Playing Dual Roles in Organizations - Essay Example

Ethics in Organizations Enron: Smartest Guys in the Room With regard to the film, identify examples of ethics concepts from Chapters 7 and 8 including: 1. “Multiple ethical selves” Multiple ethical selves is the idea of being in the position of playing conflicting roles. In the movie Enron: Smartest Guys in the Room, Jeff Skilling and Ken Lay—the president and CEO of Enron respectively-- had multiple ethical selves. These two men were consistently playing dual roles of responsible business men and gambling risk-takers. At several points in the film, Skilling and Lay claim that Enron was doing fine and that anything unethical was done without their knowledge. However, inside the company, there was their unethical counterparts who signed off on the fraud that was perpetrated by “cooking” the accounting books. 2. Reward systems – people do what’s rewarded and avoid doing what’s punished The reward at Enron was ultimately to make as much money as possible by any means necessary. At one point in the film, it is revealed that Enron created an extremely competitive environment by firing the bottom fifteen percent of their employees. These people were voted on by a review committee and part of the determining factor was that these people were not meeting the standards and objectives that Enron created. Those who did meet the standards often received millions of dollars in bonuses. Therefore, this particular system made it so that employees were rewarded for doing what Enron wanted and punished for when they didn’t. This fostered a dangerous mindset, especially since the company was unethical. 3. People following group norms Following groups norms is similar to peer pressure in that people are persuaded to do something or behave in a certain way solely because everyone else is doing or behaving in the exact same manner. In this particular documentary, traders followed group norms by being very ruthless. It was noted that due to the competitive atmosphere, people would slit each other’s throats or stomp on each other’s throats in order to get to the top. Additionally, one trader said that he did not ask questions about the unethical practices because nobody else was. Both examples illustrate an overall acceptance of values and standards due to the fact that “everyone was doing it” or was commonplace behavior. 4. People fulfilling assigned roles that influence their ethical behavior Andrew Fastow who was the CFO of Enron was assigned the role of being in charge of the money and financial aspects of Enron. The movie discusses how Fastow essentially lied to investors by convincing them to put money into the company without really receiving anything of actual value in return. He kept Enron afloat by creating a variety of bogus companies and having investors such as banks place money into them. Additionally, he skimmed money off the top of these accounts to the tune of $45 million. Fastow’s role as CFO gave him access to a lot of money and power. It appears that he was set up as a fall guy in a way since a lot of the crime had to do with the accounting aspect of the business which Fastow was largely in charge of. It can either be said that the role of CFO corrupted Fastow and he perpetrated fraud as a means of fulfilling his greed. However, it can also be thought that Fastow’s role was to maintain Enron’s image as a successful company. In this case, it would be the pressure from others to keep the company looking good that influenced his unethical behavior. 5. People do what they are told In the Enron scandal, it was interesting to note that many analysts would report only good things about Enron because they claimed that this was all they were ever told. One analyst at Merril Lynch questioned what was happening and due to Enron’s influence, ended up being fired. In return for doing what Enron told them to do, the company gave them rewards in the amount of $50 million. 6. Responsibility is diffused in organizations Diffused responsibility occurred when the entire Enron Scandal erupted. Everyone was pointing fingers at everyone else. Ken Shilling and Ken Lay, in particular, claimed to know nothing about what was happening. The financial companies that invested in Enron all claimed to be ignorant of the fraud that was occurring as well. Nobody wanted to take responsibility for the wrongdoings. Essentially, Andrew Fastow became the fall guy for the majority of the scandal. 7. Ethics and consumers including conflicts of interest, product safety and advertising (all may not be relevant). Enron siphoned off energy from California which caused rolling blackouts and caused the prices of electricity to skyrocket. Consumers were severely impacted by this as many were unable to pay their electric bills each month. The entire debacle ultimately cost California billions of dollars. 8. Ethics and employees including employee safety, employee downsizings and employee rights (all may not be relevant). Employees were treated terribly when the Enron scandal broke. The company went bankrupt and the 22,000 employees were fired with only twenty or thirty minutes to get their belongings and vacate the premises. While Ken Shilling, Ken Lay, and other higher ups were able to cash in their stocks before the crash, the employees lost all of their stock and received approximately $4,500 in severance pay. 9. Ethics and shareholders A man who worked for Portland General Electric had invested money into his 401K every single month. Due to Enron’s unethical practices, the man lost his entire retirement fund when Enron went bankrupt. He lost approximately $350,000. This was true for other shareholders who were encouraged by Ken Shilling and others to invest their money into Enron’s stock without fear of potential risk. 10. Ethics and the community Enron became a symbol for corporate greed and scandal. The community was severely impacted by the scandal in that the stock market became increasingly unstable. People were less inclined to invest due to the lies and lack of ethics exhibited by companies like Enron. Additionally, the concept of deregulating the oil market was a prevalent idea for Enron which would have impacted the prices of energy driven products such as gasoline and electricity. With California, the impact on the community was so great that people were unable to afford something as basic as electricity. Read More