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In the 2005 documentary film Enron: The Smartest Guys in the Room, we are able to get an inside look at what really happened in the largest business scandal in American history. Bethany McLean, a reporter for Fortune Magazine, co-wrote the book – with Peter Elkind – that the documentary was based on after her investigation of the company. McLean, among others, is interviewed in the movie to learn more about the company’s ultimate downfall. We, as viewers, get a glimpse into what happened in the criminal trials and conversations and encounters between the top executives of Enron.The film starts with a focus on company founder, Ken Lay. Enron begins to grow at an alarming rate with extremely high profits, causing suspicion. As auditors look into the situation, they discover that the company was betting on oil markets and putting the money into offshore accounts. "Oil trading is like gambling, sometimes you win, sometimes you lose. But Enron oil always seemed to win." (Narrator) The executives and insiders at Enron knew about the offshore accounts that were hiding losses for the company; however, the investors knew nothing of this. When the scandal goes public, Lay denies being a part of it in any way.Jeffrey Skillings joins Enron as the CEO and immediately starts thinking of ways to make the company even bigger. He comes up with the idea to use hypothetical investments, in which the company makes an instant profit after an investor signs on, even if the investment does not end up being successful. This gives the false perception that Enron is a profitable company, even though it was not actually making money. With this scandal, as well as others around the country, stock prices rise, and top executives cash in the rewards. When auditors finally dig deep into the company’s files, what they discover is shocking and the company collapses, leading to outraged citizens and numerous lawsuits against Enron.Joseph Badaracco, a business ethics professor at Harvard University, presents the idea of right versus wrong, and choosing between actions at the point he calls a defining moment. He demonstrates that the majority of people in a leadership position at one point or another have to make the decision to choose what is right for them on a personal level and what is right for the company on a business level. Neither of these ideas is necessarily wrong, but ultimately there is a responsibility that runs beyond one’s own interests and beliefs, and that is one’s responsibility to the company’s owners or shareholders, and also to the company’s stakeholders at large. Skillings, along with other top executives at Enron, did not have any regard for anyone except himself. He wanted to succeed financially and was willing to do whatever it took to get there, even if it meant destroying his integrity and permanently damaging the lives of those who were unknowingly involved.Enron is one of the most celebrated business ethics cases in the century. There are so many things that went wrong within the organization, from all personal (prescriptive and psychological approaches), managerial (group norms, reward system, etc.), and organizational (world-class culture) perspectives. There are a number of business ethics issues at Enron that were raised, from cognitive moral development to group norms, etc.The movie is an exceptional assessment of an organization that in all likelihood started out to perform ethically but, after a modification in design and moral decision-making, evolved into an organization based upon greed and performance no matter what cost. Many dangerous liaisons occurred at Enron, but they were very well hidden until the collapse of the company. The top executives were involved in deep scandals of transgression. They all wanted to be successful, but with the immediate success of the company, they became very selfish and acquisitive. Even though there were crises occurring in the company, they were spending recklessly for their own pleasure and enjoyment. Lou Pai, CEO of Enron Energy Services, admitted to regularly going to strip clubs and spending company money, then taking the strippers to the Enron office. To avoid having his wife find out about his actions, he would stop at the gas station on his way home and spill gas on himself to rid his clothing of the smell of the strippers’ perfume. He ultimately left the company after divorcing his wife to be with one of the strippers who was carrying his child. Pai’s actions reflected poorly on the company and his leadership. His lack of integrity could be carried over to that of the company.The trading desk operations were perhaps the most appalling of all the scandals in the company. The movie portrays traders speaking about intentionally causing price fluctuations in the prices of energy and talking about their upcoming retirement at the age of thirty. These individuals were allowed to not only create blackouts in California to jack up prices for the company, but were actually urged to do so. This was essentially a pay for profit situation, where this was all considered okay because it was in line with the culture of the company: profits over all. "Enron's traders were like the super-powerful high-school clique that even the principal doesn't dare to reign in." A system was instituted wherein the workers rated each other and the lowest rated were fired. One trader said that he was more than happy to step on the throats of others if that's what was needed.Structural humiliation played a direct role in shaping Skilling's thoughts and future actions, because of the ridicule he faced as a child. To combat his history of being a “nerd,” he asked employees at Enron to rank their coworkers, and those ranked lowest would be fired. By no means did this did not mean the worst employees were fired, only the least popular, or those who were not afraid to tell the truth. Thus, the corrupt culture of Enron was born. Workplace bullying and unfair treatment were occurring, amongst all the other scandals that were going on.Additionally, the company was providing the public with a false appearance in order to keep their investors contributing. They needed the money to fund projects and stock, but weren’t being honest with where all of the money was going. CFO Andrew Fastow skimmed from Enron by ripping off the con artists who showed him how to steal, by hiding Enron debt in dummy corporations, and getting rich off of it. The opportunity theory is present because this scam was done once without penalty, ultimately leading to it being done plenty more times with ease. Vital information was being withheld from investors, making them unbeknown victims in the ongoing crime. When the company went down, top executives had been taking their stocks out and cashing in, knowing that the end was coming soon. When Enron declared bankruptcy, the remaining 20,000 employees were given 30 minutes to leave the building forever, without any of the money they had invested or earned, while the executives left with a $1 billion payout.Had the company chosen to focus on the bright side of teamwork, they likely would have seen the success they so greatly desired, it just would have been a longer process. Had they stated a vision and roles, and had positive relationships that kept everyone in the loop of what was happening, better decisions would have been made and the company’s integrity and ethics would not have suffered. Through functionalism, interpretivism, postmodernism, and critical perspective taking, many of the problems and scandals could have been avoided, and Enron would likely still be in existence today.A priest who counseled many people affected by Enron speaks poignantly at the end of the film about how you can lose your soul in the corporate world. He says that some went deep and learned this lesson from their financial losses. One of the top executives, Cliff Baxter, committed suicide. In a note to his family he wrote with shame of how he once took great pride in doing the right thing. He wrote that the pride was gone and he felt he could be of no use to his family. He expressed love and asked for his family's forgiveness. In the end he realized he had lost his sense of integrity and ethics because he got too caught up in the hype of making money.As Sillars stated, “People do not seek complete understanding of others; rather, they seek a partial understanding that is adequate for their own interaction goals.” Had the public and investors fully looked into the situation, they would have discovered all the transgressions that were occurring. Instead, they sought what was being portrayed to the public and left it at that. Even the employees did not ask for more information than was being given to them. Jeff Skilling had the analysts in love with him. Rather than analyze him, when questions came up they gave Jeff a call. And they believed whatever he said. Most analysts were rewarded for their praise of Enron, the few that didn't were punished Ironically, the motto of this company, “ask why,” was perhaps the sole question that many employees are now asking themselves and should have routinely asked in the years leading up to the firm filing bankruptcy. Interestingly enough, this motto could have been more or less a type of risk control, or the first stage in a system of checks and balances, that might have helped head off this unfortunate diversion of material and intelligent capital. ................
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