Employees are being rewarded for their honesty, and managers continue to encourage communication between supervisors and subordinates. Management is also looking for ways to encourage employees to tell the truth about other employees who may be involved in something dishonest or illegal (Jones, 1982). Not all employees will take advantage of this, of course, because some still believe that they will face punishment for being a 'whistle-blower', but there are laws in place now to protect the rights of employees who blow the whistle on other employees or their employers.
Employee rights have become increasing important over the last 20 years, and this is another area in which Enron had difficulties. Those people who advocate employee rights make two different arguments. The first argument is that tougher laws and regulations are needed to ensure that employees get the rights that they deserve. It cannot be left up to the companies to take care of the employees, because they will not 'police themselves'. The other argument is that it should be up to companies. The thinking behind this is that companies will take care of their own employees through open-door policies and grievance procedures, as well as other means. This will mean less red tape and hassle for companies, since they will not have to deal with regulatory agencies all the time.
Both arguments have merit, and both have good ideas. It seems as though a good mix of both government regulation and company willingness is needed to truly give employees all of the rights that they deserve. Companies today are addressing the challenges of employee rights by creating some of the procedures mentioned above (i.e. open-door policies and grievance procedures). Some of the more progressive companies are coming up with concepts such as an 'employee bill-of-rights' and 'quality circles', which are group meetings where problems and concerns can be discussed freely with others and with management. This was something that Enron lacked in what they were doing with their company.
Another dilemma in the workplace that Enron also experienced difficulty with was how to deal with the obligations a business has to its stakeholders (i.e. employees, the community, customers, and stockholders). Businesses have more obligations now than ever before. As the business climate continues to change, new demands are placed on businesses all of the time. One demand that has not changed in some time is that companies should be held financially responsible for problems caused by their products. A company can be found to be financially liable without being morally or legally liable (Donaldson & Gini, 1984).
The most important factor in the ethical equation for Enron and other businesses, however, is leadership. Employees usually follow company example, and without sound leadership and ethical actions, the example will be a poor one. The consensus today seems to be that a crisis is occurring in the field of business ethics. While this may or may not be the case, there are problems that need to be addressed. Consensus also shows that profits are the driving force of all business, and today's companies are interested in profits above everything else, including ethical behavior.
Today's businesses must understand the role of their leaders, and the ethics or morality of leadership. The argument made by Kanungo & Mendonca (1996) in their book Ethical Dimensions of Leadership is that those people who desire to be leaders cannot be two different people -- one for home and one for office. Leaders who do not believe in unethical behavior will see it as a matter of virtue because that is the way they act in their everyday lives, instead of seeing it as a matter of policy because it is something to be done only at the office.
Clear, any company has a need for leadership. Companies have to have structure, and leaders help to make that structure sound by working toward common goals and aspirations. Leaders guide employees in their day-to-day work, as well as keep them focused on the visions that the company has for the future. Without leaders chaos would result. It is because employees look up to their leaders that leadership ethics are of such vital importance. Some would argue that worrying about ethics and morality turns leaders away from the real business of a company, which is making profits for owners and stockholders. These same people would also argue that ethics are something that should be left up to religious and educational institutions.
Knowing whether a person is prepared to enter a leadership role is usually not that difficult. If they have the proper training and have been through the proper channels, they are usually ready. Whether they are prepared for ethical leadership, however, is harder to measure. To be prepared for ethical leadership, there are several aspects that leaders should have training in. These aspects represent the most difficult challenges that a business leader has to face today. According to the book Ethics in Management, written by Kenneth Goodpaster (1984) and compiled for the Harvard Business School, these are:
Learning the forms and limits of moral reasoning in business.
Translating ethical ideals into policy and practice.
Recognizing employee rights and responsibilities.
Sponsoring moral or amoral values in TV ads and programs.
Minimizing ethical pressures from management incentive systems.
Implementing layoffs along with affirmative action policies.
Confronting the ethics of bankruptcy.
Managing product safety.
Responding to conflicting standards in international business.
The nine items listed above are what plague managers and leaders today. They are the true essence of operating a business, and they are also the areas that develop the most ethical problems. There are some things managers can do to avoid ethical problems. Obviously, the most important thing is the proper training in how to handle ethical and moral dilemmas. Although altruistic behavior cannot be trained, its importance can be learned, and this may help a manager who does not normally exhibit much altruism toward anyone learn how to find some for his employees and other companies.
Societal impact is another consideration when discussing business ethics, and Enron also did not take the time to address what kinds of impact would be seen on society based on what the company decided to do. Businesses must look at decisions they make to see if there will be effects that reach farther than just the company. Some of the decisions that a business makes may affect society, and this could raise ethical questions when deciding whether the business should go ahead with whatever it was planning or change its plan to better meet societal needs, usually at some cost to itself.
On a macroeconomic level, societal impact can be very great. Sometimes called "social responsibility" the ethical impact of business on society includes pollution, housing, development of land, the displacing of people that once lived on that land, and other considerations. Businesses benefit themselves as well as the society they are in by helping to solve social problems. Socially responsible businesses may also avoid strict government regulations that would be imposed upon them if they did not already make efforts to see that what they did was not harmful to the society. It is clear, however, that Enron did not see social responsibility as being all that important, or the company would have worked much harder to ensure that it was honest in its dealings with others so as to avoid the problems that it faced and the problems that it caused for the employees that worked there and trusted the company to take care of them.
Bernstein, S. (2000). "Shell in Nigeria." Business Students Focus on Ethics. Eds. Ryan, Leo V., Wojciech W. Gasparski, & Georges Enderle. New Jersey: Transaction Publishers.
Donaldson, T. & Gini, a.R. (1984). Case Studies in Business Ethics. 2nd ed. New Jersey: Prentice-Hall.
Garrett, T.M., and Klonoski, R.J. (1986). Business Ethics 2nd ed. New Jersey: Prentice-Hall.
Goodpaster, K.E. (1984). Ethics in Management. Boston: Harvard Business School.