Leadership Effect on Organisations Culture and Ethics
Background:
In the Module 5 Case, you will be performing a critical analysis of the role assumed by an organization's culture in determining the organization's ethics. You may complete the Module 5 Case and SLP in any order you prefer.
Required Reading:
Please read the following articles related to Enron:
Madsen, S. & Vance, C. (2009). Unlearned lessons from the past: an insider's view of Enron's downfall. Corporate Governance,9(2), 216-227. Retrieved from ProQuest.
Free, C., Macintosh, N., & Stein, M. (2007). Management Controls: The Organizational Fraud Triangle of Leadership, Culture and Control in Enron. Ivey Business Journal Online. Retrieved from ProQuest.
Meisinger, S. R. (2012). Examining organizational ethics. Human Resource Executive Online (June, 2011). Retrieved on November 19, 2012 from: http://www(dot)hreonline(dot)com/HRE/story.jsp?storyId=533348507
Assignment:
In a well-written, 5-7 page essay, please address the following:
Discuss the ways in which a company's leadership and culture influence its business ethics.
Keys to the Assignment:
- Define "organizational culture." Please be very specific (and be sure that you provide references for your description of culture).
- Evaluate Enron's sense of business ethics and business operations in the context of the organization’s culture? Specifically, what went wrong?
- What should have been the role and responsibility of company leadership (the Board of Directors, the CEO Ken Lay and others)? In what ways did key executive players (e.g., Lay, Skilling, and Fastow) work to negatively reshape the culture, and with what adverse consequences?
- How might Human Resource Management (HRM) have played a central role in setting the "moral compass" at Enron, helping to form and shape the organizational culture (perhaps avoiding the Enron debacle altogether)?
Assignment Expectations:
Your paper will be evaluated on the following seven criteria:
- Precision - Does the paper address the question(s) or task(s)?
- Breadth - Is the full breadth of the subject (i.e., the Keys to the Assignment) addressed?
- Depth - Does the paper address the topic in sufficient depth and include the background reading and other background resources as references?
- Critical thinking - Is the subject thought about critically (i.e., accurately, logically, relevantly, and precisely)?
- Clarity - Is the writing clear and are the concepts articulated properly? Are paraphrasing and synthesis of concepts the primary means of responding to the questions or are points conveyed through excessive use of quotations?
- Organization - Is the paper well written? Are the grammar, spelling, and vocabulary appropriate for graduate-level work? Are headings included in all papers longer than two pages?
- Referencing (citations and references) - Does the paper include citations and quotation marks where appropriate? Are the references from the background reading and assignment present and properly cited? Are all the references listed in the bibliography present and referred to via citation?
Tips and Suggestions:
1) For this final Case essay, use at least four additional scholarly sources.
2) Cite all sources using proper APA style, and use proper in-text citations.
3) Follow the Well-Written Paper guidelines.
4) An excellent article on Enron's culture as well, the following may also be useful to you in your analysis of the Case:
Sims, R. R. & Brinkmann. J. (2003). Enron ethics (or: Culture matters more than codes). Journal of Business Ethics,45(3), 243-256. Retrieved from ProQuest.
5) Finally, I highly recommend the movie Enron: The Smartest Guys in the Room. You may be able to view parts of the movie on YouTube. Following is the movie trailer: http://www(dot)youtube(dot)com/watch?v=0zMakN-EMLg
MANAGEMENT CONTROLS: THE ORGANIZATIONAL FRAUD TRIANGLEOF LEADERSHIP, CULTURE AND CONTROL IN ENRON
by Clinton Free; Norman Macintosh; Mitchell Stein
Content Type
Journal Article
Abstract
This article draws on a vast database of public records, testimonies at the various Enron-related trials and insider accounts concerning Enron's rise and fall to answer the question: how did a sophisticated and comprehensive set of management controls fail to prevent and detect widespread and continued corporate-wide fraud, information manipulation and dishonesty. This article focuses on the cultural environment surrounding Enron's management control systems, and the influence of a powerful-risk taking culture on Enron's controls. Enron offers a number of important insights for managers. Firstly, it underlines the vital role of top management leadership in fostering organizational culture. Secondly, within organizations, the impact of culture and leadership on even most the sophisticated management control system must not be overlooked or minimized. Finally, the Enron saga speaks to the importance of not abandoning professional integrity.
Publication Title
Ivey Business Journal Online
Publisher
University of Western Ontario
Date
07/2007
Start Pag
Unlearned lessons from the past: an insider's view of Enron's downfall
by Madsen, Susan and Vance, Charles
Content Type
Journal Article
Abstract
Purpose - The purpose of this paper is to capture an insider's view of the organizational culture and management practices that contributed to the downfall of Enron. In light of the current worldwide financial and economic crisis, this article aims to highlight some of the unlearned lessons from the past. Design/methodology/approach - A qualitative interview case study was used for the basis of this paper. Findings - This article shares an insider's (former vice president's) insights related to the practices and culture that led to Enron's unethical decisions and strategies. It discusses one man's view of the history of Enron, as well as what should have been learned and applied to the global financial industry to help to minimize or even avoid today's painful economic crisis. Practical implications - Six main causes of unethical behavior for individuals in organizations are outlined, and important lessons learned are presented. The article also discusses the importance of reflecting and remaining inwardly vigilant, while outwardly thinking of and serving others. Originality/value - The information for this article was based upon an original interview.
Publication Title
Corporate Governance
Publisher
Emerald Group Publishing, Limited
Date
2009
Volume
9
Issue
2
Pages
216 - 227
ISSN
1472-0701
Enron: Leadership Effect on Organisations Culture and Ethics
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Enron: Leadership Effect on Organisations Culture and Ethics
Introduction
Every organisation has its unique culture that shapes the manner in which it operates as it focuses on achieving its objectives. Organisation culture is the unique behaviours and values that bind and shape the operations of nay given organisation (Schein, 2010). This culture is shaped by the expectations, philosophy, values and experiences which together give direction to the organization on the way it interacts with the outside world. Organisational leaders have a major role to play in ensuring that the organisational culture helps the organisation achieve its goals. Culture impacts on ethics of the individuals who work for the company in influencing their customs, beliefs and attitudes. With time, these beliefs and attitudes are developed and influence future operation of the organisation. This paper looks at Enron enterprise and how leadership influenced the culture of the company, and lead to its failure. The paper also looks at role the human resource manager would have played to prevent the down fall of the company.
Enron's business ethics, culture, operations and what led to its fall
The fall of Enron Company can be attributed to a great extent to conflict in business ethics which are underlined by organisation's culture. Enron culture was unique and this resulted from the shift leadership which came up with unrealistic visions. The company's culture was characterised by intensive overspending where the management would get the highest share. The employees of the company were loyal and would not go against the management decisions; even when they seemed oppressive. Therefore, there was a culture that stipulated that as long as employees cooperated with the management, they would get a good share of the returns of the company (Madsen & Vance, 2009). This resulted to employees getting more money in terms of compensation as compared to other companies operating in the same industry. This contributed significantly to the down fall of the industry after 20 years of operation.
The company adopted a culture where the employees were given a maximum tenure of 18 months to work in the company (Madsen & Vance, 2009). This resulted to higher labour turn over which affected the overall productivity of the company. With time, the returns the company got could not cater for running of the company and paying the employees. The accounting system that was put in place by the company was also misleading in calculating liability of the company and the assets. There were some times when the company would borrow money, but when entering the transaction in the financial book it would be entered as part of returns instead of liabilities (Madsen & Vance, 2009). The continuous change of top management in the company also played a role in the down fall of the company. Each leader came with his own methods and ways of directing the company which was not always welcome by the employees. Ethical practices were ignored and what mattered most was making more money for themselves, without any regard to the welfare of the company.
Role CEO and top management played in the fall of Enron
The board of directors, the CEO and the senior members of the management team ought to have played a significant in the progress of Enron. Instead of propelling the company to achieve laid down objectives, they degraded its operations which lead to its fall years later. As a senior manager Ken Lay and his team were supposed to provide a clear path way for the company to follow; in its effort to serve a wider society. The leaders were entitled to acting as role models to the company's employees, who were hard-working and were ready to serve the interests of the company (Madsen & Vance, 2009). Through proper leadership, scandals would have been avoided where each individual wanted to make maximum money from the company without regard of the company's welfare. Ken Lay being the CEO of the company would have provided a clear map, and engage in consultative meetings with stakeholders to identify problems in time and correct them.
Instead of carrying out the above identified duties and functions, the management lead by Ken Lay was in the foremost position of failing the company. The c...