Challenges of the Enron Organization LDR 531 October 21, 2010 Doreen Gournaris Introduction To be effective as a team, team members need to communicate with each other. Enron lacked good leadership within their organization and the leaders in executive levels allowed accounting fraud and decentralized corporate departments. Enron’s team was faced with communications, collaboration and conflict management and top leadership had issues dealing with this situation.
This paper will (1) describe how to develop a training program to increase the effectiveness of Enron’s groups and teams, (2) how the training program would work for Enron and how it could have helped Enron from failing, (3) the unique challenges it would address to Enron, and (4) how this particular training program would not have helped Enron and the reasons. A training program to increase the effectiveness of Enron If a training program is to be effective the program needs proper communication collaboration and conflict management from its leaders.
Training plans are necessary in business and education to solve complex problems. Enron was notorious for taking the easy way out and ignoring the finer points of running a business. Training plans are necessary in business and education to solve complex problems. John Hewitt states: When a project requires expertise that the team involved does not currently possess a training plan details actionable steps to correct that deficiency. In agile, growing businesses, all employees incorporate regular training into their schedules to sharpen their own skills and empower the company as a whole (para. ). Enron’s leadership needed to adapt a proper ethics training program not only for the workforce but also for upper management. Ethics are very important for a business as it helps to determine how the company is perceived by others. . Benefits of a proper training program for Enron Ethics training could have prevented the Enron scandal from ever happening. The training plan proposed would have trained the executives properly and would have instilled the vision and integrity that the founders of the company had in mind.
The ethics training plan would also give incentives to the employees and help them better understand the goals of the company. Employees frequently develop a greater sense of self-worth, dignity and well being because they become more valuable to the firm and to society. Generally, they will receive a greater share of the material gains that result from their increased productivity. Enron needed to provide ethics training for all employee programs as it would have provided insights for liability protection as well as improve employee morale.
This training would have helped Enron provide employees with information with regard to reporting ethics violation to specific personnel and reassure them that offenders will be punished severely. This would have inhibited the leadership of Enron from giving into temptation to violate ethical code of the business. Alex Gordan states: When the ethics training for employees is carefully planned and executed, the employees will have a clear idea of the company’s code of ethics as well as being intimidated with punishment techniques for those guilty of violations.
Thus, ethics training for employees is an integral part of any training program provided to employees (para. 6). Unique Challenges of an Ethics training plan Ethics training program are designed for business leaders, executives, and senior managers who are hoping to instill a culture of ethical behavior throughout all levels of their organization. Enron faces this unique challenge as the leadership had a lack of integrity and no sense for proper ethics. To be effective, Enron needed to reach out to the employees and inspire them in a meaningful way.
Thomas states “On the surface, the motives and attitudes behind decisions and events leading to Enron’s eventual downfall appear simple enough: individual and collective greed born in an atmosphere of market euphoria and corporate arrogance” (Thomas, 2002, The Rise and Fall of Enron, para. 4). Enron’s corporate culture provides yet another unique challenge to an effective training plan. Enron’s reputation to the business world continued to grow, whereas the internal culture apparently began to take a darker tone.
Enron’s arrogance to the business world also provided challenges to the ethics training plan. Enron officials believe that they cannot be forced to take the training therefore providing employees to follow suit. Why Ethics training would not have helped Enron Enron was famous for playing it fast and loose and ethics training could not have prevented such a scandal. According to a survey: Only one percent of the ethics executives thought it would have stopped the scandal from ever happening, and more than half believe it would have made little or no difference.
Unquestionably, the Enron implosion has wreaked more havoc on the accounting profession than any other case in U. S. history (Thomas, 2002). Enron collapsed chiefly because its managers were paid to aim at the wrong financial measures, and consequently, its internal system of financial controls was a shambles. Front-line leadership was more interested in the value of risks and creativity that led to more aggressive partnership arrangements that maximized share value and ignored the aspect of business integrity.
The company contributed to the myth of invulnerability so effectively and bough into the belief that the stock would never fall. Enron’s problem was lack of integrity and a strong desired to find alternative resolution to a problem was nonexistent. Even if the company wanted to instill ethics training, the arrogance of the leadership would have overcome its value. Enron’s arrogance contributed to the nature of their problems and lack of communication is still discussed today as one of their major downfalls. Enron’s code of ethics states:
As officers and Enron Corp, its subsidiaries, and its affiliated companies, we are responsible for conducting the business affairs of the companies in accordance with all applicable laws and in a moral and honest manner… We want to be proud of Enron and to know that it enjoys a reputation for fairness and honesty and that it is respected (para. 2). The previous quotes shows that a code of ethics is meaningless unless it is made more genuine for everyone in the organization. Conclusion Training programs are implemented so that companies can teach vocational and technical skills to their employees to better to fit competencies that the ob requires. In this aspect, Enron proved to be its own worst enemy. Arrogance and the lack of a proper culture were the contributing factors to their downfall. To this day, Enron’s code of ethics is used as a historic factor of what not to do in the business world. The previous paragraphs make an argument that a proper ethics training plan, the benefits of the training plan, and the reasons it would have helped them are discussed in detail above, but in reality nothing would have kept that company from failing.
Even where an ethics plan could institute compliance training and programs, little is being done by Enron’s leadership to enforce it. Sims and Brinkman quote “Enron ethics means (still ironically) that business ethics is a question of organizational “deep” culture rather than of cultural artifacts like ethics codes, ethics officers and the like” (p. 243). Enron faced the challenges of communication, collaboration and conflict management internally to their group, and the outcome was disaster. References Bastone, W. Enron’s Code of Ethics: The Smoking Gun. 2006. ww. soxfirst. com/enrons_code_of_ethics. Gordon, A. (2006, December 24). Ethics Training Programs For Employees. Retrieved Oct 17, 2010, from htpp://ezinearticles. com/? Ethics-Training Programs-For-Employees&id=395220 Hewitt, J. How to Develop a Training Plan. August 19, 2009 Sims, R. , & Brinkman, J. Enron ethics: Culture matters more than codes. Journal Of Business Ethics, Jul 2003. Vol. 45, Iss. 3; pg. 243. Thomas, W. 2002. The Rise and Fall of Enron. Journal of Accountancy, 31(3) Appeared in the March/April issue of Today’s CPA; Texas Society of CPA’s.