http://www.scu.edu/ethics/publications/ethicalperspectives/enronlessons.html
Although Enron went bankrupt and disappeared ten years ago, the impacts it has made on the ethical standards never faded. It took Enron 16 years to go from about ten billion dollar assets to more than sixty-five billion dollar assets, and took twenty-four days to go bankrupt. The Enron scandal is one that left a deep and ugly scar on the face of modern business. In this article, the facts of Enron’s case were reviewed and the major ethical issues involved in Enron’s scandal were analyzed.
Enron’s culture contributed much to the ethic scandal. Enron was a harsh and condescending company, who emphasized competition and financial goals.
Firstly, Enron’s competitive environments and rigorous performance evaluation standards caused a culture of deception. Since employees were nervous about losing their jobs, they only focused on how to make their performances look good. They ignored the ethical standards, and only focused on the achievement of their financial goal. After a few employees began cheating on their works, the only way to beat these persons was to cheat more
Secondly, this competitive environment contributed to the covering of the errors and cheating because employees tended to be uncooperative and seldom communicated with each other. The employees were unwilling to ask questions because asking questions was regarded as humiliating. Besides that, they were also less willing to share resources and information because they competed with each other. So in Enron, no persons asking questions as well as no one want to answer questions. Because of this working environment, few employees at Enron actually understood their jobs. As a result, they just tried to hide errors and made their work look good. Additionally, they ignored the errors and cheatings of others. They never mentioned their doubts about others’ works. Because they thought if others were not actually wrong, the person who mentioned questions would be laugh at. So employees at Enron were quiet.
Additionally, the culture of Enron emphasized too much on the financial goals. The person who can achieve the budget numbers would be the hero of the company. Both executives and most of employees focused on making profits for themselves through making good financial numbers instead of a real increase of the company’s economic value. Enron also was concerned less about the needs, values, desires and also the well-being of the employees. From the ethical aspect, employers should respond to their employees and keep the goal of benefiting them. In such a company, ethical standards were just window dressing. No one followed them.
Fourthly, Enron tried to keep its employees and outside parties quiet. Employees were discouraged from expressing doubts about the financial condition of the company as well as decisions made by the executives. In these years when it committed fraud in its financial statement, Enron hurt both people inside and outside of Enron, who doubted Enron’s financial conditions. Therefore, employees in Enron were pressured to work blindly, keep silent, protect their own short-term interests, and try to achieve their goals even if it was an obvious cheat.
This evil culture contributed to Enron’s scandal. At Enron, both executives and most of employees behaved unethically when they encountered conflicts of interests. They were greedy and self-interested.
Xitong He 