The disconnect between Enron's stated and underlying corporate values

Enron Ethics Policies

It has been nearly a generation since the Enron scandal unfolded and yet the reverberations and post-mortems as it relates to the course of events that brought down Enron (not to mention Arthur Andersen) still resonate to this very day. What is particularly vexing to some is that Enron had a very robust and entrenched set of ethics policies. However, those policies and credos did not seem to do much to stop them from the behavior that was engaged in. Not only did Skilling, Lay and Fastow engage in malfeasance, the depravity that was present was wide ranging and ingrained in the culture, at least from an internal perspective. While some may point to the illegal acts themselves, Enron is a clear-cut case of stated values and underlying values being massively out of phase and to an extent with no real limits.

Analysis

Part of the situational analysis that the author of this report has been asked to engage in includes the concept of what would or should have happened had Enron been able to survive as a corporate entity in light of what was occurring. To state the obvious, the three executives mentioned in the introduction would have to be gone whether they faced jail time or not, and they all did (Sims & Brinkman, 2003). However, that would be just the beginning of what it would take to fix the problems that would still exist at Enron. Indeed, anyone else that followed and adhered to the cutthroat and ruthless ideology that the executive demanded would have to be flushed out as well. For example, the traders that were pulling energy off the market to drive the price up, even at the expense of people who can barely make ends meet, would all have to go. As stated in the thesis statement, there was a clear discord and disunity between the stated values and the underlying values of Enron. In other words, they were not practicing what they were preaching. They were saying all the right things in terms of what they were supposedly doing. However, behind board room doors and such, they were doing something entirely different. Beyond anything stated in the Enron ethics policies, there would have to be a clear re-definition of what the company strived to do. For sure, the company should seek to maximize shareholder value, be an employer that people want to work at and otherwise being a good corporate neighbor. However, anyone and anything that could or would lead to the line-crossing that occurred thru 2001 would have to be eviscerated and eliminated, to so speak (CNN, 2013).

From a stakeholder standpoint, there were clearly two groups that existed at Enron pre-2001. There were those that were pencil-pushers and nine to fivers that perhaps were not aware of what was going on with the powerbrokers of the firm. On the other hand, there were those that were fully aware (if not fully involved) in what was going on and thus were part of the problem. It would be for the obvious betterment of all of the noble and ethical stakeholders that the bad elements and people of the company be stricken and done anew so that nothing like what happened pre-2001 could happen again. Even if shareholder value is maximized by ethically dubious (if not illegal) behavior, it should not be done. For example, hiring H-1B's at a lower rate to save money rather than hiring Americans who are ready and willing to do the job may technically be legal, but it is not all that ethical. More to the point of what Enron did, manipulating the amount of energy and other commodities that are up for sale on the market to drive up the price may be a profitable thing to do, it is wrong to do so. There is such a thing as a market equilibrium and any artificial tinkering with the price, especially in a way that drives away from that "sweet spot" price, is wrong. Further, it creates bigger problems down the road. Indeed, energy consumers are stakeholders too and Enron was clearly victimizing them in terrible ways. Executives are stakeholders and they must do what they can that is best for the shareholders and their employees but they have to be willing to not cross ethical lines even if it would yield a benefit of sorts. Employees are stakeholders and they obviously want to keep their jobs. However, they often get hurt when the executives engage in illegal behavior and especially when the whole thing blows up, which Enron obviously did. Further, the ex-employees of Enron (and Arthur Andersen, for that matter) are in many ways stigmatized for having worked there even if they were not knowing or at least not involved in the bad or illegal behavior (CNN, 2013).

As for ethical theories, the clear one that comes to light is the subject of cultural relativism (SCU, 2015). While there may be certain situations and scenarios in life where morality and cultural standards are relative, business should not typically be one of them. For example, it is all too easy to jack up the price of gas when there is a hurricane coming. Indeed, while some people may be unwilling to pay, there will be plenty of others that will. However, that does not make it right. The villains at Enron did not see such a boundary. Their basic premise was that making money, whether for personal or shareholder gain, was the only thing that mattered. Even if that was not legally and/or ethically reprehensible, they started to lose their shirt by playing those games and Arthur Andersen, rather than do its job, joined right in with the faAade. There is a reason that the accounting standards exist and Enron was trampling all over them right up to the very end. All companies should have at least a modicum of teleology and deontology in their mindset (Regis, 2015). While profit is good and necessary to keep a business running, it is more important not to be soulless and heartless. The recent hedge fund pariah that jacked up the price of a parasite drug may have truly meant to use the price increase to scrounge up research and development dollars. However, his methods (and reaction to being called on it) were especially damning and telling (Stahl, 2015).