Enron’s culture contributed much to the ethic scandal. Enron was a harsh and condescending company, who emphasized competition and financial goals.
For example, it had a rating system which required that 20 percent of all the employees had to be rated as below requirements every year and then were encouraged to leave Enron (Jennings, 2009, p. 288). Although Enron hoped this rating system could have encouraged employees to work hard, actually, the system brought more harm to Enron than benefits.
Firstly, Enron’s competitive environments and rigorous performance evaluation standards caused a culture of deception. Since employees were nervous about losing their jobs, they only focused on their own. They ignored the ethical standards, and only focused on the achievement of their financial goal. After a few employees began cheating on their works, the only way to beat these persons was to cheat more. Gradually, no persons felt shame about cheating because they had no other choices and all their co-workers surrounding them were cheating. This caused a culture of deception. Employees were measured on their abilities to cheat. In such an environment, the people who never cheated were regarded as odd.
For example, Margaret Ceconi, a former employee in Enron Energy Service, once wrote a memo to record the truth of accounting situation in Enron. Later, she was questioned on employee morale (Jennings, 2009, p.290).Secondly, this competitive environment contributed to the covering of the errors and cheating because employees tended to be uncooperative and seldom communicated with each other. The employees were unwilling to ask questions because asking questions was regarded as humiliating. Besides that, they were also less willing to share resources and information because they competed with each other. So, in Enron, no persons asking questions as well as no one want to answer questions.
Because of this working environment, few employees at Enron actually understood their jobs. As a result, they just tried to hide errors and made their work looked good. Additionally, they ignored the errors and cheatings of others. Even if they had doubts for other people’s work, they would not say anything. Because they thought if others were not actually wrong, the person who mentioned questions would be laugh at. So, employees at Enron were quiet.Additionally, the culture of Enron emphasized too much on the financial goals. The person who can achieve the budget numbers would be the hero of the company.
Both executives and most of employees focused on making profits for themselves through making good financial numbers instead of a real increase of the company’s economic value. Enron also was concerned less about the needs, values, desires and also the well-being of the employees. From the ethical aspect, employers should respond to their employees and keep the goal of benefiting them. In such a company, ethical standards were just window dressing. No one followed them. For example, the conflict of interest policy was waived to let the officers of Enron served as officers in off-the-book entities.
Fourthly, Enron tried to keep quiet for those people involved. Employees were discouraged from expressing doubts about the financial condition of the company as well as decisions made by the executives. In these years when it committed fraud in its financial statement, Enron hurt both people inside and outside of Enron, who doubted Enron’s financial conditions. For example, John