1) What were the individual factors that contributed to the failure of Enron? Briefly explain two key factors.
Enron collapsed in large part because of the unethical practices of its executives. Egoism (Self interest) was one of the major factors contributed to the failure of Enron. Enron’s executives put their own interests above those of their employees, company and the public, and failed to exercise proper oversight or shoulder responsibility for ethical failings. They allowed themselves to be motivated much more by what would benefit themselves than what would truly benefit the company. Money, greed, arrogance and hubris led company executives to lose focus on working for the good of the company and to act…show more content… 2) What were the organizational factors that contributed to the failure of Enron? Briefly explain two key factors.
Leadership, Culture and Management controls were the key organizational factors that contributed to the failure of Enron. Company executives and managers directly impact the ethical direction of a company. When the executives and managers are ethical, employees are more likely to act ethically. When a company lacks committed ethical leadership, as did Enron, ethical standards will not be maintained. Because Enron lacked ethical leadership, it experienced a breakdown in its corporate structure and culture (Gini, 2004). Eventually, the entire company collapsed as a result. Enron created a culture obsessed with the bottom line and not with ethical behavior. The company culture demanded conformity and penalized dissent. Consequently, employees adopted and complied with the culture demanded by the company’s leaders. Once leadership has crossed the line to unethical behavior, unethical acts can become accepted in daily activities and employees have many reason for remaining quiet. The system (a harsher variant of one used at many companies) encouraged cutthroat competition and silenced dissent. Followers were afraid to question unethical and or illegal practices for fear of losing their jobs. Instead, they were rewarded for their unthinking loyalty to their