Enron's Dabhol Power Plant and corporate ethical systems

¶ … business ethics has been increasingly brought to the forefront. Part of the reason for this is because of the large scandals that have been occurring, which are highlighting the lack of ethics in the business world. A good example of this can be seen with Enron and the Dabhol Power Plant in India. What happened was India began opening its markets up to foreign investors in the early 1990's. Enron wanted to be able to take advantage of the increased amounts of deregulation that were occurring, by building a power plant in Western India. The idea was that as the country was deregulating, the company could be able to become a dominant player in the sector. The plant that Enron was building was supposed to be operated by liquefied natural gas (LNG). However, the problem was that the size of the project was economical unsustainable for the Western Indian economy. Then, the company would have to contend with issues such as stolen electricity and cost overruns. To make matters worse, the cost of running the plant required billions of dollars in infrastructure improvements, which would increase operating costs dramatically. When you put these different elements together, this shows how the company had a break down in ethics. As this failed investment, would cost them billions of dollars. To hide these losses, management began to create special purpose entities (SPE's). These were off the books limited partnerships that the company would transfer the losses to, so that they could make their earnings appear stronger than they really were. ("Background on Enron's Dabhol Power Project," 2002) This is significant, because it shows how the lack of ethics would force Enron and its employees to engage in illegal activities. As result, this highlights how all organizations must have an effective code of ethics in place at all times. In the case of Lockheed Marin, they have a clearly defined code of ethics that explains the most appropriate business practices of the organization and individuals. To ensure that the company does not face a similar kind of situation as Enron requires: examining a system of inquiry. This will be accomplished by: evaluating the decision making process, problem solving, understanding various behaviors and the frame work for how it will be used (the why, how, when as well as whom). Together, these different elements will provide the greatest insights, as to how to develop an effective system of inquiry.

Evaluating Decision Making

When you are evaluating the overall amounts of ethical decision making you must consider a number of different principals to include: assertiveness, evaluating risk, empathetic listening and principal negotiation. Assertiveness is when you are standing up for what is morally right or wrong without affecting the rights of others. Evaluating risk is when you are understanding and preparing for possible hazards. Empathetic listening is when you are listening carefully, to what the other party will have to say about the various ethical issues. Principal negotiation is when you are working together to create a win -- win situation for both parties. These different elements are important, because they highlight the steps involved in evaluating ethical decisions at an organization. (Lankard, 1991)

When you apply these steps to the code of ethics at Lockheed Martin, it is clear that they are addressing a host of ethical issues that could have affected the company in the past. The most notable include: harassment / discrimination, cost / labor issues, maintaining safety standards and political activities / lobbying just to name the few. This is significant, because it shows how the code of ethics at Lockheed Martin will define standards for the way employees and managers will interact with customers / suppliers. The underlying levels of assertiveness can be found throughout the company's code of ethics. Evidence of this can be seen by looking no further than reporting violations in the company's ethics policy. Where, it clearly states, If you have good reason to believe that a violation of the Code or a contract provision has occurred, or you are asked to violate the Code or a contract provision, don't remain silent. Report such violations, or suspected violations; depending on the circumstances, failure to report may itself violate this Code. Remember that no unethical or illegal acts can be justified by saying that they benefited the Corporation, or that they were directed by a higher authority in the organization." This is significant, because it shows how the code of ethics at Lockheed Martin is continuing to define the way the company will interact with customers and suppliers. ("Setting the Standard," 2008)

Evaluating risk, is when the organization will look at the underlying threats the ethical dilemma could pose. In this case, the company is encouraging all employees to follow the policy, as it will provide guidelines on how to minimize the underlying ethical challenges being faced. An example of this can be found in the section, where it is encouraging whistle blowers to contact the ethics officer or office of ethics (in the event of an ethical violation / conflict). ("Setting the Standard," 2008)

Active listening is when you are listening to various ethical issues and addressing them in the company policy. In this case, the company is addressing the ethical challenges, by listening to what issues are the most problematic for customers and suppliers. Evidence of this can be found, with the different sections that will outline prohibited activities and the most appropriate course of action. ("Setting the Standard," 2008)

Principal negotiation is when you are creating win -- win situations for everyone. In this case, Lockheed Martin has engaged in this activity. Where, it has developed several key tools to help everyone evaluate ethical situations to include: possible warning signs that you could be facing an ethical issue and an ethical quiz. This will help to address the concerns that the company has about employee activities, while improving the way the staff will interact with customers / suppliers. ("Setting the Standard," 2008)

When you evaluate the ethical decision making process, it is obvious that Lockheed Martin has addressed the most common issues. At the same time, they provide a way for the individual to assess their possible actions. This is significant, because it shows how this could allow the company, to effectively determine what ethical policies and procedures are required for their business. ("Setting the Standard," 2008)

Problem Solving

To effectively evaluate various ethical dilemmas, you must incorporate problem solving as a part of the process. This means analyzing the situations from a standard structure that will put the issue into context to include: determining if there is an ethical issue / dilemma, identifying key values / principals, ranking the different values / ethical principles, developing an action plan, implementation of the strategy and analyzing the outcome. Determining if there is an ethical issue / dilemma is when you are analyzing if there is an ethical issue that is taking place. Identifying key values / principals is when you are looking at specific actions that could be affecting the other party and yourself. Ranking ethical values / principals is when you are determining which ethical values are most important. Developing an action plan is when you are looking at the ethical issues that are most significant and taking them into account. Implementation is putting your plan into action. Analyzing the outcome is when you are looking at the results of action that was taken and you are determining if win -- win situations were created for: the individual, client as well as the business. A good example of effective ethical problem solving under the Lockheed Martin code of ethics is when, the company will conduct extensive training on awareness and how it can be applied in the real world. This is significant, because it shows how this model can address the possible ethical issues that an individual will face inside an organization. ("Essential Steps for Ethical Problem Solving," 2010)

The Basic Framework / Discussion

All employees and executives would utilize the code on a regular basis. This is because it will identify key issues that could have a dramatic impact, on how everyone is interacting with customers and suppliers. To implement the code, you would have to establish a committee that will consist of employees and executives. As they would survey both groups about what issues they felt should be addressed in the code. This would help to reduce any kind of possible negative reactions, as these changes can be implemented in a way that will address any kind of concerns. Once this takes place, is when you will be able to see a positive reaction, as employees and managers will feel that their ideas are being implemented into the code. The effects that this would have on the organization, is to change the culture inside the work environment. Where, everyone is focused on providing the customer and suppliers with the best overall experience. In many ways, one could argue that these favorable views, are because the code of ethics is changing the atmosphere of an organization.

Clearly, developing an effective system of inquiry requires: assertiveness, evaluating risk, active listening and principal negotiation. At the same time, you must have effective problem solving techniques through: determining if there is an ethical issue / dilemma, identifying key values / principals, ranking the different values / ethical principles, developing an action plan, implanting that plan and then analyzing the outcome. When you put these different elements tougher, this highlights how they can help an organization to establish accountability and transparency. In the case of Lockheed Martin, this system of inquiry highlights how they have an effective code of ethics. Where, it identifies key issues that could be affecting the organization and how the individual can be prepared for them. This is significant, because it underscores how any organization can utilize this system to address the various ethical challenges that they will face on a daily basis.