hrm ethics enron

Shantel Taylor MGNT 4165 Enron: The Smartest Guys in the Room Discussion Questions

1. After watching the movie, do you agree that Jeff Skilling and Ken Lay were the “smartest guys in the room” or would it depend on the room? Although Jeff Skilling and Ken Lay were very clever in the way that they orchestrated this scandal and were able to fool so many people for so long, I would not agree that they are the smartest guys in the room; instead I would agree that they are the sneakiest and most unethical.

2. Skilling emphasized in his testimony before Congress that he was only acting in the interests of the shareholders. Do you agree? I would agree that Skilling was acting in the interests of the shareholders in a short-term sense because he was interested in the bottom line and the peak in the market as far as their company was concerned. Obviously Skilling would not be able to keep up his façade forever, so the long-term damage and destruction of the company name was not in the interest of its shareholders.

3. Are there other people whose interests should Skilling also have been protecting? Other than the company’s shareholders, Skilling should also have been protecting the interests of its stakeholders (who we’ve learned to be anyone affiliated with the company and that the company can affect not just the people who invest into the company).

4. What message does the movie deliver regarding regulation versus “free markets”? Do you think this message is appropriate? This movie delivers a message in support of the “magic of the market place”. The movie mentions several times that Ken Lay aggressively advocated for deregulation and pushed for free markets. I do think that this message is an appropriate one because it is a message that a lot of Americans would agree with, however I do feel that the context in which the representatives at Enron twisted this message to in a way be an excuse for what they had done was not appropriate.

5. According to the movie, Enron emphasized a “rank and yank” model of employee evaluation. Explain the model and discuss whether this is a reasonable approach for a successful organization. The “rank and yank” model of employee evaluation emphasized by Enron is actual referring to the alternation ranking employee appraisal method. This model ranks employees from best to worst and then alternates between highest and lowest measured employees until all employees have been rated. This is approach is not a very reasonable approach method for a successful organization because of the insignificant difference between

the lowest ranked or the “yanked” employees and the higher ranking ones. In addition, the cost of a new hire as a replacement to the “yanked” and training them will make no difference for the company.

6. Do you think you would be tempted to follow along if the leadership at your company had the same mentality as the leadership at Enron? If the leadership at my company was the same as that of Enron’s I would definitely be a whistleblower like Sharon who went against Enron and not go along with what was going on. Although it would be very tempting to act unethical because of the boss’s influence and would be very intimidating because I could lose my job for going against what the company wanted, I know my values and beliefs of what is acceptable and unacceptable behavior.

7. After watching the movie, whose behavior was the worst – Ken Lay, Jeff Skilling, or Andy Fastow? Who received the harshest punishment? Ken Lay, Jeff Skilling, and Andy Fastow were all equally unethical in their behavior and decision making. No unethical decision outweighs another. Ken Lay received the harshest punishment.

8. How did Enron’s executives use Arthur Andersen, Vinson and Elkins, and Wall Street as a defense for their actions? Note that, of these organizations, only Arthur Andersen was put out of business in the post-Enron period. Why was the accounting firm held to an apparently higher standard? Is this appropriate? Why or why not? The mark-to-market profits that were actually disguised loses were how Enron used the above agencies to cover their scandals. The accounting firm was held to an apparently higher standard, because they have certified knowledge of the illegal activities that were being covered in the financial documents of the company also because they were responsible for shredding the financial documents and it is appropriate to hold them to a higher standard because they are who people entrust to interpret what is going on with every transaction and communicate that to the public.