Corporate Social Responsibility:
The Responsibility of Enron’s
Management to its Employees
Chris Biele
Section # 3 Row # 2
Corporate Social Responsibility
Corporate social responsibility is the corporate world’s duty to act in a moral
manner and assist the government in its civic duty. There are many components to this
but the main goal is to improve the quality of life of the local community. Companies
must choose a way in which to do this which may include giving portions of profits to
charities…which many do choose, but there are many other ways.
Some companies realize that their employees, stockholders, and customers make
up the surrounding community and work to help the less fortunate and underprivileged
that belong to their same community. Corporations serve their customers to make profit
for their shareholders through the hard work of their employees. This model of
dominates most of society, but unfortunately leaves many out of the picture. The social
responsibility or corporations includes ethical decisions to assist communities with
scholarships, sponsoring events which benefit the poor, the hungry or the sick, and in
times of local disaster can assist with recovery/reconstruction.
In addition to the philanthropic aspect of corporate social responsibility, there is
the ethical responsibility it owes the public. Whether you are an investor looking to buy
stock, or unemployed with a job offer at a company, you would like the knowledge that
the company you are dealing with is honest. Honesty in financial reports, fair treatment
of employees, truthful transactions with clients has become expected of corporations
today, but has recently been compromised and must now be under close scrutiny. This
definition is a summary of a report published by the Conference Board of Canada.
In My Opinion…
I believe that the definition given above is an adequate and accurate depiction of
how corporations need to be socially responsibly and what they need to do to accomplish
this. It outlines what has been done in the past and what continues to need work. If more
companies operated using its guidelines, it would be a much better world.
Corporate social responsibility should be just as important to corporations, or
even more so, than profits. A corporation’s main goal is to be profitable and it does this
by operating as productive as possible. Now, what do companies do with these profits?
Upper management decides this and it is usually the employees that reap the benefits. I
believe that corporations can and should do more to help with their communities. I like
to think of it as “profit-sharing” with the community. Every dollar that corporations
donate to their communities to help the poor, hungry, disabled, sick, and homeless is a
profit for the community…and the community is much more important than any
corporation. Including the entire community in the success of a local corporation
is crucial to the happiness and total success of that community. Corporations
need to work harder to share the wealth as shortcomings in society are evident.
Corporate social responsibility, as stated above, also includes an ethical
side. This dimension is just as important as charity. The Enron scandal is the
perfect model of how not to behave ethically as a corporation. Officials
blatantly misled employees, stockholders, and clients into believing they were a
much more profitable company. This type of behavior is unacceptable. Stock
traders making purchasing decisions, employees making reti rement decisions,
and unemployed searching for jobs all rely on accurate information regarding
corporations. Without this type of information, they would be making these
important decisions blindly. Or even worse, with fraudulent information they
could be making these decisions to their disadvantage, as in the Enron situation.
Therefore, honesty to the community is yet another ethical aspect of which
corporations are socially responsible for.
Another aspect of corporate social responsibility that the d efinition does
not cover is the environment. Corporations and communities both share the same
environment and must protect it for generations to come. Communities do this
through recycling, buying cleaner cars, recycled paper, etc. Corporations must
also do their part to help keep air pollution down, waters clean, and not
contaminate soil.
1. “Jobless in a Flash, Enron's Ex-Workers Are Now Stunned, Bitter and Ashamed”
This article outlines how life was at Enron before the huge scandal
became public. Enrons’s employees were just like any other’s…possibly even
happier. Employees were incredibly happy with the way they were treated, with
their cubicle-less offices and nice retirement plans. It was everything anyone
could have hoped for. Employees were encouraged to think freely, come up with
new ideas, and speak their mind. Lower level employees were given huge
responsibilities in multi-mullion dollar deals. There were many perks such as
laundry, car washing, and babysitting services which drew empl oyees to Enron.
Employees were issued laptops and palm pilots to assist in their work. Flexible
hours were available as long as people got their work done on time. Life was
good for an Enron employee.
The post-scandal picture is very different. It includes college graduates
throwing pink-slip parties, printing scores of resumes hoping for a break, and,
worst of all, ex-employees ashamed that they had worked for Enron. Some
optimists look at the experience as a positive one for themselves as they had
gained experience and feel they will be back at work soon. But for the most part,
Enron crushed the lives of thousands by completely disregarding their corporate
social responsibilities.
2. Enron Official Warned Company About Partnerships as Early as '99
Enron officials apparently knew about the illegal operations of the
company as early as 1999. This is what Vince Kaminski, a top ex-Enron riskmanagement official, states. He claimed to have had knowledge about Enron’s
partnerships that were simply “terminally stupid” and “improper” and to have had
approached many top Enron officials with the information. What did these officials do
with this information? Nothing. Not only did they do nothing, but they took Kaminski’s
research team off important assignments and disallowed their access to sensitive financial
documents.
Dr. Kaminski was described to be “brilliant”, “honorable” and “honest” by a
coworker and would not budge when urged by Enron directors to forget about the
situation. He told management that he would not “sign-off” on the partnership deals that
misled the public by altering earnings numbers. It was not morally right and did not
follow any corporation’s social responsibility. There was little that Dr. Kaminski could
do to help the company than he had not already done. The directors just did not see it
from his point of view, the morally right point of view and instead made a grave error
that cost billions of dollars and thousands of jobs.
3. Workers Say Enron Had Them Pose As Energy Traders for Analysts' Visit
As stated above, one dimension of corporate social responsibility includes ethical
decisions. The biggest of these is honesty. With hindsight vision being 20/20, we all
know now that Enron is not a trustworthy corporation. This article describes an incident
in which 150 Wall Street writers and stock raters were touring the Houston facility and
were blatantly misled by Enron management. The managers made employees move to a
floor which had been vacant and pose as energy traders until the Wall Street people had
left. The people had to bring personal items such as pictures and papers they were
working on. While the tours came through they were to type on the computer or pretend
to talk on the phone so it looked as if work was getting done. The office they were in did
not even have all working computers or phones. It almost sounds like a scene out of a
movie, but this really happened and Enron persisted in misleading its stockholders,
clients, and employees. Enron had absolutely no respect for its corporate social
responsibility.
4. Pension Allocations Are Adjusted After Fallout From Enron Debacle
The Enron case has not only affected those close to the company, but has affected
the entire corporate world in one way or another. This article outlines the unrest that
employees of companies across the country feel and what they are doing about it.
Everyone knows that the biggest problem employees faced was that most of their
retirement money was in Enron stock, which has fallen off its high from $90 to $0.50!
Employees of other companies are scrambling to prevent this from happening to them
and the answer they come up with is simply to diversify their 401Ks. Unfortunately, like
Enron, many companies use company stock to match contributions to the 401Ks and this
stock has limitations on when it can be sold. Congress is also holding hearings on
whether to take legislative action to secure employees retirement funds, but much is yet
to be determined. The entire fiasco could have, and should have, been avoided if Enron’s
directors recognized their responsibility to be ethical and honest.
5. Close Ties Between Auditors, Clients Raise Questions
This article deals with the cause of the Enron failure and discusses ways into
which the auditing system can be improved. The auditing profession used to be a
respected and revered profession, but now has been tainted. Many believe the biggest
problem was that Enron’s auditors got too close to the corporation through non-auditing
services such as consulting. This puts pressure on the auditors to “play with the
numbers” to make their client happy. This kind of relationship was proven to be a bad
one by the recent events involving Arthur Anderson and Enron. Auditors are around to
protect the public, not to make their clients happy. The problem can best be described in
one line by Barbara Ley Toffler, a social psychologist who founded Arthur Andersen's
ethics consulting branch, “The whole idea was: Don't upset the client, keep the client
happy.”
6. Enron's Acting CEO Outlines Plan to Demoralized Workers
Acting CEO of Enron, Stephen F. Cooper, has begun to turn the company around
and in doing so is following the corporate social responsibilities defined earlier. He
recently held a conference with most of the current Enron employees and gave them the
flat out truth. He outlined a restructuring plan that paved the way for a smaller, more
specialized Enron. With this restructuring would come more job cuts, but only what was
necessary. The company is about $40 billion in debt and he admits the stock will soon
become worthless. With all of this bad news being delivered, it is somewhat ironic that
Enron has just begun to follow their social responsibility as a corporation. It may not be
able to give to the community through monetary donations, but it is for once being
completely honest with its employees, and the public.
Sources
Associated Press, "Close Ties Between Auditors, Clients Raise Questions," The Wall
Street Journal. (March 16, 2002).
A. Barrionuevo, "Jobless in a Flash, Enron's Ex-Workers Are Now Stunned, Bitter and
Ashamed," The Wall Street Journal. (December 11, 2002).
K. Chen, "Pension Allocations Are Adjusted After Fallout From Enron Debacle," The
Wall Street Journal. (January 29, 2002).
J. Emshwiller, "Enron Official Warned Company About Partnerships as Early as '99,"
The Wall Street Journal. (March 18, 2002).
J. Loepold, "Workers Say Enron Had Them Pose As Energy Traders for Analysts' Visit,"
The Wall Street Journal. (February 7, 2002).
M. Pacelle, "Enron's Acting CEO Outlines Plan to Demoralized Workers," The Wall
Street Journal. (April 12, 2002).