The aim of the project is the implementation of ethical influence concepts of a practical example. For this purpose, Enron has been discussed in the current assignment. The company faced bankruptcy in 2001 because of the unethical behavior and negative politics of its leadership. The top leadership of the company abused its power and manipulated the information.
Why did it happen?
Enron is a big example of unethical utilization of power, misbehaviors, moral failure, and unethical executive practices. All these mistakes of Enron led the company towards bankruptcy. There are five ways; power comes from that include coercive power, reward power, legitimate power, expert power, and referent power. No power is unethical until it serves the ultimate goals of the organization (Johnson, 2012). The morality of any power is dependent upon the end or objectives that it serves (Johnson, 2012). The leadership of the company used their coercive power unethically. The leadership was used to remove the person from a vice chair position when they raise issues or appear as a threat to the leadership positions.
What is right?
The leadership used their coercive power to protect their interest rather thinking about the organization. When the leadership of the company was not able to answer the people, they tended to dismiss the staff from their positions. Leadership at Enron should have used its coercive power, but at the same time, the leadership of the company should respond to the influence attempts of employees or followers. They should have taken the concerns of employees into consideration (Johnson, 2012).
What is wrong?
Recommendation and Conclusion
The leadership of the company did not empower its employees ever; the company should have empowered its employees to make a decision and allowed them to make a suggestion to overcome from issues that were occurring at that time rather doing self-promotion. Through this behavior, the company could encourage employees to tackle with challenges that could save the organization from the worst situation. The leadership of the business should have adapted vision-centric vision serving political mindset rather having an egocentric self-serving political mindset. Leadership rather manipulating the facts for their self-interests could focus on the attainment of long-term organizational goals. The leadership of the firm should have adapted ethical standards of doing the things right by making right decisions rather doing things right after having bad consequences of wrongdoings (Johnson, 2003).
The leadership and Anderson, an accounting firm that did an audit of Enron should take the responsibility of improving the situation of Enron. Anderson is responsible because, under the GAAS (Generally Accepted Auditing Standards), the firm was liable to protect the interest of public and investors. Anderson did not perform its duties ethically and independently because of the huge amount paid by Enron to the accounting firm (McKendree, 2003).
The entire auditing administration is required to be changed at Enron, after facing the crisis this change should have been taken into consideration immediately because wrong reporting of finances has a huge impact on the success of the company. Wrong reporting of finances does not allow organizations to have strong control, over their actives that result in collapse as happened with Enron (The Economist, 2002).
References
Johnson, C. (2003). Enron’s Ethical Collapse: Lessons for Leadership Educators. Journal of Leadership Education, 2 (1), 45-56.
Johnson, C. E. (2012). Organizational Ethics: A Practical Approach. USA: SAGE Publications, Inc.
McKendree. (2003). Arthur Andersen and Enron: Positive Influence on the Accounting Industry Todd Stinson. Retrieved May 16, 2016, from https://www.mckendree.edu/academics/scholars/issue4/stinson.htm
The Economist. (2002). The lessons from Enron. Retrieved May 16, 2016, from http://www.economist.com/node/976011
