Introduction
This seeks t review the Enron’s code of ethics. In the process it assesses the company’s implicit and written code of ethics by comparing it to the APA and SHRM codes of ethics. From the comparison, the paper will seek to reveal inconsistencies in Enron’s code of ethics that are likely to lead to ethical violations. After revealing the inconsistencies, the paper will seek to make important recommendations based on scholarly justification. After which, a revised code of ethics for the company will be developed based on the conclusions made.
Assessment of Enron’s code of ethics
The Enron’s code of ethics focuses primarily on the company’s beliefs on how their employees should be treated. It fails to consider exact rules and regulation for conducting business within the company. There is also too much use of language that is openly subjected to interpretation by individual readers. This means that anyone can justify an unethical action using the company’s code of ethics; because there is enough room left for misinterpretation. To cite an example of a clause that has an open room for interpretation, the company principle on human rights focuses on treating others, the same way they expect others to treat them. Such a statement can be used to justify an unethical practice.
However, according to the APA and SHRM code of ethics, the main focus on is on ethical practices that are more defined and clear enough to avoid openness to multiple interpretations Similarly, the core principles according to the SHRM code of ethics, stresses on issues such as professional responsibility, professional development, ethical leadership, fairness and justice, conflict of interest, and use of information. The clauses supporting these areas tend to eliminate as much as possible, any possibility of multiple interpretation. In this way, loopholes are covered and no single member of the company’s management can misuse the code of ethics to justify or conduct any corrupt dealings.
In the business ethics section of Enron’s code of ethics, the wording used to prohibit gifts to employees tend to create loopholes that allow gifting in favor of privileges from employees. For instance, this section says that no gift will be accepted in exchange of a privilege, price, or special position. Such a statement creates a lot room for misconception or misinterpretation. However, a look at the APA and SHRM codes of ethics, such loopholes are can be covered by being more particular and focusing on the basics of the matter. For instance, gifts may appear to influence the business decisions made by employees. Therefore, in order to focus on the basics of the matter, gifts that will appear to influence the business decision of an employee should be prohibited.
The paragraph concerning confidentiality is also very ambiguous and uses words that encourage numerous interpretation of the document. For instance, it suggests that confidential information may not be used for individual benefit. This statement is open and can mean a lot of things. On the other hand, the statements regarding confidentiality according to SHRM and APA codes of ethics say that the information are not to be used at all expect when it is legally needed for use.
One clear inconsistency in the Enron’s code of ethics is the fact that it fails to provide the conflict of interest provisions. These provisions are important since they are aimed at protecting the interest of the stakeholders. They focus on maintaining high levels of trust with individual stakeholders of the company. The provisions also prevent a company from engaging in activities that create actual conflict of interest; implying the need to avoid conflict of interest as much as possible. According to the Standards in Human Resource Management Code of ethics (SHRM code of ethics), such provisions are clearly defined and the intentions behind them clearly stated. They are intended to avoid situations that appear to create a conflict of interest.
Important changes that have to be made in Enron’s code of ethics
In this regard, the code of ethics of the company was generally for public show, crowd control, and risk reduction. Just from the way it reports misconduct, one can clearly have proof that the code of ethics is not entirely real. Compliance with regulations and rules is something very different from ethics. This implies that one can easily do an unethical practice while complying with the rules and regulations governing an organization. Loopholes create room for engaging in unethical practices while complying with the rules and regulations. There is no single set of rules that can be applied perfectly in all situations. If an individual focuses on finding loopholes in a set of rules or code of ethics for selfish reasons, chances are high that he or she might find a way. This is one reason why creation of corporate ethics does not focus on compliance with rules because it encourages employees especially in the executive management to go on a quest for loopholes.
Enron’s code of ethics show numerous evidences of shortcomings and limitations compared to the current ethical standards. It is obvious that the document requires changes. One important area that needs to be changed is the wording used in different sections of the document. The wordings create a lot of room for different interpretations. There are also a lot of omissions with regards to the current standards developing codes of ethics. These omitted necessities will have to be included in order for the code to be effective on its own.
Revised code of ethics
Based on the conclusions and issues noted in the company’s code of ethics, the following is a proposed revised version of the code of ethics.
General principles
In this section, the document primarily consists of general principles rather that form the basis of the ethical standards presented in the subsequent sections.
The first principle is that of beneficence and nonmalficence. According to this principle, the company will strive to benefit the people with whom they work with and ensure no harm is done to them. The company therefore will be seeking to protect the interest of shareholders and the society in general. In case a conflict occurs in the company, through the principle of beneficence, the conflict will have to be resolved in a manner that reduces harm to any stakeholder of the company. Every employee in this company will have to be aware that their influence has a political, social, organizational, financial, and personal factor. Therefore, it is encouraged that the employees do not misuse their influence in any way.
The second important principle is that of fidelity and responsibility. This principle aims at establishing trustworthy relationships among employees. It also aims at creating awareness of the professional responsibility of all employees. The company expects that every employee upholds high standards of professionalism while conducting themselves in the name of the company. All employees’ activities and conduct must be geared towards adding value to the company and to its stakeholders. The third important principle is that of professional development. It aims at encouraging employees to make adherence to the highest standards of professionalism in order to be competent in the business environment. Employees have to expand their knowledge in their various professions and careers so that they understand how the company works and how they can make further improvement to the company.
The guidelines for the second and third principles expect every employee to adhere to the highest professional standards of behavior. The employees also have to consider how their various expertises can be used to achieve the goals of the organization. The guidelines encourage employees to openly communicate and advocate for better ways in which they can be appreciated and treated within their rights as human beings. The third principle calls for employees to pursue learning in order to meet requirements for opportunities made available to them through the company.
The fourth core principle is ethical leadership. This principle aims at encouraging employees to develop leadership in ethical issues. The target stakeholder is the executive management and board of directors. They are expected to act as role model in offering ethical leadership. They have to set the standards and examples for other members of the Enron community to follow. Each employee is also expected to earn their individual respect so as to increase the credibility of the company among the shareholders and the people it serves. According to the fourth principle, the focus is to encourage every employee and manager to be ethical. This implies acting ethically in every interaction that is business or company related. Every decision made by the management of the company has to be done in an ethical manner in order to promote ethical implementation of each decision.
The fifth principle is integrity. The aim is to promote a culture of truthfulness, honesty, and accuracy. Employees are not expected to intentionally misrepresent facts, subterfuge, engage in fraud, cheat, or steal in any involvement they have with the company. Each employee should strive to keep their words and not engage in any empty promises while relating with customers, their colleagues, and management. There are situations where deceptions can be used to bring benefit to the company and reduce harm or possible damage. In such situation the company should be able to consider the need for deception, whatever little harmful consequence that can arise from the deception, and figure out ways in which the harm can be reduced out of the situation.
The sixth principle is that of fairness and justice. The aim is to promote a culture of fairness for all the employees. The culture has to ensure that every staff member of the company is presented with an environment that brings out their full potentials. Everyone has to benefit from the contribution of the company to the workforce, the shareholders, the management, and the society at large. The potential biases and limitations of each employee’s expertise must not encourage unjust practices. Employees and management are expected to respect the uniqueness of every individual in the organization. Treatment of people is to be done with compassion, respect, and dignity. This is expected to promote a work environment based on trust and free of any discrimination by anyone. The company will give everyone within the organization equal chance to develop their potentials and skills. The company assures stakeholders of creation of an environment that is sensitive to diversity and committed to inclusiveness. Therefore, decisions shall be made collectively with the interest of the stakeholders in mind.
The seventh principle concerns use of information. This is aimed at confidentiality and legal use of any information. It is also aimed at protecting human rights by considering the sensitivity of information. The intention is to build trust among everyone involved with the organization and eliminate anxieties resulting from the how information is acquired and how information is shared. All means of acquiring and disseminating information will be based on ethical, professional, and legal standards. No information shall be used in a manner that appears to create anxiety or distrust from our employees, customers, and shareholders. The company shall further investigate any piece of information for its accuracy before using it to make any employment related decision. Confidential information shall be safe guarded and access to the information shall only be restricted to authorized individuals.
Finally, the eighth core principle is that of conflict of interest. The aim of this principle is to maintain high level of trust among the stakeholders. The company has to protect the interest of the people it serves, who are the stakeholders. It must maintain professional integrity and not engage in any activity that creates conflict of interest. This implies that every employee should reduce conflict of interest as much as possible in every business dealings that participate in. The company shall call for the use of policies that minimize on conflict of interest. All employees shall be restricted from using the company position for the sake of financial gain, material gain, and personal gain. In addition, employees shall not be allowed to use the offices or positions for the sake anything that appears to be of selfish personal interest. This therefore prevents any staff member from receiving gifts for any reason that appears to be of selfish interest.
Resolving ethical issues
This section provides guidelines on how to resolve conflict in case of any occurrence. Every employee must take action to correct responsibly every
Importance of code of ethics in every organization
Ethical standards are important consideration for every organization. Regardless of how large or small an organization is, ethical standards have to be upheld by every professional. Sometimes, international organizations may fail to focus on their codes of ethics because of plans to maximize profits and remain competitive in the market. Well, this is a sad thing to do and has to be addressed when noticed. The importance of code of ethics in an organization begins with the executive management. This group is expected to play the role of a role model to all the employees. It is important that every employee be made aware of the all the ethical standards that a company seeks to uphold. This is supposed to be a habitual event and not just a onetime thing that is done in the beginning. Employees have to be made aware of the behaviors that are considered unethical. The essence of this is to encourage employees to avoid these unethical practices at all cost. In the process of reminding the employees, about the ethical practices, it is important that executive management, which sets the example, also reminds them of how crucial it is to honor the standards of ethical practices.
In order to create an effective code of ethics in an organization, one has to consider a number of issues. The first thing is to have open communication with every employee and management. Communication will ensure that there is a common level of trust between management and employees. It also ensures high level of confidence among employees . People in the work place can discuss any issue that may arise relating to the code of ethics .
Through the human resource management department, every international organization should ensure that it makes regular observations of whether employees are honoring the standards of ethics set by the organization . The human resource team should also create a way of dealing with ethical misconduct in the organization. Such guidelines need to be made clear to all employees including management in order to avoid cases of violation . The final consideration is a vision that is clearly explained. All the aspects regarding code of ethics have to be explained in details to encourage understanding of the rules.
Letter explaining the revised code of ethics
The CEO
Enron Corporation
Houston, Texas
Dear Sir, Enron Corporation has so far pride itself in the fact that it is one of the largest corporations in the US in terms of revenue base and size. However, a critical look at the company’s code of ethics reveals numerous inconsistencies that are likely to lead to violations of the standards. This is therefore to inform you of the need to incorporate the proposed changes so that the code does not have room for ambiguity or open interpretations.
You will find the proposed code of ethics attached to this letter with the full details of the recommendations made.
Thank you.
References
APA. (2010). Ethical Principles of Psychologists and Code of Conduct. Retrieved from American psychology Association: http://www.apa.org/ethics/code/index.aspx#
Bauer, H., & Rodriguez, M. (1999). Letting Compassion Open the Door: Battered Women’s and children's Disclosure to Medical Providers. Cambridge Quarterly of Healthcare Ethics, Vol 4, pp 459-465.
Cheeseman, H. (2010). Business law, Legal environment, Online commerce, Business ethics and International issues (3rd ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.
Natale, S. M., & Ford, J. W. (1994). Social audit and ethics. Managerial auditing journal, 23-45.
National Society of Professional Engineers. (2007). Code of Ethics. Alexandria, Virginia: NSPE.
SHRM. (2007, November 16). SHRM Code of Ethical and Professional Standards in Human Resource Management . Retrieved from SHRM: http://www.shrm.org/about/pages/code-of-ethics.aspx
