Enron, what caused the ethical collapse?
Q1. What led to the eventual collapse of Enron under Lay and Skilling? A1. There are many reasons, which led to the collapse of Enron. With the senior leadership of the company not holding/staying true to the company’s code of ethics, not enforcing many laws (which led to the company violating those laws). Therefore, the inability of the senior leadership to ensure that there are not only written practices as to how business should be done, but actually following them (practice what you preach) is vital to ensuring that a company’s ethical center maintains. As our text (Weiss, 2009) showed us in the code of ethics that Enron issued in July 2000, Lay wrote that officers and employees should conduct the company’s business affairs “in accordance with all applicable laws and in a moral and honest manner.” Respect, Integrity, Communication, and Excellence were the basis/foundation of what the company’s ethics code. They wrote specifically “An employee shall not conduct himself or herself in a manner which directly or indirectly would be detrimental to the best interests of the Company or in a manner which would bring to the employee financial gain separately derived as a direct consequence of his or her employment with the Company.” While if the leadership atop an organization can at any time change course, violate laws, and conduct illegal activities if they do not waiver, from an ethical standpoint, the company typically will not either. Q2. How did the top leadership at Enron undermine the foundation values of the Enron Code of Ethics? A2. As discussed above the foundation of the Enron Code of Ethics were Respect, Integrity, Communication, and Excellence; of these, the senior leadership – Ken Lay, Jeff Skilling, and Andrew Fastow – collectively managed to find a way to undermine all of these. There was a practice within Enron of ensuring many individuals were unable to see the “big picture” due to a vast...
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