Please identify an ethical dilemma from ENRON Collapse You answer these assignment before Make sure you state your issue as a dilemma (see definition below).

Communication and responsibility are critical requirements in the overall running of a company. Organizations should portray these ethical values if they are to remain competitive and to achieve their goals. In the article explaining Enron: Communication and responsible leadership, Mathew Seeger and Robert Ulmer () identify responsibility and communication as fundamental elements in organizational ethics. On the one hand, responsibility as a value directs individuals to have morally based obligations and duties to others. This means that the individual also has an obligation to moral codes and standards. In the Enron case, it is clear that the participants and perpetrators of the scandal, who were largely the top-level executives, lacked these moral based obligations. They also lacked concern for other’s welfare seeing that they engaged knowingly in a scandal that was milking investors’ off their money without any obligation to compensate them for their troubles. In this regard, the executives applied to be deregulated knowing very well that they wanted to use this as a cushion to protect them from their corporate crimes.

On the other hand, Seeger and Ulmer propose that organizations and individuals must ensure that they engage in external conversations with stakeholders. Communication in this sense is important because it is used as an illustration of the values the individual holds. In the Enron case, it is clear that the company executives intentionally failed to communicate clearly to the public and other stakeholders as part of their scandal to hide their corporate crimes and misappropriations. Indeed, if the executives had communicated to the stakeholders about the ongoing financial crisis, it would be unlikely that the company would collapse because there would have been mediations to rectify the situations. Most importantly, communicating to the public would have showed transparency rather than intent to commit corporate crime. There was also an apparent refusal by the executives to remain open after they saw the first signs of problems. Instead, they devised crooked methods to hide the problems and to achieve financial gain in the process. The scandal reflects a company which had mastered the art of exploiting loopholes and manipulating markets using inflated profit figures. Indeed, the Enron Scandal was a case of failures in corporate ethics and personal greed. All these failures in communication and responsibility among the Enron executives suggest a high level of irresponsible leadership.

The personal integrity model of ethical decision-making best applies to the Enron case. The model is a combination of philosophical works from philosophers including Lawrence Kohlberg, Plato, and Aristotle. Specifically, the model of personal integrity has a subcategory called the virtue ethics, which basically focus on the character of the individual or decision maker. In this model, the decision maker has an attitude that guides their moral and ethical decision making. These guides of moral reasoning should be based on positive virtues such as prudence, justice temperance, and courage or fortitude. However, if the actions are guided by vices such as greed, envy, lust, or anger then the decision are unethical. This basic guide to ethical decision making was embraced by early philosophers because they saw it as the true mender of the social fabric, meaning that this model is a guide to having a society or community with good values. Indeed, in the modern world the decisions people make are influenced by their character and their understanding of vices versus virtues.

In the Enron case, the company executives were clearly disregarding in terms of assessing their virtues. The executives can best be described as greedy since they did almost anything for their personal gain, and this was often at the expense of other people’s suffering. For instance, they decided to seek deregulation just so that they could milk the investors’ monies without suspicion. CEO Ken Lay was the best illustration of an individual who uses his pose as a confident and accomplished man to trick investors into pampering his company with more money while knowing too well that all that was a fake show and a trick to seek trust. Indeed, based on the model of virtue ethics it is clear that Enron caused all the problems it caused due to the absolute lack of virtues to guide decision making in the company.

Moral values are significant in the process of making decisions and judgments on business and individual decision making. There exist different sources which offer a guide on ethical decision making, which include the religious books and philosophies. However, the basic guideline of ethics is the individual’s conscience which often tells the individual what to do and it also determines how they feel after they have made the decision. The teleological (consequentialism) perspective of moral judgment is one of the models which would be used in making judgments for a case such as Enron’s. According to this perspective, an individual should consider the end result before making a decision (Malloy, Ross, and Zakus, 2002). In this regard, the individual should make a decision bearing in mind that the end result will affect them. In the case for Enron, there was a clear disregard for consequences as the executives seemed to assume that they would continue living on corrupt money indefinitely. Therefore, based on this perspective I would charge each and every one of them with a sentence equivalent to the crimes they committed, and proportionate to the pain they caused the employees, investors, and all stakeholders.

The deontological (non-consequentialism) perspective makes an argument contrary to consequentialism. It points to the principles and personal duties of the individual as the guides of their moral conduct, meaning that regardless of their perception of the consequences an individual should act with the guide of their own rules and adherence. Furthermore, there exists social codes of conduct which are agreements on the acceptable way to act. As such, everyone knows that it is bad to be greedy or dishonest. In the Enron case, the executives clearly disregarded these accepted social standards when they engaged in malpractices of greed and exploit others (Malloy, Ross, and Zakus, 2002). Furthermore, the perspective of non-consequentialism holds that an individual should have an innate set of rules that characterize them. As such, the Enron executives are seen as immoral and greedy individuals who are willing to overlook all social values for personal gain. Therefore, I would punish them with sentences and fines which were proportionate to their lack of respect for social values and virtues to ensure that they were an example for other corporatize criminals. Based on the existentialism perspective, I would sentence each of the executives for terms proportionate to their failure to have regard for other people’s rights. This perspective proposes that the individuals should have been observers of the law and accounting guidelines regardless of their priorities.

In the summer of 2001 Enron severely exploited loopholes in the California energy market. It began by the use of Special Purpose Entities (SPEs) which were independent firms which Enron used to hide its debt. These ‘entities’ were run by Enron executives and though they did not exist in the real sense, nobody would notice because the company had been de-regulated (Youtube). This meant that it operated independently and even chose the reports to show to the public. In this regard, the company kept to itself the true reports and instead it published reports which had inflated and falsified profits. In this way, more investors were willing to pour in more money so that they could also enjoy the benefits. This was in the real sense a con because the company was continuously undergoing losses as the monies invested went into the executives’ pockets. Over time, the free markets and de-regulation created more loopholes where the executives to channel more money into their accounts in a classic case of greed and unethical business conduct.

Regulation is critical for a market because it would have otherwise revealed the scandal early enough. Regulation exists so that company executives do not hold matters into their hands, often making decisions that impact each and every stakeholder. In a case of de-regulation, the concerned agents would ensure that there are external audits conducted within the firm. This would ensure that the company publishes only the true figures concerning profitability or any losses. Therefore, even though operating in a de-regulated status the company would still be subject to external audits and assessments regarding its transparency and the ethical conduct within its management.

Enron CEO Ken Lay had been very supportive of the Astros club even before the construction of the Enron Stadium. Lay played a prominent role in raising money for the stadium, and it was clear early enough that the company would be getting the naming rights for the stadium. Eventually, the park was opened in April 1999, and immediately Enron acquired the naming rights for a 30-year period at a cost of $100 million (Jensen and Butler, 2007). The Park had over 300 signs of Enron and it changed names from the Houston Astros New Ballpark to Enron Field. The Enron scandal came out later and in December 2001 the company filed the biggest bankruptcy proceedings that had been witnessed in the U.S.A. Astros immediately filed legal action wanting Enron to honor its naming rights, to which Enron refused and asked to be paid back. Astros was in a dilemma not knowing whether to retain the name or to give back the money to Enron. The team quickly experienced backlash from the public who felt that they did not want to be associated with a company that had been engaged in financial fraud.

The Astros team paid back $2.1 million to Enron to reclaim the naming rights. They were keen to avoid any negative effect on the team as the new season was approaching. The dilemma ended with this reclaiming of naming rights from Enron (Jensen and Butler, 2007). However, there was still a question of whether it would be risky to commercialize naming rights owing to the fact that the Enron encounter had shown that this could negatively affect the team’s performance and past glory.

The public relations issues in this case emanated from the decision by Astros to give signing rights to a company that had been charged with outright corporate crimes. Astros was facing backlash from the public who felt that it had gambled with the club’s glory to achieve financial gain. However, I feel that the team handled the situation well. It decided to repossess the naming rights even though it meant paying back Enron. This move to dissociate the team with Enron was a good move. The team later sold the naming rights to Minute Maid at a cost of over $170 million. This move reflected a closer analysis of the new company, and also a concern for not only the financial gain but also the reputation of the team.

References

Jensen, R., & Butler, B. (2007). Is sport becoming too commercialised? The Houston Astros' public relations crisis. International Journal of Sports Marketing and Sponsorship, 9(1) , 18-27.

Malloy, D. C., Ross, S., & Zakus, D. H. (2002). Sport ethics: Concepts and cases in sport and recreation.

Seeger, M. W., & Ulmer, R. R. (2003). Explaining Enron: Communication and responsible leadership. Management Communication Quarterly, 17(1), 58-84.