How Ethics Influence Behavior in Organizations

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In reality, there are some specific regulations governing our lives. However, regulations do not restrain everything. In some aspects, ethics play a much more important role than regulations. Ethics is “the code of moral values or principles that governs the behaviors of a person or group with respect to what is right or wrong” (Daft & Armstrong, 2012, p.369). Unethical behavior is very common in organizations. When people need to make a decision, unethical behavior may appear, especially when decision choices conflict with one’s self-interests.
The Enron Scandal is a very interesting topic to better understand what are some responses organizations may have to unethical behavior.
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Second, they duped their employees. Thousands of employees invested their savings and pensions in the company’s share market, while executives of Enron were actually selling their shares because they saw the deteriorating performance of Enron. Between 1999 and mid 2000, when Enron shares were increasing on the stock market in New York, 29 members of the company’s management received a total amount of 1.1billion US dollars by selling a total of 77.3 million shares (The Ninth International Conference “Investments and Economic Recovery”, May 22 – 23, 2009).
Lastly, they affect many people who are not part of their company too. Enron was a poor role model because they were a prime example of a company using unethical methods to profit, although they eventually failed. Also, their business model wasn’t one other companies should adopt because of Enron’s unethical behavior.
Enron’s failure is not only because its executives’ unethical decision making, but also the problem of its organizational structure. Enron is a vertical structure dominated organization, they have specialized tasks for every employee and department, and their decision making is highly centralized. That leaves the potential opportunity for their executives to make wrongful decision without being found out.
Building on an unethical decision, like Enron did, can escalate into a snowball effect. This is because of deferring the problems over and over until it is not
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