Enron Virtue Ethics

Module 2 Virtue Ethics: ENRON

ETH501

Introduction        

Ethics where business is concerned has become very important especially in the wake of numerous scandals and various groups wanting better accountability.  One of the most important facets of ethics in business are the virtues that they behold and the culture that they convey.  That being said, while there are many types of virtues three will be discussed, these three are what is believed to be the most important ones where business is concerned because they tend to humanize the aspect of what it means to act ethically in business. And these three virtues will be applied to the Enron scandal the three virtues will be defined and then applied to Enron.  The three virtues are; Integrity, responsibility and trustworthiness.

Integrity

Integrity can be defined as; “Firm adherence to a code of especially moral or artistic values”   (Merriam-Webster, 2015).  What exactly happened got Enron in trouble was the all the accounting fraud with the accounting giant Arthur Anderson as they were hiding losses from investors (at Enron) as the company was self-destructing.  This lack of integrity cost the company 28,000 employees their jobs at Arthur Anderson and more than 5000 employees at Enron. Lack of integrity at Enron affected many small towns that invested in Enron they lost their life savings but executives had their investment diversified.  A lack of integrity also allowed Arthur Anderson to shred Enron accounting documents.  The opposite of integrity is dishonesty and that is exactly how the mangers at Enron and Arthur Anderson acted, they chose to act dishonestly and in their best interest and put their investors and employees to the side (Bobinski, 2005).

Responsibility

Responsibility is a big thing and the managers of Enron did not act responsibly, they did not take the action necessary instead they exercised poor judgment.  They did leave the company to die by not taking the responsibility for acting unethically.  The CEO chose to ignore the warning of financial irresponsibility at the same time the board members did not understand the numbers nor the operations the company was engaging in. The mangers were left to do their thing and to figure it out on their own (make the numbers work). When the company fell nobody took the responsibility to take the blame as all the top managers looked the other way.  Skilling had the cowardice to claim he did not know what was going on and that illegal activity was afoot (Johnson, 2003).

Greed played a big part in the Enron collapse, but greed was rampant throughout the company it trickled down to the average employee.  Irresponsibility was the culture at Enron; “Greed was not limited to top Enron executives, however. Meeting earnings targets triggered large bonuses for managers throughout the firm, bonuses that were sometimes larger than employees’ salaries. Rising stock prices and extravagant rewards made it easier for followers as well as leaders to overlook shortcomings in the company’s ethics and business model” (Johnson, 2003).  Many of the employees acted as if it was a free for all but some did raise concern and they were labeled as a hero after the downfall of Enron but they did not act responsible enough to prevent the collapse (Johnson, 2003).