The Virtuous Manager

1658 WordsJul 17, 20187 Pages
The Virtuous Manager Enron was the model for rapid growth in the 1990’s but part of the culture and ethics of Enron was disturbing. Falsified documents, cutthroat competitiveness among employees and accounting schemes that hid the truth of the company’s indebtedness were just a few examples of the lack of business ethics within the organization. Perhaps a more virtuous management team could have saved Enron from collapse. Culture of Enron An Indicator of Corruption Enron’s management style was apparent from the early years of the organization. In 1987, traders in New York manipulated transactions so it would appear as though volume was higher. Falsified transactions significantly increased the traders’ bonus pay out. A truly virtuous…show more content…
Shareholder management was an even higher priority if management’s compensation was tied to the company stock price. Managing for stakeholders should not elevate one group to a status higher than another for each group is dependent upon another. So how would a virtuous manager have handled the issues of corruption, employee performance and fraudulent accounting methods in Enron? Clean House Corruption, fraud and low employee morale can be infectious diseases within a corporation. In order to prevent the spread of an infection it must be removed. In 1991 Salonom, Inc. was about to fall upon difficult times when reports surfaced of an illegal bid for U.S. treasury securities was made by a Salomon trader. Like Lay, CEO John Gutfreund knew of the problems within the corporation when he had been warned of the illegal bid. Unfortunately, “Gutfreund did not take the warning seriously and failed to report it for more than three months” (Enron’s Kenneth Lay: The Last Road Not Taken, 2002). Warren Buffet demonstrated an appropriate method for dealing with corrupt behavior when he stepped in as the new CEO of Salomon and cleaned house. He immediately removed the existing management and brought in his own management team. Instead of hiding information, he immediately turned over all documentation to investigators. Buffet made it perfectly clear he was to be informed of
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