The Influence of Company Leadership and Culture on Business Ethics: A case of Enron Inc.

The Influence of Company Leadership and Culture on Business Ethics: A case of Enron Inc.
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The Influence of Company Leadership and Culture on Business Ethics: A case of Enron Inc.
Introduction: Organizational Culture
Organizational culture represents an important aspect of a firm's internal social and psychological environment. Up to date, no single definition of organizational culture exists but for purposes of understanding the underlying concept, this paper looks at the meaning of Culture (Dessler, 2011). Culture encompasses beliefs, values, attitudes and behaviors held by people in a given setting. Such social elements of culture present in an organization represent the organizational culture. An organization on the other hand, is a group of people working towards the achievement of a common goal. As such, an understanding of Organizational Culture enables the people under question to interact in harmony for purposes of realizing stated goals and objectives. It can therefore be said that Organizational culture refers to the scheme or design of collective actions, values, beliefs, attitudes and norms that people of an organization operate under.
As such, Organizational culture refers to prevailing behavioral traits of an organization. It depicts the norms or usual ways of doing things within a firm. It determines influences and or directs the aspects of operations and general work life. Additionally, organizational culture determines the overall direction towards which a company is headed either success or failure. It also establishes the way people interact and associate with others within and outside the firm (Dessler, 2011). It is also important to note that Organizational Culture is built upon over years of the firm's existence and is subject to undergo changes.
Day-to-day routines characterize the Organizational Culture of a company in both formal and informal dimensions. These routines act as a basis of ritual and practices carried out within the company. A major perspective of organizational culture involves Organizational Behavior, which refers to the ways in which people of an organization tend to behave. Per se, a desirable organizational culture facilitates harmony and intergration of both internal and external communication channels of an organization (Dessler, 2011).
It is also understood that organizational culture can also be referred to as ‘Corporate Culture', considering the fact that it influences and determines the way a company conducts its business or corporate affairs. To broaden the scope of this research, this paper discusses the correlating subject of ‘Ethics', which refers to “the principles of conduct governing an individual or a group; specifically, the standards you use to decide what your conduct should be,” (Dessler, 2011)
Enron's sense of business ethics and business operations in the context of the organization's culture
Enron Corporation (liquidated in 2001) is studied in this paper as a case concerning the influence of Leadership and Organizational Culture on a company's business Ethics practices. As far as Business Ethics practices are concerned, Enron was involved in extreme unethical accounting practices (Madsen & Vance, 2009). The founder of the company, Kenneth Lay together with other company executives were discovered to have disposed of the company's shares for personal gain and divested the shareholders of their monies. By making use of the ‘Mark-to-market' accounting policies, the company officials were able to flourish their offshore bank accounts using suspicious profits and fraudulent company success while other employees lost their savings and their jobs as well. This did not only adversely affect employees but also other stakeholders like investors, customers, shareholders and partner companies among others who lost their money in the process. This provides a clear example of record unethical practice (Sims & Brinkmann, 2003).
In particular, two individuals were for the most part instrumental in unearthing the unethical practice conducted at Enron. Jim Chanos, an investor and Bethany McLean, a news reporter, expressed doubt regarding irregularities in share values and financial statements of the Enron Company. When the reporter tried to reach the company CEO, Mr. Skilling over the phone for clarification on the same, he was extremely rude to her and even used vulgar language to insult her. This case in point reflected badly for the company in the media as a poor and undesired expression of business ethics and morals in general. It also indicated a high level of unprofessionalism by the CEO. The reactions of some employees of the company that followed, viewing the occasion as humorous was even more startling. Their willingness to appreciate such unethical behavior raised serious concerns about the company's ethical standards. This demonstrated an apparent uncouth organizational culture. Such an organizational culture stood to be blamed for the imminent downfall of the company. Con...