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Main Peculiarities of Enron Scandal

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Section 1: Introduction and situational analysis

People see the Enron story as a story about numbers, and that it’s about all of these complicated transactions but in reality it’s a tragic story about people and a failure of ethics from the top. The rise and fall of Enron can be laid at the feet of the company founder, his successor, and the chief financial officer. Each of them failed to meet the important ethical dilemmas of leadership. Enron rewards employees for monetary gain, and fired the bottom 15% of performers, no matter how successful. Even though the company had a code of ethics that said it honored the values of respect, integrity, communication, and excellence, these were just concepts on paper. Enron is a classic example of a company whose ethical pronouncements were “decoupled” from the rest of its operations (Weaver, Trevino, & Cochran 1999).

The deregulation of the electrical power market took effect, and the company redefined business from “energy delivery” to “energy broker” and Enron quickly changed from a surviving company to a thriving one. Enron took advantage of a new era. Raking in money, trading harder and riskier with every move. At this time there was no oversight, and all that mattered was the bottom line. This was the culture from the top down, it was the sum of many incremental ethical transgressions that produced the total demise of Enron. The consequentialist attitude of the management drove the culture of the company to its extinction. But despite the extinction level events of historic proportions, there were no laws in place against their methods.

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Section 2: Stakeholder analysis

In the beginning Enron was a thriving organization on the edge of technology and on the edge of normal. Being the pioneers, meant they could make the rules. Pushing their employees to continue to make profits. Deregulation allowed Enron to be creative – for the first time, a company that had been required to operate within the lines could innovate and test limits. Over time, Enron’s contracts became increasingly diverse and significantly more complex. As Enron’s products and services evolved, so did the company’s culture. This culture was pushed especially hard by the management, which in turn trickled down to the employees. This culture was bringing in the money and making 10%-15% every year. This is what the shareholders expected, this is what shareholders and investors alike demanded those results, and the ends justified the means, for a little while.

Section 3: Analysis based on ethical theories

Consequentialism is defined as the theory that human actions derive their moral worth solely from their outcomes or consequences. By this very definition whether what Enron did was morally wrong, is a matter of time frame. From rise to fall? Or from beginning to quarterly report? Enron produced the result of large cash sums.

Section 4: Conclusion and recommendations

Enron ethics means (still ironically) that business ethics is a question of organizational “deep” culture rather than of cultural artifacts like ethics codes, ethics officers and the like. (Sims, R., & Brinkman, J. 2003). Enron, unintentionally changed the world and redefined ethical business and accounting for the 21st century.

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