APPLICATION EXERCISESCASE INCIDENT: ENRON, ETHICS, AND ORGANIZATIONAL CULTURE

QUESTIONS 1. Based on what you read in this chapter, summarize in one page or less how you would explain Enrons ethical meltdown. The organizational culture of Enron was ultimately to blame. As accounting tricks were implemented to show a favorable portfolio, the ethical practices slowly eroded away. Soon the culture of Enron was transformed and more aggressive and misleading business practices sprouted. They were reporting profits from partnerships that had not yet been realized in an effort to keep stock values up. As subordinates viewed the ethics of leadership deteriorate, it was not long before they followed suit. A company that had once been praised for its ethical culture, found itself with no ethical values at all. The leadership did not want to hurt the companys image; they felt a little deception now would be ok. They felt as if they were saving their organization from financial ruin. If investors got nervous they would sell their stock, when stock gets sold too much it lowers its value. That would also hurt their credit rating and in turn would trickle down to the organizations demise. Despite conflicts of interest, partnerships were made. Then by selling off the partnered companys assets, they were able to lie about their bottom line and claim it as profit. At first it was a short term fix to a long term goal of saving the company shame, and keep it from bankruptcy. 2. It is said that when one securities analyst tried to confront Enrons CEO about the firms unusual accounting statements, the CEO publicly used vulgar language to describe the analyst, and that Enron employees subsequently thought doing so was humorous. If true, what does that say about Enrons ethical culture? By the time Enron hit bottom there was a complete lack of ethics in their organizations culture. In the beginning they prided themselves on being an ethical company. In the end they had become so numb to their actions they lost sight of their core values totally. 3. This case and chapter both had something to say about how organizational culture influences ethical behavior. What role do you think culture played at Enron? Give five specific examples of things Enrons CEO could have done to create a healthy ethical culture. At the top of the list would have been to not create questionable accounting methods.

Then the whole conflict of interest situation. Andrew Fastow, Enrons ex CFO partnered with two companies that he either owned or was running. This violated Enrons own conflict of interest policies. Employees were forced to stretch the rules; eventually ethical boundaries were stretched, and then broken. By encouraging employees to push the envelope they soon lost sight of what was ethical. Enrons CEO should have pushed employees to stay within their own ethical boundaries. The CEO should have never resigned when financial troubles, unethical practices, and deception were brought to light. The CEO should have reinforced Enrons code of ethics which included respect, integrity, communication and excellence. Employees, stockholders, and creditors should have received all of the above. APPLICATION EXERCISESCASE: NEGOTIATING WITH THE WRITERS GUILD OF AMERICA Questions: 1. The producers said the WGA was not bargaining in good faith. What did they mean by that, and do you think the evidence is sufficient to support that claim? Bargaining in good faith means that both parties honestly communicate and negotiate to make a reasonable effort to arrive at a fair agreement. It would be very difficult to determine if the WGA was not bargaining in good faith without knowing additional facts and details regarding the negotiations and bargaining between both parties. 2. The WGA did eventually strike. What tactics could the producers have used to fight back once the strike began? What tactics do you think the WGA used? The producers could have threatened to hire writers to take the place of striking employees. While this course of action would be very difficult given the creative nature of this business, often the threat of hiring replacement workers helps the process move toward a labor settlement. The WGA in return could claim the producers have committed an unfair labor practice. The WGA could also play to the media to gain sympathy for their job action 3. This was a conflict between professional and creative people (the WGA) and TV and movie producers. Do you think the conflict was therefore different in any way than are the conflicts between, say, the Autoworkers or Teamsters unions against auto and trucking companies? Why? The producers could have threatened to hire writers to take the place of striking employees. While this course of action would be very difficult given the creative nature of this business, often the threat of hiring replacement workers helps the process move toward a labor settlement. The WGA in return could claim the producers have committed an unfair labor practice. The WGA could also play to the media to gain sympathy for their job action

4. What role (with examples) did negotiating skills seem to play in the WGA producers negotiations? Timing played a role as well as a marathon bargaining session which tends to make each side more flexible and come to an agreement. Also the introduction of the heads of Walt Disney and News Corp played a role in moving both parties toward settlement. APPLICATION CASE: THE NEW HEALTH AND SAFETY PROGRAM 1. Based upon your knowledge of health and safety matters and your actual observations of operations that are similar to ours make a list of the potential hazardous conditions employees and others face at LearnInMotion.com. Make specific recommendations to reduce the potential severity of the top five hazards. Tripping, ergonomic, and electrical hazards top the list (with several specific items in each). There are many techniques and products available to help reduce all these hazards. Safety procedures are also needed (not working on any electrical item such as computers while they are plugged in). 2. Would it be advisable for us to set up a procedure for screening out stress-prone or accident-prone individuals? Why or why not? If so, how should we screen them? There are a number of issues here. One likely question from students is whether accident-prone behavior can change with training or incentives. In most cases, training and incentives can resolve the problem. Some students may argue that screening-out employees who are accidentprone raises ethical issues. 3. If we do decide to screen them what are the legal implications? Can we do this legally? How? The paper should include insights gained from this paper and/or work experiences they have. Look for reasonableness and the likelihood of adoption in real life 4. What specific topics should be included in our health and safety training program? The long hours and high pressure need to be reduced, or at least offset in some ways. Look for creative ways to accomplish this. The Hotel Paris Case: http://doc.mbalib.com/view/144bf318c8ec45167ee09fc32b8eed83.html