle increasingly greater risk without encountering any danger.
Its culture did little to promote the values of respect and integrity it instead rewarded ‘innovation’ and punished employees deemed week. The performance evaluation process for employees that was dubbed “rank and yank” utilized peer evaluations, and each of the company’s divisions was arbitrtly forced to fire the lowest ranking employees. This created cut-throat competition not only against Eron’s external competitors but also within the organization. It pitched employees against each other. The internal rivalry created in turn contributed to less communication between operations for fears of being fired. The “survival for the fittest” atmosphere reached the point where illegal activity was deemed necessary to stay on top of the game.
Enron’s compensation plans also seemed less concerned with generating profits for shareholders than with enriching officer wealth. Its culture encouraged flaunting the rules and even breaking them.
Each Enron division and business unit was kept separate from the others and as a result very few people in the organization had the big picture perspective of the company’s operations.
All these aspects of the corporate culture at Eron contributed separately to its eventual bankruptcy.
Question 2: Did Enron’s Bankers, auditors and attorneys contribute to Enron’s demise? If so, what was their contribution?
Yes the bankers, auditors and attorneys contributed to Enron’s demise. This is because they took sides with Enron’s management instead of
References: 1. The Responsibility and Accountability of CEOs: The Last Interview with Ken Lay Journal of Business Ethics _ Springer 2010 DOI 10.1007/s10551-010-0675-y O. C. Ferrell Linda Ferrell 2. The critical role of ethics: recent history has shown that when individual ethics are compromised, corporate ethics fail and financial disaster is not far behind by Marianne M. Jennings http://findarticles.com/p/articles/mi_m4153/is_6_60/ai_111737942 3. Enron And Arthur Andersen: The Case Of The Crooked E And The Fallen A Gary M. Cunningham and Jean E. Harris Global Perspectives on Accounting Education Volume 3, 2006, 27-48