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"Enron, Ethics and Organizational Culture",

"Enron, Ethics and Organizational Culture”
Answer: 1
Enron Corp. was a wholesaler of natural gas and electricity. It was running nicely in profit for outside world but inner fact was something else. There was no accounting transparency which made the company's financial condition look sound. When the outer experts start questioning the Enron's financial statements, its reality was revealed.

The reasons of Enron's ethical melt down are unethical organization culture and The Boss. Enron had a code of ethics, a reporting system as well as training video on vision which is essential part of comprehensive ethics. But ethical behavior was not depended on ethical rules. The executive director of Enron's Ethics Officer Association believes that the formed laws cannot be complete as it cannot actually accumulate each and every possible situation's behavior. This gives the employees opportunity to formulate their own unethical ways to fulfill their goals. Secondly, the employees are seemed to fully trust their boss. They neither question the management about their decision nor management try to involve them in decision making. So, it seems to be the lacking of the boss to set an example for ethical behavior as well as unable to monitor the wrong deeds of his employees. Slowly and steadily, the whole system of Enron become unethical and the predictable ending of Enron Corp. begun. Lastly, in 2001 the unethical practices of Enron got reveled to the whole world and the business collapse. This was a historical event- Enron's ethical meltdown.

Answer: 2
In case of Enron, the organizational culture is more based on what you feel you should do rather than the set laws and rules. The employees are fully in favor of their boss. They fully trust his decision and judgment. This gave the management chance to do whatever it please to do. They completely took over the decision making power. Still the employees neither feel neglected nor are dissatisfied. Hence, in such ethical culture it is not unusual that the employees will enjoy the CEO's vulgar language to describe the analyst.

Answer: 3
Enron culture of having blind faith on the boss has result as the ethical meltdown of the company. Five specific examples of things Enron's CEO could have done to create a healthy ethical culture are as follow:-

a. Selection-During the selection of the employees, he should have selected those who have ethical behavior already. They should also have ability to make their self decision rather than being sheep of a herd.

b. Ethics training-He should have provided proper ethical training to all the employees so that they won't turn towards being unethical.

c. Performance appraisal-Performing appraisal frequently would have made employees perform 
ethically as well their activities would be closely observed.

d. Reward and punishment system-CEO should have stated reward and punishment system. Hard worker would perform even harder while unethical would get lesson of no repeating the same mistake.

e. Managing employee discipline and privacy-Being a CEO, he should respect the privacy of the employees too. This will make the employees feel that they are an important part of the company and will perform more delicately.

Reference: Dessler, G., Fundamentals of Human resource Management, Prentice Hall, 2nd (2012) edition


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Comments

  1. WikiowlNovember 22, 2018 at 3:47 AM

    Organizational culture encompasses values and behaviors that "contribute to the unique social and psychological environment of a business. The organizational culture influences the way people interact, the context within which knowledge is created, the resistance they will have towards certain changes, and ultimately the way they share (or the way they do not share) knowledge.
    Organizational culture

    ReplyDelete
  2. N. Mahesh BabuFebruary 4, 2020 at 1:35 PM

    This is very helpful for business students
    Thank you so much
    Very helpful

    ReplyDelete

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