Business ethics Essay Example | Topics and Well Written Essays - 1250 words - 1

Business ethics - Essay Example Each year, the company rates 20% of its employees below their requirements and ultimately, they were asked to leave the company (Jennings, 2009, p. 288). This rating system brought more harm to company than benefits. First, Enron’s rigorous performance evaluation standards and competitive environment resulted in a deceptive culture. Since employees began to have job insecurity, they emphasized only on how to make their performance look better. They ignored the ethical norms and began to focus on achieving their financial goals. Few employees started to cheat on their work. The only way to halt them was to cheat more. Very soon, every other person in the company was cheating and it became a prevalent conception since they were left with no choice and were also surrounded by those co-workers who were doing the same. This caused a deceptive culture of the company. Employees were evaluated on their ability to cheat. Second, such competitive environment led to covering of the mista kes and cheating, because employees seldom communicate with each other and were very un-cooperative. Employees were not encouraged to ask questions because asking question was considered as humiliating. In addition to that, they were also less willing to share information and resources because they were competing with each other. Therefore, in Enron, no one was asking anyone any questions and no one wanted to answer any questions. In this way, the employees of Enron began to ignore mistakes and errors and just focused on making their work look good. Such ethical problems had ripple effect and contributed to Enron’s ethical scandal. At Enron, both employees and executives behaved in an unethical and illegal manner since they were encountered with conflicts of interest. They all were self-interested and greedy. Major Causes of Enron’s Collapse After the fall down of the company, people started making its synonyms as corporate fraud and corruption. At one hand, the compan y contributed to charity with huge amount of money but systematically, on other hand, in 1990s, it swindled its financial statements along with an audit firm, named as Arthur Anderson. Enron’s method was systematic and creative. Its accounting practices and financial statements were not clear. For instance, the company made its practices of noting costs of those projects that have been cancelled as assets. Nevertheless, on other hand, there was no explanation as official letter, which states that the project has been cancelled. Such practices had ‘snowball effect’. Moreover, it has also created special reasons for raising profitability and avoiding taxes. It gave liberty to the management to hide losses and move currency. The CFO, Andrew Fastow was the mastermind behind the arrangement of all these practices. Such arrangements enabled him, his family and friends make millions of dollars at the cost of their stakeholders. Some of the actions of this reputable and responsible company were just like gambling. In the year 2000, the share price of Enron was at its peak i.e. at $90. Enron’s Executives already knew what was happening inside the company therefore; they started to sell their shares. On 5 March 2001, Article of Bethany McLean â€Å"Is Enron Overpriced?† further reduced the stock price of the company. She played a vital role in revealing the huge debt of Enron. Slowly and gradually, the stock price