CSR AND ETHICS

CSR and Ethics



CSR and Ethics

Has the Chief Executive Kenneth Lay acted immorally? Justify your views with ethics and/or CSR theory.

Yes, the chief executive of Enron Corporation, Kenneth Lay, acted unethically and immorally. Kenneth Lay practiced unethical tactics with employees and the customers to make more and more money and in order to get monopoly of the market. Though he has done a successful job and grows the business which leads it to very high share price. Culture in any organization is determined by the following factors; history of organization, types of leadership, size of organization, technology in use, goals and objectives, environment as well as, people in the organization (Hatch & Cunliffe,2006,18-34).

Critical analysis of the organizational practices shows that the practices of Kenneth Lay led to the debacle of Enron Corporation. The collapse of Enron Corporation provides a case of organizations that have felled as a result of scandals by their leaders in the recent past. The manner in which a leader behaves during the conduct of the business has an impact as far as the organizational performance is concerned. A leader has the effect of developing either a good organizational culture that will lead to success or an unethical one that will contribute to organizational failure. Enron Corporation was established in 1985 and was very successful Energy Company in the United States. In the recent past, it was being ranked position 'seven' in the market capitalizations. It was a highly rated organization and acted as the United States' government adviser.

Many employees wished that they could work in this reputable company. It was guided by the principles of excellence, corporate responsibility as well as ethics. However, the crisis started when the organization was using questionable accounting practices in an effort to ensure that its credit rating maintained. The organizational culture was to blame for the debacle of Enron Corporation. It is thus important to define what an organizational culture entails before examining its effect on Enron debacle. Organization culture refers to the shared ideologies, beliefs, assumptions, attitudes, expectations and norms. Organizational culture enables managers to; support organizations' business strategy, make staffing decisions, set performance criteria, guide the nature of acceptable interpersonal relationships in organizations and select appropriate management styles. Organizational culture provides consistency to an organization by integrating diverse elements into a coherent set of beliefs, values, assumptions and consequent behaviours. At Enron High salaries and lavish perks -$100 notes left on employees' desks when the share price reached $50 - and a fleet of corporate jets - all were justified by Kenneth Lay, who wanted to pay people like entrepreneurs. The result was to push through bad deals such as the Indian power plant for bonuses, with no distinction between temporary value and long term value.

The new trend in the CSR practices of firms reflects a shift from quantity (degree) of CSR actions to quality of such efforts. Instead of maximizing the number of CSR issues addressed, firms are identifying key strategic issues that also ...