Business Ethics Chapter 3 Fraud Example Enron

Business Ethics chapter 3fraud Example Enronhttpswwwyoutubecomwa

Business Ethics Chapter 3 Fraud Example: Enron Who is to blame for Enron? Kenneth Lay – Chairman & CEO (retired) Jeff Skilling – President & COO Andrew Fastow – CFO (indicted) Sharon Watkins – Vice President of Corporate Development Enron Employees Investors Government Ethical Dilemma Jayla just landed an internship with Acme Incorporated in the payroll department. She was excited because these internships usually turned into a full-time job after graduation. Jayla was hired by Deon, the head of the Payroll Department. He told her about their policies and stressed the need for maintaining strict confidentiality regarding employee salaries and pay scales.

"Several years ago we had an intern who violated the confidentiality policy and was given a negative internship summary," explained Deon. "I understand, sir," Jayla responded. Jayla was determined to learn as much as she could about the job. She made sure she was always on time, followed all of the policies and procedures, and got along well with her co-workers. She started to feel like she fit in at Acme and dreamed of the day when she worked there permanently.

However, one day while studying the books, Jayla began to notice abnormalities in one of the salespeople's salary. Greg, one of the senior sales representatives, made three times as much as the next highest earning salesperson in the company. Jayla assumed he must be a spectacular salesperson and worked efficiently. She often overheard Mia, the General Manager, and Deon praise Greg for his sales numbers. She also noticed the three of them would often go to lunch together.

One morning, Deon handed a stack of client folders to Jayla. He explained, "These are the clients for the salespeople for the week. They will come to you when they need more work, and they are only to take the files on top of the pile. You are in charge of making sure the salespeople don't pick and choose the files. This is how we keep things fair among the sales force." "I will make sure the files are distributed fairly," Jayla promised.

She was excited to be trusted with this responsibility, and she made sure she did her best. Mary, one of the salespeople, came by to get files for the week. They made small talk as Mary looked into her files. She looked disappointed. "You didn't get any good clients?" Jayla asked.

"Nope, not a one," replied Mary, "which is just my luck!" She threw down the files in exasperation. Jayla was concerned and asked, "What's the matter?" "I'm sorry," she replied, "It's just that my sales have been slipping, and my paychecks are much smaller than they used to be. If my pay decreases much further, I may lose my health benefits. My daughter is asthmatic, and she has been in and out of the hospital over the last few months." Jayla looked at Mary sympathetically and tried her best to console her. The next week, before the salespeople started coming into the office to pick from the pile, Jayla had some documents for Deon to sign.

When she arrived at his office, the door was slightly open. She peeked in and saw Deon and Greg going through the stack of clients. Jayla watched as Greg rifled through the pile and picked out files. "Thanks, Deon. These are the top clients for the week," Greg said.

"No problem, Greg," Deon responded "Anything for my favorite brother-in-law. Just keep up the good work." Jayla stood there, mouth open. She turned to walk back toward her desk. She could not believe what she just saw. The boss was giving Deon all the good clients, while the rest of the salespeople had no choice in which they were assigned. Jayla knew this favoritism was a serious conflict of interest. Then she thought of Mary and her situation. "What am I supposed to do?" Jayla wondered. "If I say something to Deon, he will give me a bad evaluation. If I say anything to Mia, I may get fired. And I definitely can't say anything to the other salespeople. There would be a riot." Saddened, she sat at her desk and wondered what to do.

Questions & Exercises

1. Discuss how this conflict of interest situation affects other salespeople, the organizational culture, and other stakeholders.
2. Describe the decision that Jayla must make. What are the potential ramifications of her choices?
3. Are there legal ramifications to this kind of behavior? If so, what are the potential consequences?

Paper For Above instruction

Conflict of interest scenarios such as the one faced by Jayla at Acme Incorporated highlight significant ethical dilemmas in the workplace that can adversely impact various stakeholders, organizational culture, and legal compliance. Understanding these implications is essential for promoting ethical integrity and fostering a transparent corporate environment.

Firstly, the conflict of interest involving Deon, Greg, and the favoritism in client assignment profoundly affects other salespeople. When certain employees receive preferential treatment, it creates an environment of unfairness and resentment among staff. Mary’s frustration about her declining sales and reduced pay underscores this point, as her perception of unfair distribution of clients and opportunities diminishes morale and job satisfaction. Such an environment discourages teamwork and erodes trust, potentially leading employees to question management’s integrity. Research demonstrates that perceived unfairness in workplace practices can result in decreased productivity, higher turnover rates, and reduced organizational commitment (Greenberg, 1990). Additionally, other stakeholders, such as investors and clients, may lose confidence in the company's leadership if favoritism and unethical practices become apparent, risking reputational damage and financial loss.

Secondly, Jayla faces a complex decision: whether to stay silent about the favoritism, confront her supervisor Deon, or report her concerns to higher management or human resources. The choice carries potential ramifications. If she remains silent, she perpetuates the unethical behavior, which could lead to continued unfair treatment and possible legal violations if favoritism breaches employment laws or industry regulations. Conversely, reporting the misconduct may result in retaliation or a negative performance review, jeopardizing her internship and future employment prospects. Ethical theories such as Kantian ethics emphasize the importance of duty and integrity, advocating that individuals should act according to moral principles rather than personal consequences (Kant, 1785). Meanwhile, utilitarian perspectives suggest that reporting unethical behavior, despite personal risks, promotes the greatest good for the organization and its stakeholders, including fairness for all employees.

Legal ramifications of such unethical conduct are significant. Discrimination, favoritism, and unequal treatment can breach employment laws and anti-discrimination statutes, potentially leading to lawsuits and financial penalties. If the favoritism results in discriminatory practices based on protected characteristics, the organization could be exposed to legal action under laws like Title VII of the Civil Rights Act (U.S. Equal Employment Opportunity Commission, 1964). Moreover, the falsification of client files or misallocation of resources could constitute fraud or breach of fiduciary duty, exposing the organization and individuals to criminal and civil liabilities.

Addressing and preventing conflict of interest issues require strong organizational policies and an ethical culture that encourages transparency and accountability. Implementing whistleblower protections and ethical training helps cultivate an environment where employees like Jayla feel safe to report misconduct without fear of retaliation (Near & Miceli, 1985). Furthermore, leadership commitment to fairness and integrity is crucial, ensuring that policies regarding client assignments and employee evaluations are objective and equitable, thereby fostering lasting organizational trust.

In conclusion, the ethical dilemma at Acme Incorporated emphasizes how conflicts of interest and favoritism can have far-reaching effects on employee morale, organizational integrity, stakeholder trust, and legal compliance. Addressing these issues proactively through ethical policies, open communication channels, and leadership accountability is essential for cultivating a fair and transparent workplace environment that benefits all stakeholders and sustains organizational success.

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