South-Western - Management  
Corporate Ethics: Right Makes Might
Topic Ethics and Social Responsibility
Key Words ethics, integrity
InfoTrac Reference A84666562
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News Story

The Enron collapse demonstrated the importance of having a corporate conscience and ethical climate. Not doing so will affect your business's bottom line and shareholder value.

Enron's Jeffrey Skilling and Kenneth Lay claimed they didn't know the details of the off-the-books partnerships that were used to hide debt. Enron had a code of ethics, but the people at the top set expectations that fueled unethical behavior.

A 2000 survey by the Ethics Resource Center found that 43% of respondents believed their supervisors don't set good examples of integrity. Other studies have shown that employees who perceive their companies to have a conscience possess a higher level of job satisfaction and feel more valued as workers. Also, they have found a strong connection between employee's perception of their leaders and their own ethical behavior.

There are many ways to encourage ethical behavior in a company. Some companies promote their ethical work environment as a plus when recruiting. Johnson & Johnson employees periodically survey and evaluate how well the company is adhering to its code of ethics. Including business ethics as part of employee performance reviews sends a clear message.

Questions
1.

Name several ways in which Enron encouraged unethical behavior within the company.

2.

According to this article, what should companies do to increase the probability that their employees will conduct business in an ethical manner? Can you think of other ways companies can enforce ethical codes?

Source Heesun Wee, "Corporate Ethics: Right Makes Might," Business Week Online, April 11, 2002.
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