1. What facts would you want to know before making a judgment about
Watkins? What ethical issues does this situation raise? (4pts)
➢ Before judging Watkins, I want to know first if she was aware about the issues
looming Enron for a long period of time already. I also want to know if she did
something about the issue right after she knew about the malpractices in their
accounting division. Moreover, knowing how she was able to know about it
could be helpful as well, whether she knew it from the start or just knew it due
to relevant happenings. The ethical issues that this situation raised are abuse
of leadership in the top management and even in the lower managerial
positions, always resorting to questionable accounting practices, having
unrealistic targets, and conflicting goals within the organization.
2. Besides Kenneth Lay, who else might have had an interest in hearing from
Watkins? Who else might have had a right to be informed? Did Watkins
have a responsibility to anyone other than Lay? (5pts)
➢ The whole company would have an interest in hearing from Watkins. This
includes their stakeholders, especially their employees and investors as they
are the ones that are going to be affected directly with the repercussions of the
issue. Every stakeholder from the top manager, even to their lowest-ranked
employees have the right to be informed about what is happening to the
company. Watkins had a responsibility to everyone since she is the Vice
President of Enron. It won’t just be Lay that would be affected by the issue but
everyone in the company as well. She had the control over what is happening
and has the bird eye view of the entire situation, that’s why it was her duty and
responsibility to let everyone know that the company is going down.
3. Other than informing Lay, what other alternatives might have been open to
Watkins? (3pts)
➢ She could’ve talked first to the head of the accounting department and discuss
what could be done to discuss alternatives to fix the problem and prevent the
issue from becoming deeper and more chaotic. She could also have met with
the different managers of each department and discussed what is happening
to the company for them to be informed and ready. She could’ve also checked
with the employees in the accounting department if they were aware of what is
happening, if they were, in a way, coerced to do such mistakes, and if the
employees are willing to work things out in order for them to fix the mistakes
retrospectively and prospectively.
4. What might the consequences of each of these alternatives had been? (3pts)
➢ Meeting first with the head of the accounting department to discuss the issue
could’ve led to employee rage by the time they knew about the issue because
they would protest that they should have also know because it is also their right.
This would also be the case if she had gone for the second alternative, which
is to talk to the managers of each department. Checking in with the employees
in the accounting department may have led to having untrusting employees
because those who are innocent, if they feel that they are being generalized as
a part of the issue. There is also a risk that nothing would happen because the
employees may have just shut their mouth regarding the issue to not make
things worse than it is.
5. From this section of the memo, how would you characterize Watkins’
motivation? What factors seem to have motivated her to act? (5pts)
➢ For me, Watkins’ motivation was that she doesn’t want to be caught in the
middle of the issue. It is stated that she brought the issue to the attention of the
CEO when things are already getting out of hand. This makes me think that
she may have known the issue before and didn’t do anything about it that’s why
her motivation was self-serving. If it hadn’t been for the unrest of the
employees, investor concern, and being on the verge of being exposed to the
public, I think that she wouldn’t have blown the whistle to expose the company
and its wrongdoings.
6. If you were Ken Lay and had received the memo, what options for next steps
might you have perceived? Why might you have chosen one option over
another? (5pts)
➢ The options I would have perceived for the next step are: To talk with the
employees to let them know that the issue has already been brought to the
attention of the CEO and that the top management would take the necessary
steps to try to resolve the issue, to have a board meeting and try to decide
together what would the next step be to extinguish the fiery issue, or to release
a memo to the investors informing them about what is currently happing. I might
have chosen one option over another depending on the relevant factors
connected to a certain option. I would probably choose the option that would
best promote employee well-being and good investor relations as the company
has a duty to protect them and their investments. I would think that there is no
other way for me to stop the news from coming out so I’d just do and save what
I could still save for the company.
7. Do you think Watkins should have taken her concerns beyond Kenneth Lay
to outside legal authorities? (5pts)
➢ I don’t think so because for me, the ones that should know first about the matter
are those who are within the company. The issue should be raised first with the
board members, then the stakeholders and if no sound resolution could be
formulated, that is, I think, the time for Watkins to take her concerns to outside
legal authorities. I believe that company issues should be resolved first within
the company as to avoid misunderstandings and wasted efforts. Even though
this is a big issue, it is fitting for the internal departments in the company to
know first before it gets to the attention of the authorities because it is their right
to do so that’s why I think that taking her concerns to Kenneth Lay first was a
sound choice.