Enron - Question 3 Analysis

Question 3:

To the outside world, and as mentioned in Michael Novak’s book, Kenneth Lay came across as an intelligent, responsible leader with a good head on his shoulders. Lay said that he was fully exposed to not only legal behaviour but moral and ethical behaviour and what that meant from the standpoint of leading organisations and people. Lay also wrote in an introductory statement to the revised Enron Code of Ethics that they (officers and employees of Enron Corp.) were responsible for conducting the business affairs of the companies in accordance with all applicable laws and in a moral and honest manner. Lay mentioned that the Enron enjoyed a reputation for being fair and honest and that the company was highly respected.

Jeff Skilling, on the other hand, implemented a very rigorous and threatening evaluation process for all Enron employees. Known as the “rank and yank” – this process was aimed at getting rid of the lowest ranking employees – probably an attempt to get rid of all the bad apples. But this too backfired when employees intentionally ranked peers lower to enhance their own position and ranking.

So with leaders like these, who harboured only “good intentions” for the company… Enron was sure to be headed for success. Along with Enron’s ethic codes based on respect, integrity, communication and excellence; Enron looked like an excellent corporate citizen, with all the corporate social responsibility (CSR) and business ethics tools and status symbols in place. A company heralded as a paragon of corporate responsibility and ethics – successful, driven, focused, philanthropic and environmentally responsible. Enron appeared to represent the best 21st century organisation had to offer, economically and ethically. With all this in mind, reasonably, Enron employees should have had no doubt regarding the ethical decisions and actions taken by their leaders. In the ethical world, these leaders should have been able to walk the talk. But this is now from...