Failure at Tyco International, Ltd.

The unethical behavior portrayed by Enron’s senior management was ultimately the result of greed and lack of control and proper oversight combined with, intense,competitive, result driven corporate culture that made it easier to ignore Enron’s codes of ethics that gave rise to manipulation of financial reports; hidden losses and SPE’s, suspicious partnerships. Adding to the employee stress was the organization evaluation system that forced employee to either find another position in the company or have their contract terminated and therefore employees were afraid to lose their jobs and followed unethical and illegal practices.

This now bankrupt company, misappropriated investments, pension funds, stock options and saving plans after deregulation and little oversight by the federal government. However, with deregulation an increasing competitive culture emerged as the CEO Jeffry Skilling motto to his organization was to “do it right, do it now, and do it better” this was the rally cried that pushed ambitious employees to engage in unethical behavior as Enron use deceptive “accounting methods to maintain its investment grade status” (Sims, & Brinkmann, 2003, pp.244-245). As Enron continued to flourish and received accolades from the business community this recognition drove executives to continue the façade of bending ethical guidelines before their public fall from

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,

The PRC was a powerful mechanism for preventing the emergence of subcultures running counter to the organizational tone set by Enron’s hierarchy. Members of the Risk Management and Assessment Group who reviewed the terms and conditions of deals (and who were largely inexperienced recent MBA graduates) as well as internal auditors, were fearful of retaliation in the PRC from persons whose deals they were reviewing (Chaffin and Fidler 2002; Dallas 2003). At best, control was compliance-based, seldom encouraging employees to follow either the letter or the intent of laws (Dallas 2003). This punitive environment brought the consequences of dissent sharply into focus. Enron’s culture has been characterized as “ruthless and reckless … lavish rewards on those who played the game, while persecuting those who raised objections” (Chaffin and Fidler 2002, 4-5). Led by Skilling’s cavalier attitude to rules, top management conveyed the impression that all that mattered was for employees to book profits. In sum, this led to an erosion of employees’ confidence in their own perceptions and, most crucially, to further compliance with the organization’s leaders in a way that strengthened conformist behavior. Former employees have noted how “loyalty

The Security Exchange Commission found that The Enron corporations CEO’s and executives hindered the company’s research methods by using information to reveal how the top leaders of the organization assisted and supported the unethical behaviors in the accounting and finance departments. These acts deteriorated the integrity of excellence professionals, associates, and employees who were associated with the Enron Corporation. On behalf of the entire organization, the Enron Corporation’s poor business practices gross standards that pertain to unethical behavior.

Global bribery scandals in the 1970s brought about the first developmental period of codes (Messikomer & Cirka, 2010, p. 57). Later, after the public discomfort towards continuous ethical lapses of major U.S. corporations, the United States Congress enacted the Sarbanes-Oxley Act of 2002 on July 29, 2002. This Act required American companies to reveal whether it has adopted a code of ethics (McCraw, Moffeit, & O’Malley, 2008; Schwartz, 2004). In this Act, the term ‘‘code of ethics’’ referred to written standards that are designed to deter wrongdoing and to promote

Enron’s ride is quite a phenomenon: from a regional gas pipeline trader to the largest energy trader in the world, and then back down the hill into bankruptcy and disgrace. As a matter of fact, it took Enron 16 years to go from about $10 billion of assets to $65 billion of assets, and 24 days to go bankruptcy. Enron is also one of the most celebrated business ethics cases in the century. There are so many things that went wrong within the organization, from all personal (prescriptive and psychological approaches), managerial (group norms, reward system, etc.), and organizational (world-class culture) perspectives. This paper will focus on the business ethics issues at Enron that were raised from the documentation Enron: The Smartest Guys

The entire downfall of the giant Enron was brought about due to various ethical lapses that, in the end, would muddy the reputation of anyone who had a connection with the company. Even according to Gibney (2005), it was widely known that Enron’s CFO Andy Fastow would tend to implement and use less than ethical financial practices. The unethical behavior, though, does not usually just occur with one person or one position. Gibney (2005), throughout the entire documentary, hints at the idea that all Enron management/leadership knew of and were complicit in the unethical practices. In the end, Enron had betrayed the trust of thousands of employees and investors. Both of these betrayed parties would try to seek some level of justice in what had become one of America’s worst economic blunders (Gibney, 2005).

Analysis of Enron: the Smartest Guys in the Room One of the greatest achievements of Enron: the Smartest Guys in the Room, is the documentary’s ability to so meticulously and cohesively deconstruct the corporation’s practices, from top to bottom, to illustrate even for the layman just how fundamentally illegal and reckless its leadership was. One of the reasons that the film’s title (which is based on and taken from the book of a very similar name) is so fitting, is that the sorts of business ventures that Enron pursued—be it their Blockbuster bandwidth scheme, their Dabhol power plant project, or their California energy price-gouging—required such immensely-detailed, calculated planning and maneuvering, that the notion that those at the top didn’t know

Tyco began in 1960 when it was founded by Arthur Rosenberg and started as an investment holding firm. In 1973 Joseph Gaziano took over for Rosenberg as CEO and pursued many hostile acquisitions. He was successful and was able to grow the company to a net worth of $140 million before he passed away in 1982. The CEO who took his place was John Fort who came in with the basic strategy of maximizing shareholder wealth through dramatically cutting costs. When John Fort left his position in 1992, Tyco was comprised of Fire Protection, Electronics, and Packaging departments. Dennis Kowalski was able to work his way to the top of Tyco and take the CEO position in 1992. Kowalski began as

Dennis Kozlowski was the mastermind behind all of the unethical decisions and, actions that led to the near bankruptcy of the company. The scandal of Tyco was an ever-growing process that started when Kozlowski was on the verge of becoming the new CEO of Tyco. Kozlowski greatly looked up to his mentor, friend, who also happened to be the previous CEO of Tyco Joseph Gaziano. Kozlowski adopted some Gaziano’s harsh and very pricey lifestyle that ultimately led to his demise. His lifestyle became so extravagant that nothing was every enough, he had a taste of the “living large” lifestyle and he could not go back. Kozlowski and CFO Mark Swartz were charged with roughly thirty counts of corruption, conspiracy, fraud, grand larceny, and falsifying business records. However these two, Kozlowski and Swartz, were not the only two employees involved, Mark Belnick former general counsel was also

Organizational culture is one of four influences whether an ethical or unethical behavior will be made. WorldCom’s demise, deliberately overstating their income by $7 billion between 1999 and 2002; and their once valued stock of $180 million becoming nearly worthless, can attribute a significant amount of their failure on their “dis”organizational culture. Corporations worldwide who do not think this type of fraud can happen at the hands of a relatively small amount of people, are completely wrong. Bernie Ebbers, Chief Executive Officer, and Chief Financial Officer, Scott Sullivan’s classical view of social responsibility was the beginning of the end for WorldCom; this

Every organization also has a profession responsibility to conduct business honestly and ethically. Our readings reported, “Experts estimated that U.S. companies lose about $600 billion a year from unethical and criminal behavior” Kinicki and Kreitner (2009). The organization could avoid having ethical issues by meeting the

Kozlowski and other board individuals had cheated and misdirected speculators by keeping stock costs falsely expanded, not increasing the value of the association for their partners. This type of radicalism does not constitute moral or sound judgment and choice making by Tyco 's administrators

This is because they fail in reviewing and predict the tone at the top and ensuring the executives is control the environment of the company. The company itself does not emphasize the importance of an ethical corporate culture in their daily duties during the Kozlowski era which later make the personal interest become the new culture of the corporate culture in Tyco International. The failure of review the whole environment of the company makes the unethical conduct become the usual norm to the employees in Tyco International.