Corporate Ethics plays a key role in setting the moral compass of an organization. The precipitous fall of Enron was preceded by a tragic erosion of ethical values within the organization. This document is a very short synopsis of the ethical standards observed in Enron prior to the accounting scandal that led to its bankruptcy.

1. Ethics at Enron: A Synopsis
Ethics, speaking broadly, concerns itself with the morals and values an individual enforces on himself
while operating in a world where lines between good and evil are often blurred. Enron having been at
the centre of one of the most scandalous corporate meltdowns of this century presents an interesting
perspective on how executives bereft of an ethical bearing can not only bring doom to themselves but
also cause massive collateral damages. The ethical conundrum at Enron is multifaceted. It is not just
the personal failings of the executives that merits a deep analysis but also the systemic dissonance
that exists in corporate America that deserves a critical evaluation. In the end, the demise of Enron
and the destruction of thousands of careers thereof is a manifestation of personal malfeasance
enabled by an interpretation driven legal system that failed to check obvious conflicts of interest.
The seven deadly sins that afflict the human kind had made their presence felt in Enron much before
the final doom struck. Chief Executive Jeffrey Skilling was known to have been very acutely aware of
his business acumen going to the extent of claiming that he had never not been successful at work
ever in a public statement. Analysts cite several examples where Skilling would lose his cool when
asked contentious questions during conference calls. The Enron board had played an increasingly
perfunctory role while giving in to the shenanigans of Skilling and Co. Where they should have been
vigilant and circumspect of the tall promises made by the top brass, they were guilty of playing gullible
fools in accepting outrageous claims of success and granting excessive governance concessions in lieu
thereof. Lastly, the leaders were unabashedly greedy to the extent that they did not hesitate in selling
their massive piles of Enron stocks fuelling an already dangerous down-spiral of the stock price even
as clueless employees with their life’s savings locked in Enron securities were left holding the rough
end of the stick.
The other dimension in this case is the extreme cronyism that pervaded the leadership echelons.
Both Lay and Skilling may be accused of having fostered such an environment where success within
the company was equated with an individual’s ability to pull deals in his favour leveraging their
closeness to the person on the other side of the table. While the meritocratic culture at Enron was
lauded in many business magazines of the day that extolled the Darwinistic nature of the system
where in only the most successful thrived, they failed to capture the effect it had on those that chose
not to join the cozy club. Several whistleblowers had been unceremoniously rebuffed or removed
before the final shake down just because they had reported facts that were not deemed comfortable
by the people in upper ranks. A system that cannot incorporate a self monitoring and controlling
function is bound to fail.
If the decisions taken by the leadership team at Enron were to be tested closely, one could not help
but notice that the driving force was personal ego, greed and avarice. None of these decisions would
pass muster if tested for altruism or utilitarianism. A leader that is driven solely by a sense of ego
would be too beholden to the position that he or she holds and would do whatever necessary to
achieving their goal which in this case was maximizing profits. Leadership is a process of influencing
others; one cannot influence others positively without exhibiting those traits in an individual capacity.
Leaders operating in extreme insularity, as was the case with Lay, Skilling and Fastow, seldom build
teams that can revel in openness. It is during times of opulence and success or extreme destitution
that the moral standards get diluted. Enron happened during an era of a long bull run in the stock
markets. It is therefore also important for leaders to exhibit a more matured outlook when
environmental factors and social constraints seem to be all too favourable.