For 6 years in a row, Enron was named Forbes magazine’s “Most Innovative Company.” By the year 2000, Enron employed over 20,000 people and was reporting yearly revenue in excess of 100 billion dollars. In the world of high-powered, Fortune 500, companies–Enron was one of the very best.
For years, though, Enron’s analysts, accountants, and other mid-level employees quietly watched as their superiors tampered with company accounts in ways that were suspicious, if not outright illegal. Money seemed to appear and disappear, assets seemed to appear and disappear. Anyone who spoke out was fired.
Enron’s own internal analysts began to suspect that potentially millions of dollars had been secreted into foreign bank accounts. Internal audits returned inconsistent findings when attempting to reconcile management’s declared earnings and those that were being reported to shareholders and government regulators. In short, Enron was starting to look like a shaky house of cards.
As the situation at Enron became dire, shareholders and other interested parties were left virtually blind as the organization’s largely unaccountable chief executives robbed the company into an early grave.
By the time concerned employees were able to secret-out information confirming former CEOs Kenneth Lay and Jeffrey Skillings extreme, illegal, and unethical behavior–it was too late. Shareholders were forced to watch as the malfeasance of a few well positioned officers forced one of the most brilliant organizations in modern finance into bankruptcy, ignominy, and death.
But why? Why did Enron, a company that was widely lauded as one of the strongest publicly traded entities on the market in the early 2000’s, wind up a by-word for corporate corruption and questionable ethics?
And while there are certainly many answers to that question, one serves as a constant through-line in the story of Enron’s collapse: whatever scant system of corporate ethics and compliance Enron had in place was not powerful enough to keep talented, determined, and dishonest men from taking advantage of the company that helped propel them to success.
Don’t Be Victimized By Unethical People
Success brings a lot of great things. Expansion and profits to name but two. It also attracts people who don’t mind hurting other people’s business and reputation to advance their own interests.
To avoid this situation, modern businesses must do what Enron failed to–they must institute firm, well publicized rules, and then police those rules through the use of anonymous, issue-specific ethics hotlines. Further, attentive businesses may implement a wide range of tried and true compliance initiatives to augment hotlines and other reporting protocols.
By offering employees several different ways to anonymously report the unethical and illegal conduct of their peers, you can catch would be abusers before they can act. Nipping unethical behavior in the bud before it creates a culture of corruption at your organization is the only way to avoid becoming another Enron, and ethics auditing and reporting is the best, most-efficient, way to do help your organization accomplish just that.