Avoiding Unethical Behavior in Businesses

Every day businesses are faced with making decisions that can have far reaching effects within their organization and the communities in which their business are based. Company Q is one of these businesses. Recent decisions made within this company have demonstrated a trend that would suggest Company Q has a negative attitude toward social responsibility. This attitude can be evidenced by the closing of two stores in high-crime rate areas because they were consistently losing money, offering minimal amounts of health-conscious and organic foods despite high demand, and declining donations of day-old products rather than donating these items to the local area’s food bank due to concerns of fraud and stealing by employees.

This now bankrupt company, misappropriated investments, pension funds, stock options and saving plans after deregulation and little oversight by the federal government. However, with deregulation an increasing competitive culture emerged as the CEO Jeffry Skilling motto to his organization was to “do it right, do it now, and do it better” this was the rally cried that pushed ambitious employees to engage in unethical behavior as Enron use deceptive “accounting methods to maintain its investment grade status” (Sims, & Brinkmann, 2003, pp.244-245). As Enron continued to flourish and received accolades from the business community this recognition drove executives to continue the façade of bending ethical guidelines before their public fall from

Today, executives are having a rough time juggling between the demands of the workplace and those of their families and other personal responsibilities. In a bid to meet targets and other organizational goals and objectives, business executives in addition to traveling extensively also tend to dedicate long hours to office work.

Mr. Jeffrey Skilling was one of three executives at Enron Corporation that were indicted for manipulating financials to show the public inflated numbers about Enron’s profitability. By showing these numbers to the public they were trying to mislead the public into thinking the company was more profitable than it really was. Mr. Jeffrey Skilling was convicted by a Texas federal district court of conspiracy, securities fraud, making false representations to auditors, and insider trading. Mr. Skilling had been the C.E.O. of Enron Corp. Mr. Skilling appealed, he argued he was prosecuted by the government under an invalid legal theory and that the jury he had was biased.

As with much of Enron, their outward appearance did not match what was really going on inside the company. Enron ended up cultivating their own demise for bankruptcy by how they ran their company. This corrupt corporate culture was a place whose employees threw ethical responsibility to the wind if it meant financial gain. At Enron, the employees were motivated by a very “cut-throat” culture. If an employee didn’t perform well enough, they would simply be replaced by someone who could. “The company’s culture had profound effects on the ethics of its employees” (Sims, pg.243). Like a parent to their children, when the executives of a company pursue unethical financial means, it sets a certain tone for their employees and even the market of the company. As mentioned before, Enron had a very “cut-throat” attitude in regards to their employees. This also became one Enron’s main ethical falling points. According to the class text, “employees were rated every six months, with those ranked in the bottom 20 percent forced to leave” (Ferrell, 2017, pg. 287). This system which pits employees against each other rather than having them work together will create a workplace of dishonesty and a recipe of disaster for the company. This coupled with the objective of financial growth, creates a very dim opportunity for any ethical culture. “The entire cultural framework of Enron not only allowed unethical behavior to flourish,

Enron was a publicly traded energy company formed in 1985 by Kenneth Lay when Internorth acquired Houston Natural Gas; the company, based in Houston Texas, Enron (originally entitled “EnterOn”, but was later subjected to abbreviation), worked specifically in power, natural gas, and paper and even ventured into various non-energy-based fields as they expanded, including: Internet bandwidth, risk management, and weather derivatives. Several years after the founding of the company, Enron hired a man by the name of Jeffrey Skilling, a former chemical and energy consultant, who, upon promotion, created a team of high-level administrative employees who, by using special purpose entities, lackluster reporting of finances, and unethical accounting practices, hid billions of dollars of debt from unsuccessful arrangements and ventures from stock holders and the U.S. Securities and Exchange Commission. Enron executives achieved this scheme by using a controversial accounting method entitled “mark-to-market accounting,” which in essence, assigns value to financial commodities based on their projected market values; mark-to-market accounting is the opposite of cost-based accounting which records the price of a commodity at the purchase price. As a result of this new method, Enron’s worth skyrocketed to over $70 billion at one time, only to collapse miserably several years later—ultimately costing thousands upon thousands of people their jobs, pensions, and retirements. Enron’s employees

In comparing and contrasting two articles which analyze and evaluate ethics in business, the impact of corporate social responsibility and ethical behavior by corporation and their managers can be understood by the public perception documented in a survey of Hawaiian residents, as well as the argument of negative value to consumers when self-interest and lack of ethics are part of an organization’s business model. The survey results in Choy’s article demonstrate the impression of a decline in corporate ethical behavior over the past twenty years. Both articles use the environment of competition to discuss the characteristics of ethical and moral behavior in the corporate realm. The recommendation based on the evaluation of information in the two articles is for business organizations to employ ethical and moral practices that include the values of society, and use traditional morality in all business dealings. The value of corporate social responsibility will be acknowledged and appreciated by consumers, and both economic and social gains can be achieved.

According to the documentation, those Enron people who faced ethical issues used different prescriptive reasoning approach to resolve their dilemma. Take Andrew Fastow as an example, he might not start all the fraudulent financial activities in the first place; however, he decided to do so in order to please the boss, when Ken Lay wanted to see neat financial disclosures. It seemed that Fastow

Unethical companies will eventually get exposed: Most of the top executives were tried for fraud after it was revealed in November 2001 that Enron 's earnings had been overstated by several hundred million dollars. Overall, 16 previous Enron executives including Skilling had been sentenced to prison. Its previous chairman, Ken Lay, was also convicted but because he passed away before his guilty verdict could be appealed, that case was thrown out. Sherron

In the early months of 2006, the trial began for Enron’s present and former CEO’s, Kenneth Lay and Jeffrey Skilling. They were both charged with a total of 29 criminal counts, including a conspiracy to hide the failing health of the company by selling a boosterish optimism to Wall Street and the public (NBC). This became a devastating blow to the guilty party who figured they would not be convicted of any crime, or at least only a minimal amount of something that could be paid off. In 2002, Arthur Andersen was convicted for shredding

When Jeffrey Skilling was hired, the company started using mark-to-market accounting which allowed the company to record potential profits and giving the appearance that the company is extremely profitable even when it isn’t. Enron continuously created deals and new projects to increase potential profits for the company and never actually making any money in the process. Skilling’s best idea was to turn Enron into a stock market for natural gas. Enron began to move towards trade of energy rather

With the focus on these videos, one can understand the value of business ethics which should not be taken lightly as they had various bad experiences in past. Since 2000, ethical scandals erupted throughout the American corporate. There are many cases in which issues of fraud, conspiracy, conspiracy to commit securities fraud, grand larceny, and obstruction of justice were raised during the time of business running by known Companies leader. Enron is one of the example where their leader had made its fail with a loss of $60 billion. Similarly, in 2009, Bernard Madoff, was convicted of bilking investors out of more than $50. Therefore, points are very clear about the fraud and conspiracy case

Business ethics examines ethical principles and moral or ethical problems that arise in a business environment. Business ethics often encompasses many concerns such social responsibility, sustainability, labour practices and environmental development. Business ethics as a concept fundamentally applies to all aspects of business conduct and is relevant to the behavior of individuals and entire organizations. Desjardins (2011) suggests that business ethics is the study of business from an ethical viewpoint. It is about organisational conduct and the ethical consequences of business behaviour. Companies can define ethical business values by outlining clear examples of right or wrong, thus used as a way to guide the behavior of an organization. Carroll (1979) notes that the social responsibility of a business includes legal and ethical expectations that society has of organizations. Their legal responsibility is their obligations to fulfil their economic mission within the confines of the law. Their ethical responsibility is to act as a way to maintain the license to operate (Carroll 1999) which is why core values of business should be in line with core values of society. The World Business Council for Sustainable Business states that businesses have and should have a continuing commitment to behave ethically (Holme and Watts, 2000). Market economies once became stagnant which is an external pressure of business ethics, the concept was no longer the focus of a duty to society or

In 2001, all of the creative accounting practices and fast and furious deal making caught up to Enron’s ‘golden boys’ at the top and Enron filed bankruptcy. Skilling and Lay were tried and convicted on May 25, 2006 of conspiracy and fraud. Skilling was sentenced on October 23, 2006 to 24 years and four months. While awaiting sentencing, Lay died of coronary artery disease on July 5, 2006. Fastow was found guilty of conspiracy on September 26, 2006 and sentenced to 6 years (Murphy & Barrionuevo, 2006, September 27, NY Time). And the rest is history.

We have heard the well-used phrase, “When in Rome, do as the Romans do,” and have applied it well as we travel among other countries and cultures, with great success. However, in business, it does not prove to be as much of a reliable phrase to live by. General practices of businesses can sometimes prove to be unethical, even though they are quite legal, or were simply unethical in their conduct and operations, with no remorse. Unethical practices by businesses have often been a catalyst in their demise. Hence, for business success, we might say, “When in business, practicing integrity is good business,” because if it is adhered to, it can be a recipe for success.