Enron Impact The Human Behavior Of Those Who Were Employed By The Company

Before going into an analysis on the organizational culture at Enron, I will first elaborate on the severity of the unethical behavior that existed at Enron. The problem can best be shown in the words of an Enron employee who said “If I’m going to my boss’s office to talk about compensation, and if I step on some guy’s throat and that doubles it, then I’ll stomp on that guy’s throat”(Enron: The Smartest Guys in the Room). This culture of greed and corruption can also be seen through Enron’s mark to market accounting system, in which Enron cashed in on ideas and “future profits” without actually making anything. Furthermore,

Enron made greater use of social control as a means of guiding employee action, however, the company did have limited methods of formal control in place. By using social influence tactics, limiting dissenting opinion, and inflicting a sense of high cohesion among employees, Enron deceived millions into believing the company was more profitable than it actually was. Because Enron’s values and norms were not conducive to a successful, ethical company, the employee’s targets, attitudes, and behaviors led to Enron’s undesirable outcomes. (O’Reilly and Chatman 165) Enron’s downfall can be largely contributed to its norms and values, of which were not strategically appropriate. Enron valued money above all else, which was

The story of Enron is truly remarkable. As a company it merely controlled the electricity, natural gas and communications sectors of the world. It reported (key word, reported) revenues over one hundred billion US dollars and was presented America’s Most Innovative Company by Fortune magazine for six sequential years. But, with power comes greed and Enron from its inception employed people who set their eyes upon money, prestige, power or a combination of the three. The gluttony took over sectors which the company could not operate proficiently nor successfully.

As with much of Enron, their outward appearance did not match what was really going on inside the company. Enron ended up cultivating their own demise for bankruptcy by how they ran their company. This corrupt corporate culture was a place whose employees threw ethical responsibility to the wind if it meant financial gain. At Enron, the employees were motivated by a very “cut-throat” culture. If an employee didn’t perform well enough, they would simply be replaced by someone who could. “The company’s culture had profound effects on the ethics of its employees” (Sims, pg.243). Like a parent to their children, when the executives of a company pursue unethical financial means, it sets a certain tone for their employees and even the market of the company. As mentioned before, Enron had a very “cut-throat” attitude in regards to their employees. This also became one Enron’s main ethical falling points. According to the class text, “employees were rated every six months, with those ranked in the bottom 20 percent forced to leave” (Ferrell, 2017, pg. 287). This system which pits employees against each other rather than having them work together will create a workplace of dishonesty and a recipe of disaster for the company. This coupled with the objective of financial growth, creates a very dim opportunity for any ethical culture. “The entire cultural framework of Enron not only allowed unethical behavior to flourish,

Enron was a publicly traded energy company formed in 1985 by Kenneth Lay when Internorth acquired Houston Natural Gas; the company, based in Houston Texas, Enron (originally entitled “EnterOn”, but was later subjected to abbreviation), worked specifically in power, natural gas, and paper and even ventured into various non-energy-based fields as they expanded, including: Internet bandwidth, risk management, and weather derivatives. Several years after the founding of the company, Enron hired a man by the name of Jeffrey Skilling, a former chemical and energy consultant, who, upon promotion, created a team of high-level administrative employees who, by using special purpose entities, lackluster reporting of finances, and unethical accounting practices, hid billions of dollars of debt from unsuccessful arrangements and ventures from stock holders and the U.S. Securities and Exchange Commission. Enron executives achieved this scheme by using a controversial accounting method entitled “mark-to-market accounting,” which in essence, assigns value to financial commodities based on their projected market values; mark-to-market accounting is the opposite of cost-based accounting which records the price of a commodity at the purchase price. As a result of this new method, Enron’s worth skyrocketed to over $70 billion at one time, only to collapse miserably several years later—ultimately costing thousands upon thousands of people their jobs, pensions, and retirements. Enron’s employees

Whenever someone hears the word "Enron" today, they usually think of the transgressions committed by the top-level executives who successfully managed to destroy the company's reputation and achievements.

Enron’s executives had large expense accounts and were compensated far beyond the competitors within the industry. Kenneth Lay, CEO of Enron, received over $250 million in compensation from the company over his 17 years with the company. Enron’s culture of arrogance resulted in a two year increase in fictitious revenue of nearly $70 billion from 1998 to 2000. Executives’ compensation within Enron’s energy services division was based on a market valuation formula that was influenced by internal estimates which created a pressure to inflate contracts despite having no effect on the generation of cash flow. Skilling introduced a policy in which the employees ranked in the bottom 20% of the company were forced to leave (Mclean, Varchaver, Helyar, Revell, and Sung, 2001). This created a competitive atmosphere internally and, in many cases, caused the workers to ignore potential errors and

The first important factor in the Enron case advanced interests on share price. The second factor how the company was liberalized over the past 20 years along with the reduction of legal responsibility of investment banks and accounting firms. The third factor, which is the most important, was the immediate alteration of pay packages given to investment bankers, executives, and accountants (Barreveld, 2002). In this case, the factors mentioned above was a result of the culture implemented by the executive leaders whom were influenced by unethical behaviors they engaged in. One could agree that Enron was definitely reaping the bad seeds that the

As the stock prices were inflated, the liquidity of the company was spread very thin. Through the individual business ventures of these highly educated individuals, Enron took out loans and spread their finances thin. Additionally, there was an intense culture of competition within Enron. Skilling implemented an intense employee evaluation system (PRC 360-degree review) in which employees were judged on the profits of their projects. The bottom 10% of employees according to this evaluation were often fired or demoted. This created a state of individual paranoia at Enron in which individuals, in order to keep their jobs, were forced into using shady accounting practices and not worrying about the future considerations of a deal as long as it turned a short term profit. Because of this intense culture of internal competition, employees at Enron (even the ones who felt they were using unethical practices) were reluctant to speak up. The corporate culture made it hard for ethical objections to be heard or taken seriously. In an employee 's recollection of his experience at Enron it was noted that "saying things like 'This doesn 't make sense ' was unofficially sanctioned …I got the idea that not many people actually knew what was going on, and asking questions would further show this lack of knowledge." Furthermore, Enron 's message about their values was demonstrated through the actions

Enron’s code of ethics was supposed to be based on respect, integrity, communication and excellence…most of the upper management failed on one or all of the codes. Lay and Skilling had little or no integrity based on their approval of the shoddy accounting practices. They had their own corporate culture driven by greed and intimidation. The top management was continuously aggressive in getting its employees to meet the sales objectives irrespective of ethical behavior. This aggressive earnings management style forces employee to try to accomplish goals regardless of the moral and ethical cost.

If the most troubling aspect of Enron was the way in which its employees were treated losing jobs, stocks, health and retirement benefits in the wake of its dissolution, then it is possible to backtrack from this event to list the many problems provided by the men that ran the company that allowed for such a travesty to happen. The duplicitous, and in some cases outright iniquitous business practices of this

In this case of Enron the corporate culture played a vital role of its collapse. It was culture of full of moneymaking strategies and greed, in the firm Greed was good and money was God. There was no or very little regards for ethics or the law, they operated as there was no law and ethics in the world (Enron Ethics, 2010). Such culture affected all the employees of the firm from top to down. Organizational culture supported unethical behaviour and practises, corruption, cheating and those were all widespread. Many executives and managers knew that the firm is following illegal and unethical practises, but the executives and the board of directors did not knew how to change this unethical culture, the firm used creative accounting and were making showing misleading profits every day. Reputation management enabled them carry on their illegal and unethical operations. Moreover if the company made huge Revenue in the unethical way then the new individual who joined the firm would also have to practise all those unethical practises to survive in the company. All of the management was filled by greed and ambition, their decisions became seriously imperfect, thus the firm fell back and managers had to pay in the price in the form imprisonment and fines. Greed is the main key factors that brought the Enron “the most innovative company” to downfall. Enron was looking into the ways of

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

The trading part of Enron’s business was hugely successful, in the beginning. Traders and executives were given huge bonuses and stock options, based on their performance. With this newfound success, the culture at Enron slowly evolved. All new hires that entered Enron were evaluated based on their ability to generate profits. Characteristics like teamwork and loyalty were no longer important. If you were a team player, but didn’t make profits, you were fired. This culture created a dysfunctional and cutthroat atmosphere at Enron.

Enron Corporation was an energy company founded in Omaha, Nebraska. The corporation chose Houston, Texas to home its headquarters and staffed about 20,000 people. It was one of the largest natural gas and electricity providers in the United States, and even the world. In the 1990’s, Enron was widely considered a highly innovative, financially booming company, with shares trading at about $90 at their highest points. Little did the public know, the success of the company was a gigantic lie, and possibly the largest example of white-collar crime in the history of business.