Confessions of an Enron executive

Lynn Brewer was employed in risk management in energy operations, the e-commerce initiative for Enron's water subsidiary, and competitive intelligence for Enron broadband services, when she began seeing the ugly writing on the wall. She witnessed several situations of illegal and corrupt dealings, such as bank fraud, espionage, power price manipulation and gross misstatements to the media, public and financial world. Her story about the corruption at Enron in House of Cards was disconcerting to read (although it was more like a TV movie of the week) yet not that surprising. Since the beginning of time, and surely the beginning of big business, unethical businesspeople have done all they could do for number-one -- "themselves." However, more upsetting is the fact that the whistleblowers' whistles often fall on deaf ears of those who do not want to hear. They either do not want to get personally involved in such a mess or because they, too, have something to lose by rocking the boat. Brewer claimed to have contacted both company-related organizations, such as the employee assistance program, and external high-level contacts, such as senators, without response.

Even more upsetting is how the company got the employees to play along with its unethical standards through its performance review program. Like many companies, Enron's external face to the public and its internal face to its employees were two different things. To the public, it presented itself as an ethical company with integrity as a high priority goal. However, at the same time, it built another opposite another management model for its own people. Informally called "rank and yank" and instituted by its Performance Review Committee (PRC), the model emphasized ignoring supposedly tight controls.

The PRC applied a forced bell curve made up of approximately 5% of the employees at the top rung and 40% spread outward into the next two groups. These three groups were considered the primary bonus groups. In addition, there was about 30% of the people in the middle and two groups toward the end, at least 8% of them getting "yanked" or thrown out the front door for poor performance. In the meantime, those individuals with the power of control soon realized if they did not assist in commercial dealmaking and attain financial goals by encouraging sour deals, they would be considered persona non grata with PRC. Based on what it told the public, Enron should have made sure that the control professionals with the most complaints receive the most rewards for doing their job and throwing up red flags on shakey deals. The opposite happened, and soon any controls in place fell away. Meanwhile, the dealmakers had to aggressively chase after additional clients or be persecuted by the PRC.

Humans as a whole do not like to go against the tide. If they see others doing something, especially if these others are being awarded for their efforts, it will not be difficult to get them to go along with the crowd. Also, people want to be accepted and not known as a complainer or different from the norm. They like be liked. Again, this means they will more than likely follow others even if the path is rocky. Finally, based on Abraham Maslow's pyramid of need, humans have certain basic needs. The first need is survival, which means having the money to eat and have a roof over their heads, and the second basic need is security, that is not losing their jobs. Therefore, it will take a lot for the average person to buck the system. This was seen at Enron and it has been seen at many other companies. People will say everybody else does this and gets away with it, could it be that wrong? It comes down to economics vs. ethics.

The difficult thing for me personally is that I do not know how I would have reacted in this situation. I would like to think that I would have tried to blow the whistle or at least try to talk with someone in authority about the problem. If this did not work, I would like to think that I would have quit and went someone place else that I believed were more ethical. However, until being in such a situation, I do not know exactly how I would have reacted. I may have bitched and complained with other employees in the lunchroom or over the phone at night. However, would I have gone the extra step? Would I have been brave enough? I am not sure.

How much the Enron situation has changed is debatable. For a while, it appeared that companies were writing up ethical standards and promoting their importance. Whether this was because they really believed that this should be done or that they had to do so (the skeptic in me asks) remains unanswered. I do believe that over the past few years, the number of companies that have been developing these standards have declined after the first flurry. Also, scandals are quickly forgotten as another one comes in to replace the last.

I do feel that certain organizations that know they will be closely watched by the powers to be will mind their manners and not try anything as foolish as what the Enron officials did. However, these companies are a very small minority compared to the hundreds of thousands of businesses of all sizes and shapes that go on about t their business every day. Whether as a whole the majority of organizations changed after the Enron fiasco or if it was business as always in most companies is questionable. I believe that people who are going to be ethical will do so regardless whether or not they have to do so. The other ones with less integrity need to be continually reminded before they act -- it has to be in their best interests. In a highly competitive and global environment as exists today, companies have a lot more to worry about to survive than their ethics.