As noted by Ferrell, Fraedrich, and Ferrell (497), Enron’s executive compensation plan was designed to make executives wealthy rather than generating profits for shareholders. There were unique peculiarities about Enron’s compensation plan that motivated top executives to manage earnings in deceitful ways. As pointed out by Niskanen (259), the executive compensation plan at Enron created many problems with negative repercussions. To make matters worse, the company also promoted the use of non-standard accounting practices. Among other wrongs, the compensation plan opened avenues for employees to blow up the value of contracts and make money for themselves through illegal means. Instead of increasing shareholders’ profit, the compensation strategy was designed to guarantee maximum benefits for the company’s top executives. The prevailing culture permitted employees to continue cheating and stealing as long as they were not caught.Īnother source of the downfall was the company’s executive compensation plan. Rather than working towards building a committed, reliable, and accountable team, there was a greater focus on making more money for the company’s top executives. The corporate culture at Enron allegedly encouraged flouting rules in pursuit of profit. Throughout the company’s operations, important values such as respect and integrity were greatly undermined. In addition, the poor corporate culture at Enron did very little to promote integrity and respect.Īnything, good or bad, could be done as long as it brought profit to the company. According to Ferrell, Fraedrich, and Ferrell (497), the executive team at Enron believed that no single competitor had a chance against it. Ostensibly, this description has been blamed for making people believe that Enron could handle any kind of risk or pressure without fear of loss. Many people described Enron as a company with a culture of arrogance. How would you characterize Enron’s culture and what role, and in what way, do you think culture played in the ethical issues at Enron? Regrettably, ethical behavior was never put to practice at Enron as intended. His original idea was to build a highly moral and ethical culture that would compel people to honor the values of respect, integrity, communication, and excellence.
ENRON THE SMARTEST GUYS IN THE ROOM SPARKNOTES FULL
Although Enron’s CEO had a strong conviction about establishing a healthy environment for individuals to reach their full potential, he did not succeed. It is quite obvious that the unethical culture at Enron denied the company numerous opportunities to remain at the top. Undoubtedly, the unethical and irresponsible culture at Enron especially in financial statements put the company in a very big mess.Īccording to Forster (538), every company must understand the negative consequences of unethical behavior. In the end, money was lost and people lost jobs. Unethical culture further caused the company to lose billions of dollars to corrupt employees. This raised suspicion and experts outside the organization started questioning the credibility of the company’s financial statements. Failure to insist on accounting transparency, for example, created room for managers to falsify financial statements to make the company look good before the public. Sadly, he was unsuccessful in reinforcing important principles that could keep Enron on the right track. We will write a custom Enron: The Smartest Guys in the Room specifically for youįor only $14.00 $11,90/page 308 certified writers online Learn Moreīased on the documentary by Altyazılı (1), Enron’s Chief Executive Officer was regarded by many to be ethical and of high moral standing. He or she is thus able to do what is appropriate in any given situation. A person with good morals can distinguish right from wrong. On the other hand, morality involves acting correctly when confronted with different situations.
They are also influenced by the culture and society he or she grows and learns. To a large degree, personal ethics are determined by the experiences one goes through in life.
In general, every single individual has his or her set of personal ethics. Drawing from a study by Means (52), ethics refers to principles of right and wrong. Summarize in one page or less how you explain Enron’s ethical meltdownĮthics attempts to establish the nature of morality and to define and distinguish what is right from what is wrong.
0 kommentar(er)
