Applying Virtue Ethics To Enron Case – Justice, Integrity, Courage

Virtues Application in Enron Case

Definition of Terms

  • Justice is defined as just treatment or behavior. It is a quality of being reasonable, moral rightness, equitableness, and righteousness. Justice is a synonym to neutrality, objectivity, and equity.
  • Integrity is defined as a value of being honest and containing strong moral uprightness or being morally principled. It can be used to refer to ethics, virtues, honor, good character, honesty, rectitude, probity decency trustworthiness, truthfulness, sincerity, and scrupulousness. It is a state of being undivided and whole.
  • Courage refers to the aptitude to do what is frightening. It can also be referred as fearlessness, bravery, boldness, daring or heroism. It refers to moral or mental strength to face evil or immorality.

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Why Enron Company Failed?

Lack of Courage

Enron downfall was highly attributed by lack of virtues. The new Enron management introduced a new culture which instill fear among the employees. The main fear was losing job, being demoted or remaining in one position for a long time despite of the quality of services offered. Promotion was gauged by the kind of deals one can make for the company irrespective of the working position, or individuals ability to de-credit another person in a higher position. The company lacked the operation and promotion standards. Workers were required to adhere to everything the management wanted to avoid any unceremonious dismissal. The management did not permit any form of questioning. Workers were supposed to do what they were ordered to do irrespective of whether an individual worker felt that it is against personal moral or initial organization principles before the merge (Madsen & Vance, 2009).

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This made a number of honest employees to quit their job since they could not work under the current organization culture. Other employees quitted their job for feeling less useful to the company. The company did not consider individual expertise in their respective field. No intelligent power was required in the company. Therefore, most professional felt useless in the company. However, no one managed to gather enough courage to confront the management to develop a strategy that would make the management understand that the employed culture would destroy the company in the long run. Moreover, the organization management did not offer any chance to anyone with a different opinion from them. Thus, maybe there was no use gathering any courage to address the management. The management was never ready listen or even to change. It was never concerned about the future foundation of the company but immediate level of revenue (Madsen & Vance, 2009).

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Lack of Integrity

Another reason why the Enron Company’s failed was due to lack of integrity, particularly in the management team. Normally, the employees’ behaviors are highly determined by the behavior of their leaders. Ken Lay as a leader of the company failed in developing ethical leadership principals that would be followed by the workers. Instead, Ken Lay demonstrated his great weakness of being a money lover and great spender to the employees. He also eliminated the honor employees earn for their knowledge and intelligent contribution to the company. Instead he introduced the culture of focusing on earning more using all possible means as long as they cannot be regarded to be legally wrong. While doing so, Ken Lay forgot the importance of the company’s future. He unethically sacked or dismissed employees who tried to question his acts or to work diligently. The management treasured employees who could manage to come up with any money generating activity. It did not matter whether that activity had a future. Although the main aim of the merge was to enhance the company’s growth Ken Lay did not care about the company’s future. This demonstrated his lack of integrity. His selfish desires of making money made him destroy a company which acted as a source of livelihood for a huge number of employees and the clients they served. He destroyed Willis Straus lifetime effort to build a reputable company that he hoped would stand long after he is gone.

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Moreover, he used his unethical tricks to get Sam Segnar on the way just to fulfil his personal desires. Despite knowing very well that he did not have the company’s interest at heart, he influenced other board of directors to eliminate Sam who Straus was sure would maintain the company to have access into decision making position, for personal benefit. This is an act of selfishness, and lack of integrity (Sims & Brinkmann, 2003). Sam could not take any advice despite knowing it was important. He could not do any form of analysis, or accountability to understand his path; where the company is going or coming from because he only cared about the present.  He ethically failed as a leader who was supposed to care about his employees, company’s shareholders, company’s clients and all other individuals who depended on this company. Lay and Jeff demonstrated a high unethical level dishonesty to their followers and the company’s stakeholders (Sims & Brinkmann, 2003). They were dishonest to their level of intelligence and true call in life. Despite of having suffered poverty and being a son of a church minister who understood more about ethics, Ken always justified his ill motive by ensuring that the act were legal despite being selfish and destructive. He ensured that he forced his employees to support his unethical activities by threatening them and rewarding those royal to him using unmeasurable rewards, either through promotion or salary increment. Promotion was not done of performance merits but on employee’s ability to make Ken generate more easy money.

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Another aspect of lack integrity was demonstrated by the company’s accountants and auditors. It is stated that the company’s accountants knew that the company was not making money or profit despite of having a heavy flow of cash. However, they still manage to convince more investors to invest with a flopping company. This was done through manipulation of accounting figures to demonstrate strong company’s financial health. Although the company was in a pathetic situation and had no plan for the future, the accountants managed to convince the public that the company was still worth for investment. In addition, the company’s auditor, although they realized that the company current trade may jeopardize the company’s future, they still held back this information to the public and failed to give the right advice to the company or take other necessary measures that were within their jurisdiction. This made investors to build their hopes on possible great returns although the company was experience a great level of fraud and possibility of failure. In addition, there are a number of employees who demonstrated dishonest behavior and lack of integrity. This mainly happened when employees developed a habit of telling on others to be promoted or discrediting the other employees to be promoted. This destroyed the spirit of collaboration and ideas sharing. The company communication was completely destroyed by this behavior and in the long-last, Ken managed to use his strategies to destroy the livelihood of many while benefiting only those who were royal to him.

Lack of Justice

The company management is highly blamed for the company’s downfall. The manager was unfair to faithful workers especially the conservative employees from InterNorth Corporation who were founded on ethical background. They always worked to ensure effective performance and good services to the customers, for the benefit of the company and all its stakeholders. Ken management ruined their hard work by floating the oil prices and creating oil market crisis. This destroyed their future despite of working hard to ensure it. This was also unjust to consumers. Floating of oil prices increased oil cost unnecessary, making customers to incur more. This was worse since during this time the company was not more concerned about the offered services and thus, there is a high likelihood that oil prices were high while services were poor. This was unjust to consumer (Chandra, 2003). Ken was unjust for dismissing workers just because they could not support his bad ideas. Normally, diversity is allowed in any big organization. Ideas sharing in decision making is allowed everywhere. Moreover, workers were dismissed without any warning, or any hearing. There was no workers welfare to fight for their rights and hence Sam could easily dismiss those that came on the way. This was a sign of injustice. His use of Sam’s rivals to eliminate him and to take over the chairman seat was also an act of injustice. Any leader should be impeached based on performance issues and not personal issues. Stealing from investors despite of knowing that they were not working on the company’s future was another act of injustice. Selling of company’s properties to ensure that there is very little left to compensate creditors in case of financial crisis was also unjust to creditors. Sam and Jeff committed great acts of injustices to the company’s stakeholders before the company was declared bankrupt (Chandra, 2003).

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