Personal Ethical Framework

Topics: Ethics, Enron, Enron scandal Pages: 7 (2597 words) Published: February 15, 2014
According to Johnson (2012) leaders are powerful role models, and policies will have a little effect if leaders do not follow the rules they set. In Enron case, corruption and ethical misconduct were deeply embedded in their business culture where profitability was more important than ethics. In this paper, I will address the factors that had led to the development of the culture of profit before principle at Enron. Also, I will create my personal code of ethics that will guide me in my professional and personal decision making and doing the right thing when faced with ethical challenges. “Enron: The Smartest Guys in the Room” shows us how basic human nature does not change, whether it is firing as a means to resolve disputes, or in the ceaseless obsession to gain for profitability sake. This all makes for terrible human actions. According to Bethany McLean, the collapse of Enron is a story of “human failure” that created a culture where profitability is the priority.

According to Boatright (2003) the major factor in Enron scandal is an increased focused on share price; second important factor is the deregulation that occurred in the past two decades and the legal liability of accounting firms and investment banks was reduced, and third factor and most significant are simultaneous changes in the compensation structures for executives, accountants, and investment bankers. However, these factors, I believe were brought by the culture that leaders had cultivated and were influenced by the shadows they have casted as what the bible says "a man reaps what he sow” (Galatians 6:7, NIV). Every person’s behaviors and actions will have consequences and the effects are not necessarily obvious, such as when Enron executive’s slowly casted shadows of power, privilege, mismanaged information, inconsistency, misplaced and broken loyalties, and irresponsibility. In Enron, these were demonstrated by human failures of greed and corruption, dishonesty and intolerance, and pride and arrogance. Factors

Greed and Corruption
Enron’s “smart guys” misled their employees by telling them to buy stocks of the company. They walked away with billions while investors and employees lost everything. According to Johnson (2012) in the process of reaching the financial goals, the few often benefit at the expense of many, casting the shadow of privilege”. This is exactly what the “smart guys” did. In the documentary video, one of their biggest frauds was in California with the Energy Company, the blackout in the summer. They manipulated the prices of energy in California; Enron bought in California the energy cheap and exported it to others states, where they sell the energy at a higher price. Similarly, in an interview by Lucas & Koerwer (2004) Watkins, a former Vice President for Corporate Development of Enron, stated that Enron was promoting traders to management quite often, letting the traders manage junior traders resulting for a disastrous manipulation of the California energy market in 1999 and 2000. They bankrupt their primary customer, Pacific Gas and Electric for their own interest by taking advantage of the flaws in the deregulation process. On another situation, Watkins stated that although Ken Lay established respect, integrity, communication, and excellence as a core values for the company, they were not followed. Communication can only be about good news and not bad and people who delivered the bad news got moved out or fired. On the integrity issue, employees were directed to use his sister's travel agency. In addition, Ken Lay excessively used the corporate jet for personal purposes. Here, Ken Lay had casted the shadow of power. According to Johnson (2012) the greater a leader’s power, the greater the potential abuse and that “power corrupts, and absolute power corrupts absolutely”. Dishonesty and Intolerance

Johnson (2012) stated that leaders cast shadows not only to protect themselves but also they mismanaged the information and...
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