Week Four Learning Outcomes OMM618: Human Resources Management (MFG1322B) This week students will:
1. Examine employee compensation factors, including direct financial payments and indirect payments.
2. Summarize the key attributes of a healthy ethical culture within an organization.
Readings Read the following chapters in: A Framework for Human Resource Management:
1. Chapter 7: Compensating Employees
2. Chapter 8: Ethics and Fair Treatment in Human Resource Management
Discussions
To participate in the following Discussion Forums, go to this week’s Discussion link in the left navigation:
1. Acme Manufacturing
Answer the questions to the case, “Salary Inequities at Acme Manufacturing,” at the end of Chapter 7. Include at least one outside source supporting your answers. Explain your answers in 200 words. Respond to at least two of your fellow students’ postings.
2. Ethics and Organizational Culture
Answer the questions to the case, “Enron, Ethics, and Organizational Culture,” at the end of Chapter 8. Include at least one outside source supporting your answers. Explain your answers in 200 words. Respond to at least two of your fellow students’ postings.
Assignments
To complete this assignment, go to this week’s Assignment link in the left navigation:
Incentive Plans
Research and discuss at least two different types of incentive plans discussed in the text. Highlight the possible advantages and disadvantages of each. Find at least two articles through ProQuest that discusses incentive payment plans. Summarize your findings in a 3-5 page paper. Be sure to properly cite your resources using APA style.
Week 2 in Review
An examination of Trilogy provided insight into the complexities of various approaches to recruitment — and the importance of incorporating recruitment into organizational strategies. From an HR perspective, the strategy involves many intra-related and inter-related aspects, such as job description, job analysis, recruitment methodologies, legal requirements, and a planned and cultivated organizational culture. It is all about Hiring Right! It is all about aligning organizational goals with individual goals to arrive at a place where work effort matches work productivity. Culture is the environment people work in, it’s the element that shapes your enjoyment, work relationship and work process. Culture is made up of values, beliefs, underlying assumptions, attitudes, and behaviors shared by a group of people (Heathfield, 2011). The employees at Trilogy all share similar interests and passions about their job, which means that working as a team would not be problematic. Trilogy has created an organizational culture that represents decision making, daily work practice, stories and legends.
Heathfield, S.M (2011) Culture: Your Environment for People at Work. Retrieved on June 29, 2011, from http://humanresources.about.com/od/organizationalculture/a/culture.htm
It is important to note that organizational culture should be developed through design, not by merely letting it happen. Trilogy is a company that recruits employees that are a cultural fit. Culture is the environment people work in, it’s the element that shapes your enjoyment, work relationship and work process. Culture is made up of values, beliefs, underlying assumptions, attitudes, and behaviors shared by a group of people (Heathfield, 2011). The employees at Trilogy all share similar interests and passions about their job, which means that working as a team would not be problematic. Trilogy has created an organizational culture that represents decision making, daily work practice, stories and legends. Heathfield, S.M (2011) Culture: Your Environment for People at Work. Retrieved on June 29, 2011, from http://humanresources.about.com/od/organizationalculture/a/culture.htm
Undoubtedly privacy concerns in any aspect of improvement must be addressed. But do not be so quick to discount the use of integrity and honesty testing. Julie Moreland (September 7, 2010; People Views), noted that the primary goals of using such tests are to identify counterproductive behaviors and attitudes of applicants prior to being hired. Morlan identified that one must first look at the policies that are in place in the organization and that conducting a predictive blind study allows one to determine if an honesty and integrity test can facilitate the prediction of counterproductive behaviors in the workplace. The following article will provide additional details on the topic. http://blog.peopleclues.com/index.php/steps-to-assessing-the-validity-of-integrity-and-honesty-testing-in-job-recruitment/
Week 3 Instructor Guidance Training and development are important to both the attainment of organizational strategies and the sustainability (and retention) of the employee. Ensuring training and development opportunities are fairly distributed among the workforce creates an environment of trust and further cultivates the organizational culture. It is helpful to separate the terms by defining them and understanding the influence such activities have on the organization. Training addresses knowledge, skills and abilities to enhance performance requirements currently expected of the employee to successfully accomplish their current duties. Development identifies future needs of the organization and appropriate supportive knowledge expected to address these needs. Development also identifies persons deemed appropriate to acquire this knowledge — and simultaneously provides lateral and vertical promotion opportunities that come with the added knowledge. There are many factors to consider when deciding how training and development will be employed:
1. What knowledge, skills and abilities (i.e., communication, empathy) must employees of your organization possess if they are to effectively contribute to a diverse and inclusive workplace?
2. What additional knowledge, skills and abilities (i.e., issue identification, group dynamics) must managers in your organization possess if they are to effectively recruit a diverse team and manage staff in an inclusive way?
3. What additional knowledge, skills and abilities (i.e., visioning, cross-cultural competence) must leaders in your organization possess if they are to role model diversity, ensure that your organization’s clients or customers are treated with respect, and chart the correct path for your organization’s future?
4. Which learning methods would be the most appropriate to employ, given the competencies you wish to support?
5. How can your organization frame training & development related to diversity so that it is, if at all possible, an ongoing activity, not restricted to isolated experiences in a classroom?
6. Who must you engage to lead the diversity training & development initiatives within your organization?
Source: http://www.shrm.org/hrdisciplines/Diversity/diversity_mgmt_plan/Pages/training.aspx Performance appraisal is that oft-dreaded task which manager’s are expected to complete that identifies the strengths, weakness, and accomplishments of subordinates. One wonders why this important component is so often run through with lack of focus, rendering many (if not most) appraisals meaningless. Performance planning allows for the identification of many aspects of organizational processes (training, development, reward, punishment, promotion, termination). Please review the following link for a Power Point that details performance planning (you may need to copy the URL into your address bar). Consider this information in the context of discussions and assignments. http://www.shrm.org/Education/hreducation/Documents/ Performance _Management_PPT_SL_Edit_BS.ppt
DISCUSSION ADDENDUM RELATED TO HR ISSUES: Family Medical Leave Updates
The EEOC has recently reported a significant upswing in lawsuits under the Family Medical Leave Act of 1993. The number of cases has recently spiked by about 25% over the same number filed 10 years ago. A brief synopsis of the FMLA and common misconceptions: 1. Under the FMLA, people can get up to 12 weeks of unpaid leave for post-pregnancy care, to care for a family member, or to attend to a personal health issue, above and beyond any medical benefits or accrued company leave time. 2. FMLA is not available to all employees in all companies. The company has to have 50 employees located within 75 miles of the company work site for its employees to be eligible. 3. Employees have to have been employed for at least 1 year, usually for at least 1250 hours, to be eligible. 4. Employees are eligible for 12 weeks FMLA leave in any calendar year. 5. Employees have the right to return to the same or equivalent employment at the end of FMLA leave, with ONE KEY EXCEPTION: Highly paid, “key” employees may not be denied FMLA leave, but the company is within their rights not to reinstate highly paid, “key” employees who take FMLA leave to their former job or any job. 6. If employees have indicated that they do not intend to return, or would have otherwise been laid off, terminated, or downsized, or are unable to return after 12 weeks, or refuse to provide company-requested medical or personal documentations, the company may rightfully refuse to reinstate them. Most of the current lawsuits claim that litigants were discriminated against or retaliated against for taking time off to handle the care-giving of a child, which is covered by the FMLA, or to care for a relative with a disability, which is covered by the Americans with Disabilities Act. Two key areas of defense for employers fighting these cases: (1) If the employee is designated as a “key” employee, the company is not obliged to return the employee to their current position or any position. Let’s say that Jane Doe is 29 years old and VP of a company with 50 employees. She becomes pregnant and gives birth. She takes six weeks of paid time under company policy, four weeks of paid vacation time, and then desires to take 12 more weeks because of difficulties with the child’s health. The company has designated her as a key employee. Under the FMLA, the company is not obliged to hold her vice presidency for what amounts to about a half year. It is unclear whether the ADA would protect her because the child probably would not qualify under disability rules. (2) It is unclear whether a company may avoid the potential FMLA issue entirely by refusing to hire persons with small children or who are known to be caring for disabled relatives. Many companies currently in litigation have claimed that they should not be liable for not hiring persons with high likelihood of going on FMLA or ADA leave time because it makes them the unwilling provider of company benefits for the unproductive. There does not appear to be any Title VII violations related to refusing to hire persons with small children or who are known to be caring for disabled relatives. Where companies have gotten into trouble is when they have refused to hire female caregivers, instead preferring male non-caregivers. Hiring female non-caregivers over female caregivers, however, does not appear to be a violation of FMLA, ADA, or Title VII. This will be an area of increasing interest as more employees end up caring for children, grandchildren, or parents as the workforce ages, and may be an interesting topic for your students.
WEEK 4 STUDENT RESPONSES DISCUSSION 1
| Juanita W |
6/19/2013 1:02:35 PM |
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Answer the questions to the case, “Salary Inequities at Acme Manufacturing,” at the end of Chapter 7. Include at least one outside source supporting your answers.
APPLICATION EXERCISES Case Incident: Salary Inequities at Acme Manufacturing
Joe Black was trying to figure out what to do about a salary problem he had in his plant. Black recently took over as president of Acme Manufacturing. The founder, Bill George, had been president for 35 years. The company was family owned and located in a small eastern Arkansas town. It had approximately 250 employees and was the largest employer in the community. Black was a member of the family that owned Acme, but he had never worked for the company prior to becoming president. He had an MBA and a law degree, plus 15 years of management experience with a large manufacturing organization, where he was senior vice president for human resources when he moved to Acme.
A short time after joining Acme, Black started to notice that there was considerable inequity in the pay structure for salaried employees. A discussion with the human resources director led him to believe that salaried employees’ pay was very much a matter of individual bargaining with the past president. Hourly paid factory employees were not part of the problem because they were unionized with wages set by collective bargaining. An examination of the salaried payroll showed that there were 25 employees, ranging in pay from that of the president to that of the receptionist. A closer examination showed that 14 of the salaried employees were female. Three of these were frontline factory supervisors and one was the HR director. The other 10 were nonmanagement.
This examination also showed that the human resources director seemed underpaid, and that the three female supervisors were paid somewhat less than were any of the male supervisors. However, there were no similar supervisory jobs with both male and female job incumbents. When asked, the HR director said she thought the female supervisors may have been paid at a lower rate mainly because they were women, and perhaps Bill George did not think that women needed as much money because they had working husbands. However, she added that they may have been paid less because they supervised less-skilled employees than did male supervisors. Black was not sure that this was true.
The company from which Black had moved had a job evaluation system. Although he was thoroughly familiar and capable with this compensation tool, Black did not have time to do a job evaluation at Acme. Therefore, he decided to hire a compensation consultant from a nearby university to help him. Together they decided that all 25 salaried jobs should be in the job evaluation cluster, that they should use a ranking method, and that the job descriptions recently completed by the HR director were current and usable.
The job evaluation showed that there was no evidence of serious inequities or discrimination in the nonmanagement jobs. However, the HR director and the three female supervisors were underpaid relative to comparable male salaried employees.
Black was not sure what to do. He knew that if the underpaid female supervisors took the case to the local EEOC office, the company could be found guilty of sex discrimination and then have to pay back wages. He was afraid that if he gave these women an immediate salary increase large enough to bring them up to where they should be, the male supervisors would be upset, and the female supervisors might also want back pay. The HR director told Black that the female supervisors had never complained about pay differences, and they probably did not know the law to any extent.
The HR director agreed to take a sizable salary increase with no back pay, solving this part of the problem. Black believed he had four choices relative to the female supervisors:
1. To do nothing
2. To gradually increase the female supervisors’ salaries
3. To increase their salaries immediately
4. To call the three supervisors into his office, discuss the situation with them, and jointly decide what to do
QUESTIONS
1. What would you do if you were Black? Why?
If I were Black I would go with option #4. Things need to change, that is obvious. However, if all three supervisors and Black got together and discussed the issue and came to a joint decision, nobody would feel shorted. Let them decide on whether getting it one lump sum or to gradually increase their pay.
2. How do you think the company got into this situation in the first place?
I think that when the company first opened it was small and only men worked there since it opened 35 years ago. Then, when they started hiring women to work they had little to no experience and so were paid less. Of course this happened all before the equal pay rights were put into effect. Obviously Bill George just overlooked the pay raises for women over the 35 years that he ran the company. It may have just slipped his mind to update the pay grades.
3. Why would you suggest Black pursue the alternative you suggested?
Most companies pay outside companies to make out the paychecks so the males would not know about the increase unless they were told about it, for one. Many companies today have direct deposit which would also help hide the fact from the other employees and supervisors. Meeting with the 3 women would let them know that he was thinking of the “glass ceiling” within this company. It also allows the women to speak freely of their needs and for Black to hear how he can better assist them.
Dessler, Gary. Framework for Human Resource Management, A, 6/e Vitalsource eBook for Ashford University. Pearson Learning Solutions.
Jackson, Nancy Mann (June 22, 2010). Break your own glass ceiling. Researched June 19, 2013 from http://www.glassdoor.com/blog/break-glass-ceiling/
Nita Wood
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Week 4 Discussion 1 – David Teeter |
David T |
6/19/2013 8:14:07 PM |
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1. What would you do if you were Black? Why?
Out of the four options which Black has, I would increase the supervisors salaries immediately. There are three reasons for doing so. (1) Not increasing the salaries would be in violation of the 1938 Fair Labor Standard Act and the 1963 Equal Pay Act. The 1938 Equal pay Act address the equal pay. The 1963 Equal Pay Act “states that employees of one sex may not be paid wages at a rate lower than that paid to employees of the opposite sex for roughly equivalent work” (Dessler, 2011, p. 202). (2) Increasing the salaries of the supervisors is the ethical action to take. “…fair treatment reflects concrete actions such as “employees are trusted,” “employees are treated with respect,” and “employees are treated fairly”” (Dessler, 2011, p. 236). (3) It is the right thing to do. Just because Bill George used different standards to pay the employee, does not make what actions he took to be fair. “Doing the right thing” will start repairing the damage which Bill George started. As stated in reason two, the supervisors will feel appreciated.
2. How do you think the company got into this situation in the first place?
Bill George worked with each employee on pay. “… salaried employees’ pay was very much a matter of individual bargaining with the past president” (Dessler, 2011, p. 230). Also, “the HR director said she thought the female supervisors may have been paid at a lower rate mainly because they were women, and perhaps Bill George did not think that women needed as much money because they had working husbands” (Dessler, 2011, p. 230). This could also be stereotyping the role of women in the work place which, in some organizations, are still in place.
3. Why would you suggest Black pursue the alternative you suggested?
As stated in reason two and three of question 1, it is because it is the ethical and right thing to do. There is a chance the supervisors could demand back pay or file a lawsuit against Acme for the difference in pay. Acme will have to deal with what “might happen” if that is the case. The organization was in violation of the two federal laws and will need to “own up to it” and take responsibility for their actions or lack of actions.
One of the steps Black will need to take in the future is to accomplish a wage assessment for Acme. A wage assessment needs to be completed at this point to insure the wages are competitive for the industry and demographics. After the assessment is completed the a “benchmark” will be established to guide the organizations wages. The federal Troubled Asset Relief Program requires and initial assessment. Joanne Sammer, in her article, Measure Compensation’s Impact, states “Executives found the assessments so useful that they still conduct and review them, even though doing so is no longer required” (Sammer, 2012, para. 13).
David Teeter
Dessler, G. (2011). A framework for human resource management (sixth edition). Upper Saddle River, NJ, Pearson Education, Inc.
Sammer, J. (2012). Measure compensation’s impact. HRMagazine, 57(9), 85-86, 88, 90. Retrieved from http://search.proquest.com/docview/1039493629?accountid=32521
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OMM 618 week 4 Discussions
Discussion 1: Case Incident: Salary Inequities at Acme Manufacturing
1. If I were Black, I would have held a meeting with the 3 supervisors and would have convinced them to a restructuring of the salaries and further exchanged thoughts and concrete suggestions regarding this matter. This issue cannot be neglected despite the women not complaining about it, because it can create legal problems for the company.
He might consider a justifiable pay scale, or other sound skill related differential deserving within a group as a whole. I would also take the second choice under consideration as well, because that way unintentional sex discrimination would be reduced in such a way that women may not even question further their previous low wages. However, the company is violating the equal pay act, 1963; wherein there is sex discrimination made by giving a reduced comparative salary to the female employees (EEOC Small Business, 2013). Hence, Black should gradually increase the salary of the female supervisors, as this would potentially solve his issue of the female employees reporting to the EEOC for sex discrimination.
1. The company has gotten into this situation due to the following probable reasons:
· The major reason was not following the equal pay act, 1963. Hence, the discrimination pay demonstrated between male and female employees for the same work (EEOC Small Business, 2013)
· Payment of salaries was not made in accordance to their competencies. The skill set of the personnel was not given importance or considered in the company (Dessler, 2011).
· Current laws are not strong enough. The Equal Pay Act and Title VII of the Civil Rights Act are important laws, but they are hard to enforce, and further, these legal cases are extremely difficult to prove and win.
1. Ethical practices are required in the business to boost the business through motivated employees with high levels of energy and none of this is possible if the company treats their employees unfairly (Deb, 2006).
References
EEOC Small Business. (2013). Retrieved from U.S. Equal Employment Opportunity
Commission: http://www.eeoc.gov/employers/
Deb, T. (2006). Strategic Approach to Human Resource Management Concept, Tools And
Application. Atlantic Publishers.
Dessler, G. (2011). A Framework for Human Resource Management (6th ed.) New York:
Pearson.
Discussion 2: Enron, Ethics, and Organizational Culture
1. Ethics refers to “the principles of conduct governing an individual or a group; specifically, the standards you use to decide what your conduct should be,” according to Dessler (Dessler, 2011). Secondly ethical decisions always involve questions or morality (Dessler, 2011).
Anyone that had anything to do with the meltdown at Enron had no ethical standards. Enron had a lack of accounting transparency, which enabled the company’s managers to make their financials look much better than they actually were. Kenneth Lay got rid of several million shares of Enron stock and made over a billion dollars (Dugas, 2002). This was done while the Enron employees lost their jobs, the money in their pension funds as well as was any money they had invested into the company. Not only did Enron damage the lives of their employees, but they also affected the customers that were buying their products, and the outside investors who lost a significant amount of their money. This all happened because of the unethical behavior and greed of those individuals involved in the meltdown (Dugas, 2002).
1. The use of vulgar language with journalist illustrated the lowered moral and ethical standards of the CEO. It also reflected on the absence of professionalism from the CEO, as he quickly resorted to abusive behavior to avoid the questions of journalist. The consequent reaction of company’s employees demonstrates the willingness of the employees to appreciate the unethical and immoral behavior of their CEO that defies the societal norms. The organizational culture was evidently corrupt and beyond repair.
1. The ethics literature is replete with suggestions, including selection and hiring of ethically-oriented employee, establishing codes of ethics, promoting an ethical culture, developing employees internally, and taking a stewardship perspective (Erwin, 2011)
References
Dessler, G. (2011). A Framework for Human Resource Management (6th ed.) New York:
Pearson.
Dugas, C. (2002). Employees’ faith in enron cost them life savings. USA Today, Retrieved from
http://usatoday30.usatoday.com/money/covers/2002-01-21-bcovmon.htm
Erwin, P. M. (2011). Corporate codes of conduct: The effects of code content and quality on
ethical performance. Journal of Business Ethics, 99(4), 535-548.
WEEK 4 DISCUSSION 2—Student Responses
| Juanita Wood |
6/19/2013 10:51:56 PM |
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APPLICATION EXERCISES Case 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 Enron’s 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 company’s 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 company’s 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 Enron’s CEO about the firm’s 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 Enron’s 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 Enron’s 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, Enron’s ex CFO partnered with two companies that he either owned or was running. This violated Enron’s 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. Enron’s 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 Enron’s code of ethics which included “respect, integrity, communication and excellence”. Employees, stockholders, and creditors should have received all of the above.
Resources:
Dessler, Gary. Framework for Human Resource Management, A, 6/e Vitalsource eBook for Ashford University. Pearson Learning Solutions.
Sims, R. R., & Brinkmann, J. (2003). Enron ethics (or: Culture matters more than codes). Journal of Business Ethics, 45(3), 243-256. Retrieved from http://search.proquest.com/docview/198149843?accountid=32521
Nita Wood
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According to an article by Schuler, (2011) “Enron’s corporate culture also seemed to embrace a value – massive size – that is not so much a value as it is a strategy through which to achieve a larger mission”. It used its large size to “bully” or intimidate those that went against them (Schuler, 2011). Their cooperate culture was not well grounded and the valued they say their stood for were not upheld (Schuler, 2011).Schuler, A.J. (2011). Does corporate culture matter. Retrieved from http://www.schulersolutions.com/enron_s_corporate_culture.html Your thoughts?
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1. Based on what you read in this chapter, summarize in one page or less how you would explain Enron’s ethical meltdown.
The ethical meltdown within Enron took place on a number of different levels. Not only were the companies executives to blame for the fraud, but several lower level staff were to as well. The problem which led to an ethical meltdown was the fact that no one stepped to the plate to blow the whistle on the fraudulent action which were taking place within Enron. Lower level staff may have seen documents or emails which would have led them to believe something illegal was taking place; however, no one stepped forward. Likewise, the executive staff were privy to day today actions which should have sent up red flags, however, none of them step forward to report any wrongdoing. “Ethics refers to “the principles of conduct governing an individual or a group, and specifically to the standards that you use to decide what your conduct should be”(Dessler, 2011, P. 235) .Some may say that the lower level staff felt uncomfortable being the one to step forward because they would potentially be blowing the whistle on the their superiors.
2. It is said that when one securities analyst tried to confront Enron’s CEO about the firm’s 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 Enron’s ethical culture?
Apparently, under the direction of Jeffery Skilling and Kenneth Lay the culture at Enron was one that promoted unethical behavior. It appears that both executives and staff alike felt as though they we justified in committing fraud and misleading people. During the California energy crisis Enron traders were caught on tape laughing about their company’s manipulation of the California energy market, which caused prices to soar and blackout to occur (Roberts,2007, P. 5). This again, proved that employees at Enron were aware of the manipulation, but it appears they were all benefiting so no one stopped it. Their ethical culture obviously was widespread throughout the whole company.
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 Enron’s CEO could have done to create a healthy ethical culture.
The culture which is established in a company is what determines in the end whether ethical standards are observed or not. The culture at Enron allowed for a total and complete disregard to following the rule or empathizing with their customers. Executives could have promoted healthy work habits which could have encouraged holding each other accountable. This could have assisted people in being willing to come forward and tell on others. They could have also encouraged a customer first mentality. This would have encouraged workers to always think of serving the customer. Another item could have been to introduce a policy of ethical standards. This would have provided workers with the information needed to know what they should do if they witness impropriety. Lastly, they could have fired people as an example.
Dessler, G. (2011). A Framework for Human Resource Management (6th ed.). Upper Saddle River, NJ: Prentice Hall.
Roberts, J. (2007, Dec.). Enron traders caught on tape. CBS Evening News. Retrieved on May, 8, 2013, from http://www.cbsnews.com/8301
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Based on what you read in this chapter, summarize in one page or less how you would explain Enron’s ethical meltdown.
I believe that the main cause of the meltdown was because of the management. Root causes lie in leadership and the control environment. Ethics, ambition, and complexity fall right after (Makosz, 2002).
Ethically they tried to make things disappear through their bankers and accountants. They tried to legalize all of their non-performing assets, and other illegal part taking, they eventually were caught (Makosz, 2002). Ambition wise their goal was to be number one on the Fortune 500 list. 3500 SPE’s (Synchronous Payload Envelope) were created, there was no real picture set, and they were breaking all the accounting rules (Makosz, 2002). As for complexity, they had guarantees for their stocks. While in actuality, it was plummeting the entire time. In addition, the collaborators who aided and bedded including the accountants, bankers, lawyers, stock brokers, directors, etc. They kept shifting the responsibility whenever approached (Makosz, 2002).
It is said that when one securities analyst tried to confront Enron’s CEO about the firm’s 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 Enron’s ethical culture?
This just shows that there was no room for whistle blowers because people were scared to talk. It was out of control and this just shows a failure to take anything seriously because the even the corporate culture was already compromised. This would make ethical people to stay quiet, because they saw that the important hire ups were the ones committing the violations in the first place (A. J. Schuler, na).
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?
First, Enron was extremely arrogant and not well grounded at all. Their culture showed values of high-risk taking, aggressive growth and entrepreneurial creativity. Though these attributes are considered positive, they were still not balanced with attention to corporate integrity (A. J. Schuler, na).
Give five specific examples of things Enron’s CEO could have done to create a healthy ethical culture.
The five steps needed to incorporate the most healthy ethical culture environment is through correct legal hiring, good leadership, proper training, geographic consistency, and having periodic reminders (Rogers Corporation, by juliann, 2011).
Hiring is top priority and companies need to have a filter process that chooses the right candidate and meets the ethical standards of the company. Leadership initiates the process for a company does their business (Rogers Corporation, by juliann, 2011). This means, that they are responsible for prioritizing values and integrity as their initial goal. In addition, they need to be consistent and fair at all times in all approaches when trying to handle any violation of ethics, because it is visible and people will talk (Rogers Corporation, by juliann, 2011). Training is important because it helps the employer stay on top of the employees so that that they understand that the code of conduct remains. It is to remind them of their responsibility as an employee that there are boundaries concerning how to except gifts and other relationship issues, and should be done annually. This is also a time for anyone who wants to speak up about an issue, if not there should be set hotlines so they are able too (Rogers Corporation, by juliann, 2011). Ethical culture is different for all countries and a company needs to make sure that if they are growing in that direction, that they inform and educate their employees on how adjust. It is all about doing the right thing and protecting the company as well as the employees (Rogers Corporation, by juliann, 2011). Lastly, giving periodic reminders is essential. Ethics training is something that has to be consistent. The more they give opportunities for people to open up about things the better. Training sessions do just that. It helps people to open up more and let the managers know if they feel something is not right. Leaders cannot be everywhere all the time (Rogers Corporation, by juliann, 2011).
Jen
References
A. J. Schuler, P. D. (na). Does Corporate Culture Matter?:The Case of Enron. Retrieved June 20, 2013, from www.schulersolutions.com: http://www.schulersolutions.com/enron_s_corporate_culture.html
Makosz, P. (2002). Enron & co – ethics meltdown. Retrieved June 20, 2013, from www.csa-pdk.com: http://www.csa-pdk.com/frame/07current/07current18/07current18.pdf
Rogers Corporation, by juliann. (2011, August 2). 5 Steps To Buliding An ethical Culture. Retrieved June 20, 2013, from http://blog.rogerscorp.com/2011/08/02/5-steps-to-building-an-ethical-culture/
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Members of Enron may have been concerned with being and maintaining ethical face in the beginning but as time went on those practices began to shift in another direction. Enron’s rise began with its success as a successful energy trading organization that ventured into the internalization of market mechanisms as well as helping to transform disparate markets into trading platforms and connecting inefficient trading centers (Kobrak, 2009). With its new found success at such a rapid pace, Enron seems to have found itself in a position that required it to remain a level above its competitors in order to keep its investor and other business prospects happy. Salter (2008) “believes that Enron’s managers crossed the an ethical Rubicon in 1997 when they began papering over profit and cash warning signs that were springing up in new and old businesses” (cited in Kobrak, 2009, p.174). In light of everything that was going on everyone continued to perform as though nothing out of the ordinary was occurring. This type of “head in the clouds” behavior with no one speaking out only encouraged the melting pot of unethical behavior.
If true, the CEO demonstrated a behavior that suggested the culture of the organization was one that would follow in the footsteps of it leaders despite the potential consequences. As suggested by Dessler (2011) employees tend to model the behavior of their supervisors.
Enron’s culture dictated a lot of the unethical behavior displayed by its high ranking employees to its lower level employees. To start, the board of directors could have been more involved by ensuring that certain laws and regulations were being adhered to by bringing in outside resources to handle the company’s accounting and auditing needs since it was growing at such a rapid pace. Supervisors should have conducted random evaluations of their staff and their accounts. Employees should have been required to take part in mandatory continuous education courses. Issues should have been addressed when the first presented instead of being pushed under the rug. And most important, the leaders should have lead by ethical example.
Dessler, G. Framework for Human Resource Management, A, 6/e Vitalsource eBook for Ashford University (1st ed). Pearson Learning Solutions
Kobrak, C. (2009). Innovation corrupted: The origins and legacy of enron’s collapse. Business History Review, 83(1), 173-177. Retrieved from http://search.proquest.com/docview/274385744?accountid=32521 |
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