Section 1: Introduction and situational analysis
Deregulation provided an opportunity for Enron to be a matchmaker in the power industry, playing the role of bringing sellers and buyers together. The Company made much profit from those exchanges with revenues generation from the differences between the selling and buying prices. In addition, the deregulation allowed the company to become creative and for the first time, the company that was required to operate along the lines that embraced innovation and tested limits (Bartlett & Glinska, 2001). Enron's contracts over time became more diverse as well as significantly complex. As its services and products evolved, the company's culture also evolved. In the newly deregulated as well as innovative forum, the company embraced a culture rewarding cleverness. Thus, deregulation opened up the industry to experimentation as well as the culture in which Enron expected its employees to explore new playing fields to the maximum hence pushing limits was considered as a survival skill (Sims & Brinkman, 2003). That presented a dilemma for employees and management on whether to adhere to the ethical codes or enhance personal performance.
Section 2: Stakeholder analysis
Ethical dilemmas face various stakeholders within an organization depending on the organizational culture as well as individual’s perspectives. In that respect, the following is a summary of the stakeholders that faced the ethical dilemma in the Enron’s case.
Management: Although the management had t he responsibility of ensuring that the ethical code was adhered to; as a way of enhancing governance and improving public image, they had the incentive to overlook them for purpose of enhancing the company’s profitability as it would increase their benefits. For instance, the company’s former President and CEO, Jeffrey Skilling cultivated a culture that pushed limits with a do it right and do it now as well as do it better motto. With that, he encouraged the employees’ independence, innovation and aggressiveness that later resulted to unethical conducts (Farrell, Farrell & Cobbin, 2002).
Employees: They faced the dilemma of adhering to the ethics code and carrying out their functions in a conservative manner that would enhance the business image, as well as sustainability and the need to enhance their personal performance as a survival means given the pressure from the management to improve continuously performance (Sims & Brinkman, 2003).
Auditors: The Company’s Accountants and Auditors had the responsibility of reporting the unethical conduct in the company’s financial reports manipulation. However, the incentive to keeps their jobs and their earnings motivated them to overlook the practices hence the failure to disclose the ill deeds that later resulted in the company’s collapse (Bartlett & Glinska, 2001).
Section 3: Analysis based on ethical theories
Ethical relativism theory holds that morality is a relative aspect dependent on one's norms and culture. Thus, whether an action is wrong or right is dependent on society's moral norms. In that view, an action could be morally right in a society while it is wrong in another. For ethical relativists, there cannot be universal standards for morals in terms of standards that are universally applied o and by peoples in all places and times. The only standards for a society's practices can only be judged on their own (Jones, Felps & Bigley, 2007). In that respect, Enron’s ethical conduct was acceptable within its organizational culture that sought to enhance innovation and performance at the expense of is ethical code and business long term sustainability. In addition, the culture that admired innovation and unchecked ambition as well as publicly punishing poor performance produced tremendous returns for Enron in the short run. However, it became more difficult to achieve additional value in the long run by constantly upping the ante (Sims & Brinkman, 2003).
Section 4: Conclusion and recommendations
Once ethical boundaries get breached, thresholds for more extreme ethical conducts are lowered. In that respect, after pushing employees for performance, Enron's executives began to bend the ethical rules for their personal gain (Bartlett & Glinska, 2001).
In addition, Enron’s case consists of more than questionable business dealings because when strong leadership was needed the most, is leader left. In that respect, the company lacked an effective leadership that is appropriate in addressing ethical issues and necessary for developing a suitable ethical culture that could have prevented the problem and the eventual collapse (Sims & Brinkman, 2003).
In that respect, some of the recommendations for avoiding such a case in the future would include cultivation of an ethical leadership by the company’s top management. Further, there should have been measures to punish unethical conduct hence discouraging and making it costly for employees to engage in unethical practices. Finally, performance management should seek o balance the short term and long term goals hence avoiding the scenario of excessive push on employees that could result to overlook of set codes and procedures (Bartlett & Glinska, 2001).
References
Bartlett, C. & Glinska, M. (2001). Enron's Transformation: From a Gas Pipeline to a New Economy Powerhouse. Boston: Harvard Business School Press.
Farrell, J., Farrell, M. & Cobbin, D. (2002). Can codes of ethics produce Consistent behaviors? Journal of Managerial Psychology, 17(6), 468 - 490.
Jones, T., Felps, W. & Bigley, A. (2007). Ethical Theory and Stakeholder – Related Decisions: The Role of Stakeholder Culture. Academy of Management Review, 32(1), 137-155.
Sims, R., & Brinkman, J. (2003). Enron ethics: Culture matters more than codes. Journal of Business Ethics, 45(3), 243-256.
