Topic: PsychologyBehavior

Last updated: April 23, 2019

Enron, an energy company was regarded as one of the most potential companies in the 90’s. However, they went bankrupt for a month. As the truth came out, people found that this company were unethical. The top people in the company used the new policies released in the U.S. to defraud all the money from their stockholders into their own pockets. Many people said that Enron’s behaviors were unethical but it seems like most people in Enron do not realize that what they are doing is unethical. From my perspective, Enron’s employees did unethical practices because they didn’t use the right ethic theory and their ethic was derived from the wrong starting point.
There is one practice that made me impressed, the rule to lay off employees. This practice was raised by Jeffery Skilling, the CEO of Enron, he called the system the Performance Review Committee(PRC). He believed that a person’s ability can be graded and the system will classify the people into five levels. Some people must be graded as a five and then they will be fired. As a reward, the people who are graded at the first level in the company can get a five million dollar bonus(Enron: The smartest Guys in the Room). As a result, in order to stay in the company, employees try everything to keep their level and ascend to the top level.
The practice made the employees ruthless. “If I’m on the way to my boss’s office talking about my compensation, and if I step on somebody’s throat on the way that doubles it, well, I’ll stomp on the guy’s throat. That’s how people were(Enron: The smartest Guys in the Room),” said Charles Wickman, the Ex-trader of Enron. I think under that working environment, because people were so stressed, they think if they do not stomp on each other, their condition will be bad. One result is that they might get less compensation but the worst result is that, there were going to lose their job. However, since the compensation is so alluring, they prefered to stay in the company and kick other people out, rather than follow the traditional ethics and lose their job.
John Stuart Mill had come up a theory of ethics, which he called Utilitarian Ethics. Utilitarian Ethics declares that a right decision is the decision that can bring the maximum happiness for all the humans involved in the incident, and reduce the pain to the minimum(Mann, Roberts, 30). This practice is unethical according to Utilitarianism. It means every year some people had to be fired no matter how hard they worked. The practice forced employees to discard their kindness, and act like a wild animals. You have to kill other vulnerable animals, then you can survive. The practice awakened people’s greedyness and desire. Though someone stays, someone leaves. This condition is against what Utilitarianism says, maximizing the overall happiness for all humans. Since a company is like a group or family, people in the team should work together and unite as one. Someone did not get happiness in this practice and the result might make people doubt themselves or their working competence. As an outsider of Enron, we use Utilitarianism to judge it and think it is unethical. However, as an insider of Enron, they might have a different opinion.
Their behavior could also be explained by another theory of ethics, moral relativism. Moral relativism states that a person may accept an ethical rule that is against their original rule to make a decision in a certain circumstance(Mann, Roberts, 30). Moral relativism has two types: cultural and individual(Mann, Roberts, 30). The ethic of Enron is cultural relativism. Cultural Relativism suggests that whether a decision is right or wrong is based on what the society’s norms are(Mann, Roberts, 30). Enron is a small society. In the company, everyone knows that stomping on others is a common way to reach a higher level, so they accept it and think their behavior is right and ethical.
From my perspective, Enron’s cultural relativism was derived from the traps of ethics. First, they follow blindly the company’s authority figures. People followed an order regardless of whether it is right or wrong because they were afraid to be punished, or because they respected and believed in their authority(Mann, Roberts, 30). Employees respect Skilling because he helped Enron make a lot of money. This respect made Skilling a model in employees’ mind. “When Jeff got Lasik on is eyes, everybody at Enron got Lasik”, said by Mimi Swartz, the Executive Editor of Taxes Monthly Magazine(Enron: The smartest Guys in the Room). Employees got lost in following: Skilling is right, I’ll follow everything he does or said. Therefore, they agreed with the PRC system and chased the highest level even though the system is brutal. Also, they were afraid that they will be punished if they went against Skilling.
Second, money is also a big factor for the form of Enron’s cultural relativism. Skilling had said that “money was the only thing that motivated people(Enron: The smartest Guys in the Room).” On the one hand, employees were forced to accept the practice; on the other hand, their desire of money also encouraged them to accept the practice and do something unethical. If you can defeat a certain percentage of people, you are enrolled in the highest level and you can get a 5 million dollar bonuses. In the nineteenth century, 5 million is such an attractive number. Money leads people to move towards darkness. They began to use tricks or some means to get the thing they want.
Because of these two factors, the ethic of the company went into a wrong way. Employees valued profit and discarded mercy. When the idea takes root in mind, nobody will think it is wrong, because this is the norm of the company. Their cultural relativism tells them that it is ethical.
Enron’s norm is not the norm of the society people live in. From most people’s view, the practice does not care about people’s feelings and it is too brutal, like an arena. It makes people become immoral. As a system which governs a number of people, it should give consideration to a major part of people. It should be tolerant to everybody. For Enron, since they are familiar with the system and get used to it, they have no comments about this system. However, their ethic is derived from the wrong point of view. Following orders and money are the traps which give Enron employees an illusion that what they are doing is right, and employees do not realize that they are being mislead. Therefore, the practice will never be ethical in society, because a real ethic is formed in a positive intention.

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