1. Running head: M7A2 1
Enron Code of Ethics Review
Kimberly Trares-Jordan
Argosy University Twin Cities
Module 7, Assignment 2 (LASA)
IO6300 – Professional Ethics and Legal Issues
David L. Cranmer, PhD
12/6/2013
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M7A2 - Enron Code of Ethics Review
In October of 2001, the Securities and Exchange Commission (SEC) launched an
investigation into the corporate practice of Enron, uncovering a complex web of corporate fraud
on a massive scale, never before seen. The resulting collapse of Enron had widespread ripple
effects across worldwide markets as well as consumer confidence, (Chandra, 2003). As Enron
evolved from a producer and distributor of gas into a trading company, it grew and evolved into
a massive corporate machine, reporting a 5x revenue increase in a 3year period, (Chandra, 2003).
There was no indication based on financial reports of any financial loss or difficulty during this
period of incredible growth.
Contrary to the reported gains, Enron suffered heavy losses within many of its business
sectors. Instead of accurately reporting these losses, it was common practice to maintain two
sets of records, actual and reported, (Chandra, 2003). The financial obligations associated with
diversification and mergers, financial losses and desire to grow and become the worlds leading
energy company, resulted in the lapse of ethics and fraudulent practices that ultimately caused
the collapse of Enron.
Special Purpose Entities (SPEs) were created as a means to hide losses and debts and to
allow Enron to continue to borrow from sources outside of the corporation. Enron also adopted
the practice of off-balance sheet financing, (Chandra, 2003). Although Enron disclosed the
existence of the SPEs and auditors and legal counsel were aware of their existence and approved
of them, the information disclosed by Enron regarding their existence and performance was
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insufficient to accurately represent their true financial standing to auditor and investors,
(Chandra, 2003).
Enron enlisted the accounting and auditing services of Arthur Andersen, LLP. Arthur
Andersen provided both consulting and auditing services to Enron, which ultimately proved to be
a serious conflict of interest that contributed not only to the collapse of Enron, but the firm of
Arthur Andersen as well, (Chandra, 2003). The failure of Arthur Andersen to recognize and
report concerns related to the accounting practices and internal controls to the proper parties
including; the Enron Board and the Audit and Compliance Committee contributed substantially
to the financial collapse of Enron that effected hundreds of thousands of; employees, creditors
and investors and resulted in a world wide shake up of investor confidence, (Chandra, 2003).
Another major contributor to the collapse of Enron was the failure of the leadership to
exercise a role model of ethical behavior. Industry deregulation opened the door to creative deal
making and these deals became more focused on profit than ethics. Top management was given
carte blanche in deal making and their practices were not questioned as long as goals were met
and profits were made, (Chandra, 2003). Performance was based on profit without regard for
how the profit was made. Internal competition became intense. Intense competition fostered
paranoia and secrecy, which became pervasive in Enron’s corporate culture pertaining to
contracts, disclosures and trading practices, (Chandra, 2003).
Enron is perhaps the most blatant example of corporate greed and lack of ethics in our
history. How could the evolution of Enron have been different? What policies, procedures and
oversights could have been implemented in order to better foresee and prevent the lack of ethical
practices, fraud and ultimate collapse that devastated the world market at large? In order to
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answer these questions, we must first evaluate the foundation from which Enron operated, it’s
Code of Ethics.
Ethical Inconsistencies
Upon dissection of the Enron Code of Ethics, obtained from, The Smoking Gun, (2011)
there are many evident deficiencies as well as a pervasive defensive and reactionary tone. The
Code reads in many ways as an after thought rather than a solid foundation for ethical practice,
proactive decision-making and behavior.
The first major component that is missing from the Enron code is the Mission Statement.
The mission statement is a key component of the code which in essence describes the purpose of
the corporation and it’s reason for existing: products offered, markets served, unique benefits and
feature of products, managerial philosophy, desired public image and self-concept (Aguinis
2008). With the failure to include a Mission Statement, there is a lack of connection to the
purpose and intent of the corporation for employees, customers and other stakeholders to identify
with.
The Vision Statement is brief and states that Enron desires to become the world’s leading
energy company, but fails to outline how and by what means it intends to do so, (Smoking Gun,
2011). There is no mention of operating within ethical standards or practices in order to
accomplish the vision in an appropriate and ethical manner.
The Values Statement addresses respect, integrity, communication and excellence
(RICE), which are the cornerstones of Enron’s code, (Smoking Gun, 2011). Within the respect
section, the language is subjective, “we treat others as we would like to be treated ourselves” and
negatively oriented, “ruthlessness, callousness and arrogance don’t belong here”, which implies
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that it is representative of the current climate. The integrity, communication and excellence
sections are weak and vague and lack any reference to ethical standards on which to exercise the
values.
Within the Enron Code, it states that Enron’s Vision and Values are the platform, from
which their human rights principles are built, (The Smoking Gun, 2011) rather than human rights
principles being the platform from which the Enron Code is constructed.
The American Psychological Association (APA) Code of Ethics identifies key principles
that comprise the core of ethical practice, (apa.org). The Society of Human Resource
Management’s Code of Ethics also outlines core principles and practices that are necessary to
ethical leadership and organizational operations. The core principles and ethics shall be address
and compared to the Enron Code of Ethics below.
Principle A: Beneficence and Nonmaleficence: which in essence states that in the course
of operations, you shall endeavor to do no harm and to protect the welfare and rights others,
(apa.org). The SHRM code also identifies the necessity of professional responsibility for
decisions and actions and the need to encourage social responsibility and compliance with the
law, (shrm.org).
The Enron code addresses this aspect with mention of commitment to operating safely
and in compliance with environmental (wildlife, natural resources) and health safety regulations.
The code also states that Enron will strive to improve the lives of individuals in the
areas/communities that the corporation does business, (Smoking Gun, 2011). Lacking in this
section is mention to conducting business in a manner that protects the rights of stakeholders
including customers, creditors and investors.
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Principle B: Fidelity and Responsibility: which calls for the upholding of professional
standards, clarification of roles and obligations, personal responsibility for behavior,
management of conflicts of interest and the avoidance of exploitation and doing harm (apa.org).
SHRM also addresses the need for professional behavior and responsibility, (shrm.org).
The Enron code addresses the need to conduct business with the highest ethical
standards. However it does not address clarification of roles or personal responsibility outside of
protecting the interest of the company. Proponents of Stakeholder theory argue for the necessity
of management to look beyond the mere goal of financial gain toward including the needs and
concerns of stakeholders as well, (Street & Street, 2009). Conflict of interest is addressed only
in relation to financial gains to employees derived as a result of employment with the company,
outside of the scope of their role and ordinary compensation, such as bribes, lavish gifts, etc.
(Smoking Gun, 2011), again implying that these are current practices. There is no mention of
conflicts of interest within the context of business relationships or operations including
accounting and reporting.
Principle C: Integrity: operating with accuracy, honesty and truthfulness. Operating in
a manner in which you do not steal, cheat, engage in fraud or intentionally misrepresent fact
(apa.org). SHRM further addresses the need for building respect, credibility and social
responsibility, (shrm.org).
The Enron Code addresses this principle only in relation to products and services, “being
of the highest quality and as represented” and in relation to advertising being “truthful and not
exaggerated or misleading”, (Smoking Gun, 2011). Mention is also made within the Enron code
to honoring verbal and contractual agreements, refraining from acceptance of bribes and
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kickbacks. There is no mention of policy and procedure relating to accounting, reporting and
disclosures that the corporation may make to auditing bodies or stakeholders.
Principle D: Justice: This principle addresses the necessity to be aware of potential
biases, boundaries of individual competence and limitations of expertise and the importance of
ensuring that limitations do not result in or condone unjust practices, (apa.org). SHRM
addresses this principle in the context of exercising fairness and justice by creating and
sustaining a supportive environment that encourages individual growth and attainment of full
potential, (shrm.org).
Within the Enron code, this principle is not addressed beyond requiring legal
approval on all contracts, which include any document or arrangement that may result in
imposing any obligation on the Enron corporation, (Smoking Gun, 2011).
Principle E: Respect of People’s Rights and Dignity: rights to privacy, confidentiality
and self-determination, respect for: cultural, individual and role difference including: age,
gender, gender identity, race, ethnicity, culture, national origin, religion, sexual orientation,
disability, language and socioeconomic status (apa.org). SHRM code dictates that individual
rights must be protected and that trust and open exchange of information is essential for a healthy
environment, (shrm.org).
This principle is addressed in part, within the Enron code. The Enron code discusses fair
treatment of employees, customers, contractors, suppliers, partners, the community and
Government representatives, but does not comprehensively cover all of the aspects referred to in
the APA code. Confidentiality is addressed in the Enron code, primarily in regard to protection
of the company’s sensitive and proprietary information and in context to preventing the
dissemination of information that may be slanderous, libelous or defamatory toward the
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company as well as those directly employed by or having business relationships with Enron,
(Smoking Gun, 2011). Confidentiality is not addressed in regard to the protection of consumer,
employee or stakeholder information.
The APA Code also outlines Ethical Standards, (apa.org). The standards most relevant to
the Enron Code shall be addressed below.
Resolving Ethical Issues
Organizations must develop and exercise a clear and effective system for the resolution
of ethical issues. These issues may arise as conflicts between ethics and law, regulations,
governing legal authority, as well as conflicts of ethics and organizational demands. It is
necessary to implement channels of informal resolution of violations, reporting of violations as
well as protection of individuals from discrimination that, bring forth reports or complaints of
violations, (apa.org). The implementation of an Ethics Committee to hear, mediate and remedy
ethics violations is crucial to the process of managing ethical issues and compliance, consistently
and in a timely manner.
SHRM specifically addresses the necessity for ethical leadership. Ethical leadership sets
the tone for the entire organization and fosters a culture of trust and credibility, (shrm.org). It is
also the responsibility of ethical leadership to seek guidance in matters that need clarification
from other professionals and to act as a mentor for others for the purpose of continued individual
development, (shrm.org).
There are several deficiencies in the Enron code pertaining to the resolution of ethical
issues. The Enron code states that, the corporation shall act in a manner, which abides by the
highest ethical and legal standards, regionally, nationally as well as internationally. However,
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there is no mention of how conflicts shall be handled, (Smoking Gun, 2011). The code lacks any
mention of how to manage conflicts between ethics and organizational demands. No informal or
formal resolution processes are outlined in the code. There is no outline for the process of
reporting ethical violations. No mention is made of the existence of an Ethics Committee or how
to conduct interaction with such a committee. There is no mention of how to file complaints,
what constitutes a proper and improper complaint or how complainants shall be protected,
(Smoking Gun, 2011).
Failure to implement a clear code of ethics, ability to measure ethics knowledge and
compliance, system for reporting and resolving concerns and violations and a governing body to
address concerns and issues as well as actions and outcomes, leaves Enron susceptible to
unchecked ethics violations due to lack of direction and resolution of violations. These
unchecked violations have the potential to be harmful to individual employees, the corporation as
well as all stakeholders including customers, investors and creditors.
Competence
It is essential for personal professional development as well as organizational success, to
implement systems for measuring and maintaining competence as well as fostering continuous
development and improvement (apa.org). SHRM stresses the necessity for meeting the highest
level of competency and to continue to improve upon competencies as an ongoing pursuit,
(shrm.org).
Within the Enron code, there lacks guidance on operating within ones scope or attainment
of appropriate licensure and certification required for competent business practices. In addition,
there is a lack of compliance training and certification. There is also no mention of the proper
delegation of work, oversight guidelines or performance evaluation. Excellence is one of the key
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components set forth in the Enron code. As stated in the code, “we are satisfied with nothing
less than the very best in everything we do”, (Smoking Gun, 2011). However, there is no
guideline for how this excellence is to be achieved. It further states that “we will continue to
raise the bar for everyone”, but does not outline how these improvements and growth will be
implemented and measured, (Smoking Gun, 2011). In sum, there is a lack of mention of a
training, education, performance management and feedback system.
Without measurements of competence, abilities and qualifications there is no way to
fairly evaluate competence and performance, which may be applied in a consistent manner
across employees and departments, (Aguinis, 2008). This leaves room for ethical deviation by
having individuals in positions that they are not qualified for, making decisions that they are
unqualified or competent to make which may negatively impact the corporation at every level.
Lack of consistent performance management also leaves the corporation open to law suits from
employees based on discrimination or other unfair practices, (Aguinis, 2008). Performance and
competencies must also be a part of compensation determination. Compensation based on
ethical and compliance performance rather than purely the end result (profits reported) will
safeguard the corporation from unethical dealings.
Human Relations
In any organization, it is crucial to implement safeguards to protect individuals from
discrimination and harassment. In addition operating in an environment and with a focus on
avoiding harm to all involved, employees, customers and stakeholder is a necessity in business
relations. Additionally, SHRM addresses human relations in the context of treating people with
dignity, respect and cultivating a work environment that is free of harassment, intimidation and
discrimination, (shrm.org).
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Avoiding conflicts of interest and having clearly defined roles and responsibilities which
maintain the best interests of all parties served is essential to avoiding circumstances that may
lead to exploitative relationships, (apa.org). SHRM further discusses the need to protect the
interests of stakeholders: maintain a high level of trust, refrain from giving or seeking
preferential treatment and to prioritize obligations and avoid conflicts of interest, (shrm.org).
Discrimination, harassment and avoiding harm are addressed in the Enron code.
However the definitions of the types of harassment as well as the individuals and protected
classes are not comprehensive and inclusive of all of the individuals and classes mentioned in the
APA code, (Smoking Gun, 2011).
Addressing multiple relationships, conflicts of interest, exploitative relationships and
cooperation with other professionals are important aspects of the Enron code that are lacking.
Failure to avoid conflicts of interests creates inherent problems and potential ethics violations
due to the fact that individuals are less able to make decisions based on the best interests of those
being served when they are serving potentially contradictory or competing interests.
Exploitative relationships or agreements may be engaged in for the purpose of serving ones own
best interest or the interest that will have the maximum benefit to the individual without regard to
the impact on the other party of the relationship as well as the interests of the corporation and
stakeholders.
Privacy and Confidentiality
Organizations are responsible for maintaining confidentiality, discussing limits of
confidentiality, minimizing intrusions of privacy and providing accurate and thorough
disclosures of necessary information, (apa.org). SHRM guidelines call for the building of trust
and the open and transparent exchange of information while protecting the rights of individuals
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and eliminating anxieties. The accuracy and completeness of information is also stressed in the
SHRM code, (shrm.org).
Within the Enron code, confidentiality is covered pertaining only to the protection of the
company’s proprietary information and reputation as well as the privacy and confidentiality of
individuals against, slanderous, libelous and defamatory statements, (Smoking Gun, 2011).
There is a lack of outline regarding individual confidentiality pertaining to personal information
such as HR related information for the purpose of evaluation, promotion and compensation.
There is also lack of inclusion of guidelines regarding the necessity and nature of required
disclosures or their need for thoroughness and transparency.
Failure to maintain confidentiality and privacy leave the corporation open to issues such
as insider trading and other fraudulent activity. Additionally, failure to provide accurate and
complete reporting of information, especially concerning disclosures that effect individuals
decisions regarding consumer choice and investment can have devastating impacts on the
reputation of the company as well as on investors and creditors that rely on thorough, accurate
information in making financial decisions that may effect hundreds of thousands of individuals.
Advertising and Other Public Statements
When designing advertising campaigns and public statements, organizations have an
obligation to avoid false and deceptive statements, to be responsible for the statements of others
pertaining to the organization and to insure that media presentations are accurate and truly
representative of the organization, (apa.org).
Enron’s code specifically mentions having products and services of the highest quality
and that these products will be represented in a truthful manner that is neither exaggerated or
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misleading. However reference to the quality and transparency of public statements and
disclosures, is lacking, (Smoking Gun, 2011).
Truth in advertising goes hand in hand with the necessity for thorough and accurate
disclosures and failure to exercise truth in advertising and public statements has the potential to
lead to the same degradation of corporate image, respect and credibility that face the corporation
when failing to be open and honest with disclosures, including those pertaining to products and
services as well as financial status.
Record Keeping and Fees
Documentation and maintenance or records is a major aspect of corporate governance. In
addition, the dissemination and disposal of confidential records and accuracy of reports is
essential for the ethical operations of an organization, (apa.org).
Specifically, records pertaining to accounting, auditing, gains/losses and overall financial
standing and viability are necessary for both internal and external auditing, accurate
dissemination of information and decision making by management, employee’s, creditors and
other stakeholders.
Accurate records of compliance certification, performance management, professional
development and training as well as other HR related records are crucial to maintaining the
highest level of ethical and quality employee performance and protection of the organization
against incompetent, unethical practices.
Accuracy and transparency of records allow all stakeholders the opportunity to make
informed decisions and implement best practices in order to achieve the most advantageous
outcomes for all involved. Thorough and accurate documentation and reporting of accounting
and financial records are required to maintain compliance with The Foreign Corrupt Policies Act
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of 1977 (justice.gov) as well as Sarbanes-Oxley Act of 2002 (loc.gov), Corporate And Auditing
Accountability, Responsibility and Transparency Act of 2002 (loc.gov), The Corporate and
Criminal Fraud Accountability Act of 2002 (loc.gov) and the Public Company Accounting
Reform and Investor Protection Act of 2002 (loc.gov) as well as Antitrust Laws, (ftc.gov).
Education and Training
Ongoing education and training are crucial for the continuous improvement of employees
and organizations at large, (apa.org). Continuous improvement at all levels (management and
employees) will result in an ongoing evolution and positive growth toward individual and
organizational goals and objectives. The SHRM code also speaks to the necessity for individuals
to be able to continue to expand on learning and skills in order to reach full potential in a positive
and productive manner, (shrm.org).
The Enron code states that, “the bar will continue to be raised for everyone”, (Smoking
Gun, 2011). However, there lacks an operational guideline for what this bar represents,
qualitatively or quantitatively. Outlining how employees will be able to gain education, training
and expertise and what is expected in order to attain personal, professional and organizational
excellence will guide employees on a path that will allow them to strive for excellence in an
ethically compliant manner, in alignment with corporate goals and objectives.
Failure to provide or encourage ongoing education and training does not allow for growth
and improvement of individuals or the corporation. Ongoing education and training will allow
individuals to increase competencies and stay current with rules, laws and regulations that may
directly impact their business dealings, decisions and behavior. Staying current decreases the
likelihood of both intentional and unintentional ethics violations.
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Assessing Changes Needed to Code of Ethics
After assessing Enron’s current Code of Ethics it is clear that there are areas of
opportunity to address. There are several key changes that must be made to Enron’s Code of
Ethics in order to make it more comprehensive, proactive, positively oriented and effective in
guiding the decisions, actions and overall culture of Enron and its subsidiaries. These
recommended changes will also serve to aide in the protection of the rights and interests of all
involved rather than, primarily, the corporation.
Recommendations are as follows:
• The first recommendation is to revise the language of the Code to be more assumptive
and proactive vs. reactionary. Currently the language is defensive and reactionary.
• Inclusion of a Mission Statement. The Mission Statement will help define and clarify the
purpose of Enron and provide a purpose for which employees, customers and investors
may identify.
• Align Mission, Vision and Values with ethical standards and practices. Clearly state how
the mission and vision will be accomplished in an ethical manner as well as how values
benefit others outside of the corporation. Adopting a Trusteeship style of management
will create a framework from which management may provide a balance of consideration
for the needs of all stakeholders (Street & Street, 2009).
• Restate the Code in a positively oriented manner, which defines what is expected and
what will be done, rather than what is undesirable, (ethics.org) Currently the verbiage is
negatively oriented.
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• Make human rights principles the platform for Enron’s Mission, Vision and Values.
Currently, Enron’s code states that the Vision and Values form the platform for the
human rights principles.
• Incorporate principles and practices throughout the Code that encompass the need to
protect the rights and interests of all stakeholders, including employees, the corporation
as well as customers, investors and creditors, (Street & Street, 2009). Currently the Code
reads as mainly protectionary toward the corporation.
• Specifically address conflicts of interest and exploitative relationships. Outline what
constitutes a conflict and what to do if faced with a potential conflict.
• Specifically address expectation of thorough transparency and compliance with financial
accounting, auditing and reporting practices.
• Address confidentiality issues.
• Implement a system of ethics: training, compliance, reporting of violations, rectifying of
violations and protection of individuals who report violations as well as development of
an Ethics Committee
• Implement a system for competence evaluation as well as performance management,
training and ongoing professional development practices.
• Revamp the compensation structure and bring it into alignment with ethical and
competency-based performance.
• Comprehensively define discrimination and harassment, as well as the individuals and
classes that are protected from such behavior.
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Revised Code of Ethics
Enron: Our Guiding Principles and Beacon of Ethical Conduct
I. Title
II. Leadership Letter
III. Introduction-Prologue
IV. Core Values of Organization
V. Code Provisions
VI. Information and Resources
LEADERSHIP LETTER
As your CEO, I would like to welcome you to the Enron family. At Enron, we cultivate a culture
of trust, honesty, personal responsibility and integrity. We endeavor to conduct our business
with regard to the highest of ethical standards and practices everyday. We pride ourselves on our
ability to accomplish our personal and professional goals in a manner that is cognoscente and
respectful of the rights and best interests of our fellow employees, our environment the
communities we serve, our customers as well as our stakeholders. We are all here to support one
another in our joint mission. If you should ever have any questions, concerns or suggestions for
improvements regarding the substance or interpretation of the Code please feel free to contact
your manager, human resources or myself directly.
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Welcome aboard!
Kimberly Trares-Jordan, CEO
INTRODUCTION, PROLOGUE
Our Code of Ethics has been developed in cooperation with our employees, our Board of
Directors as well as relevant business units and stakeholders. The purpose of the Code is to
provide a common framework from which our daily focus, operations, decisions and actions are
guided and governed. It is the responsibility of each individual to become familiar with the Code
and to implement the Code as routine business standard and practice as a beacon for ethical
conduct.
CORE VALUES
MISSION
The mission of Enron is to provide the highest level of products and services to our customers
while operating in a manner that is legally, ethically, environmentally, economically and socially
responsible.
VISION
To create innovations and advances in technology that enable Enron to efficiently create energy
solutions worldwide. Through energy solutions, we will foster the growth of domestic and
foreign economies, providing enrichment to the lives of those we serve, becoming the world’s
leading, ethically driven energy company.
VALUES
Respect: Every individual is valued. We cultivate and maintain a culture and environment that
is free of harassment, intimidation, and discrimination and embraces inclusiveness and diversity.
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Integrity: We hold ourselves personally and professionally responsible and accountable for
decisions and actions. We endeavor to conduct our daily business practices and work toward
objectives that hold the rights, and best interests of our fellow employees, customers and
stakeholders as the highest priority.
Communication: We maintain an environment of trust and open, honest communication while
respecting individual privacy and confidentiality. All communication shall be thorough, accurate
and timely.
Excellence: We value personal and organizational improvement and encourage the ongoing
quest for continued education, skill and competency development. Each individual is
encouraged and mentored in order to reach their full potential and professional development
though appropriate and ethical means.
THE CODE
RESOLVING ETHICAL ISSUES:
• Training on the Code: All employees including CEO, management and other staff shall
receive training on the Code within the first 14 days of employment with Enron.
• Access to the Code: All employees shall receive a copy of the Code. The Code may also
be accessed via the company Intranet under the Human Resources tab.
• Implementation of the Code: All employees are expected to implement the Code within
daily operations, decision-making and behavior with one another, customers as well as
governing agencies and collateral contacts.
• Conflicts with the Code: All conflicts with adherence to the Code must be brought to the
attention of management, Human Resources and or the CEO immediately.
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• Reporting Violations of the Code: Reporting violations must be done immediately upon
becoming aware of the violation. Reporting may be done either directly or anonymously.
The proper chain for reporting violations may be found on the company intranet under
the Human Resources tab.
• Confidentiality in reporting: Individual confidentiality and privacy is of great importance
and value at Enron. Your identity, confidentiality and privacy shall be protected within
the scope of legal compliance when reporting ethics violations.
• Unfair Discrimination Against Complainants and Respondents: Individuals and
respondents to ethics reporting shall be free of unfair discrimination due their bringing
forth a complaint or report in the proper manner as outlined on the company intranet
under Human Resources.
• Ethics Committee: Violations of the Code will be heard and remedied primarily by the
Ethics Committee either formally or informally depending upon the violation and
appropriate and necessary actions.
• Conflict Resolution: Resolution of conflicts and violations of the Code may result in
action up to and including termination.
COMPETENCE:
• Obtaining proper certifications and licensure: Each individual is responsible for
maintaining required licensure and certification in good standing and providing HR a
copy of current licensure and certification.
• Compliance and Ethics training and certification: Each individual shall be evaluated
regarding compliance and ethics matters relevant to your position within the corporation.
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Failure to pass compliance and ethics evaluation and certification may result in
suspension from activities relevant to your position, retraining and re-evaluation to ensure
that standards and benchmarks are achieved in order to insure the highest level of
customer service and ethical behavior.
• Performance Evaluations and Feedback: Each individual will receive training on the
Performance Evaluation and Feedback system. Evaluations will be done at minimum, on
a quarterly basis. More frequent informal evaluations and coaching may be conducted at
the discretion of your manager and upon your individual request for feedback and
coaching.
• Compensation and Reward: Performance evaluations shall represent the major indicator
of compensation and reward. Individuals that meet or exceed their performance
expectations may be eligible for rewards, so long as performance expectations have been
met in an ethical and professional manner.
HUMAN RELATIONS:
• Discrimination: Enron maintains a culture of inclusion and diversity free of
discrimination based on cultural, individual and role differences, including those based
on age, gender, gender identity, race, ethnicity, culture, national origin, religion, sexual
orientation, disability, language and socioeconomic status.
• Harassment and Intimidation: Enron maintains a culture free of harassment and
intimidations of any form including, mental, emotional, physical or sexual in nature
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• Reporting Acts of Discrimination, Harassment or Intimidation: Reporting of acts may be
made directly to management, HR or the CEO directly. You may find the proper chain of
reporting on the company intranet under Human Resources.
• Conflicts of Interest: All manner of conflicts of interest must be avoided. A conflict of
interest may be defined as a circumstance in which you have conflicting or contradictory
obligations or interest in a matter, relationship, contract or other area in which your
judgment and ethics may be compromised and render you unable to represent the interest
you are obligated to serve. (For example, accounting and auditing responsibilities shall
be executed by separate entities). Should you find yourself in a potential or actual
conflict of interest, you are required to report the conflict immediately and cease further
engagement in the contract or relationship until resolution of the conflict has been made.
You may find the proper chain of reporting on the company intranet under Human
Resources.
• Exploitative Relationships: All employees must endeavor to refrain from becoming
engaged in exploitative relationships which may be defined as relationships, contracts or
agreements that induce or require special treatment, or derive some form of benefit as a
result of position or standing to the detriment or less than best interest of all parties.
PRIVACY AND CONFIDENTIALITY
• Personal Information: Each individual’s privacy and confidentiality shall be maintained
within the ethical and legal scope of the corporation. This pertains to all personal and
Human Resource information including but not limited to; personal identifying
information such as social security number, professional licenses and certifications,
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performance evaluations and compensation structure. Dissemination of information shall
be made only to appropriate parties with individual consent where required for purposes
relevant and necessary for the disclosure of the information.
• When Reporting Violation or Filing Grievances: Confidentiality will be maintained for
individuals reporting violations and filing grievances to encourage reporting and the
timely addressing of violations in order to protect the best interests of all stakeholders.
ADVERTISING AND PUBLIC STATEMENTS
• Media Presentation: All media presentations shall be truthful and not exaggerated or
misleading in order to accurately represent the corporation, our products, services and
values.
• Public Statements: All public statements shall be thorough, accurate and verifiable and
easily accessible in order to allow for public inspection.
• Disclosures: All disclosures both private and public shall be thorough, accurate and
truthful in every aspect in order to insure that all parties are able to exercise due diligence
and utilize accurate information in making decisions.
RECORD KEEPING
• Accounting: All accounting shall adhere to the laws and ethical practices governing the
Accounting industry, service and standards. Accounting shall be accurate, reliable and
verifiable and separate from the process of auditing.
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• Auditing: All auditing shall adhere to the laws and ethical practices governing the
Auditing industry, service and standards. Auditing shall be thorough, accurate, reliable
and verifiable. Auditing shall be separate from the process of accounting.
• All records pertaining to training and certification, performance Management and
Compensation structure shall be maintained by HR and kept confidential. Dissemination
of information will only be done for purposes and to parties requiring access to
information with individual consent.
LEGAL COMPLIANCE
• Every individual shall operate within a manner that exercises legal compliance. This
compliance extends beyond the corporation to include Governmental regulation and
International Law.
• Individuals operating within accounting and auditing capacities must undergo training on
and familiarize themselves with the following acts:
o The Foreign Corrupt Policies Act of 1977
o Sarbanes-Oxley Act of 2002
o Corporate and Auditing Accountability, Responsibility and Transparency Act of
2002
o The Corporate and Criminal Fraud Accountability Act of 2002
o Public Company Accounting Reform and Investor Protection Act of 2002
25. M7A2 25
EDUCATION AND TRAINING
• Continued Education and Professional Development: Each individual is encouraged to
seek continued higher education, take advantage of training opportunities and actively
engage in professional development planning and opportunities. We encourage each
individual to strive for personal and professional excellence within ethical standards.
• Mentoring and Coaching: Management strives to encourage and cultivate employees in
order for them to reach their full potential. Individual are encouraged to actively seek out
and participate in coaching and mentoring as well as professional development
opportunities.
INFORMATION AND RESOURCES
Most questions regarding the Code may be answered in the FAQ section of the Code, located on
the company intranet. For further clarification, please see management and or Human
Resources.
Ethical Inconsistencies
The APA code provide a framework of ethical principles and standards which are crucial
to the IO professional’s ability to establish guidelines and make recommendations that will have
the maximum benefit and minimal harm to those that stand to be effected by IO professional
guidance. It provides an industry standard of measurement from which to weigh and justify
recommendations. Operating within a Code of Ethics lends credibility and value to the industry
as well as a checks and balances system to weigh the decisions, recommendations and actions of
IO professionals.
26. M7A2 26
At the individual level, IO professionals are able to assist with establishing knowledge,
skills and aptitudes that are necessary for successful operation within a given position. They are
further able to assist with identifying appropriate training opportunities and encouraging personal
professional development in a manner that respects individual differences and encourages
individuals to reach their maximum potential, (Aguinis, 2008).
At the group level, IO professionals may be instrumental in guiding recommendations to
improve cultural citizenship, teamwork, alignment of departmental goals with organizational
goals and improving group dynamics in an environment that embodies inclusiveness and values
diversity, (Aguinis, 2008).
On the organizational level, IO professionals may be instrumental in assisting with the
establishment of guidelines for constructing; Mission, Vision and Value Statements, formulating
performance management and feedback systems as well as guiding organizations on the ethical
management of human resources, including appropriate training, professional development
practices as well as improving retention and understanding mechanisms that may be improved to
foster a healthy corporate culture and ongoing quest for improvement, (Aguinis, 2008).
There are some that argue that the current APA Code of Ethics is insufficient for IO
professionals. Essentially, it has been posed that the ethical principles of the APA code;
Beneficence and Nonmaleficence, Fidelity and Responsibility, Integrity, Justice, Respect for
People's Rights and Dignity are not the right principles of IO psychology, (apa.org). However,
until additional revisions are made to the existing APA Code of Ethics, IO professionals need to
implement the existing Code when working with individuals, groups and organizations.
27. M7A2 27
Letter to the CEO/Senior Leaders
December 8, 2013
Enron Corporation
1400 Smith Street
Houston, Texas
77002
Subject: Revised Enron Code of Ethics
Dear Enron CEO and Senior Leaders,
It has been a pleasure to have the opportunity to review and evaluate your existing Code
of Ethics. Upon completion of the review, several recommendations for improvement have been
made and implemented into the attached revised version of the Code of Ethics, titled:
Enron: Our Guiding Principles and Beacon for Ethical Conduct.
The revisions and improvements have been made in order to address the need for a
cohesive, comprehensive, proactive and positively oriented Code. This revised code will serve
as a framework to unite your corporation and stakeholders under a common Mission, Vision and
Value Statement that specifically addresses the main principles and practices that govern ethical
leadership and business practice.
The code will serve as a touchstone from which decisions and actions may be guided
with the highest regard for ethical compliance. This increased ethical compliance will safeguard
the best interests of the corporation, employees, customers and stakeholder alike.
In addition to revising the code, I have taken the liberty to begin outlining an Ethics
training-module for all employees.
I look forward to further assisting Enron, its leaders, employees and stakeholders with
moving forward toward your future success in a culture of high ethical standards, practices and
outcomes.
Sincerely,
Kimberly Trares-Jordan, MAIO Student, Argosy University
28. M7A2 28
Conclusions
It may become easy when you are focused on a single objective to have the ability to
vacillate between perspectives and see both the details as well as the big picture. Often when
there are monumental tasks at hand a myopic view blinds you from what, to others seem blatant
circumstances and concerns.
It is often helpful to have fresh eyes and perspectives evaluate circumstances, offer
counsel and guidance in order to gain the ability to shift focus and see changes that need to be
made. This is true in every aspect of life from personal, to academic as well as professionally.
IO professionals occupy a unique position and perspective. They have the ability to
observe, evaluate, recommend improvement and assist with the betterment of circumstances for
individuals groups and organizations at large on multiple levels.
The research and evaluation of Enron’s history, policies, practices and Code of Ethics has
been very enlightening. While revising the code, it became evident, just how many perspectives
and concerns must be considered in the ethical operation of a corporation, from employees,
customers, stakeholders, stockholders to foreign economies, legal, ethical and economic
considerations.
May we all endeavor to embody the change that we wish to see as we strive to facilitate
positive changes for the betterment of all that we influence and serve.
29. M7A2 29
References
Aguinis. (2008). Performance Management (2nd ed). Pearson Learning Solutions. Retrieved
from http://digitalbookshelf.argosy.edu/books/0558569080/id/pg74
Chandra, G. (2003). The enron implosion and its lessons*. Journal of Management Research,
3(2), 98-111. Retrieved from
http://search.proquest.com/docview/237227628?accountid=34899
Ethics Resource Center, Ten Writing Tips for Creating an Effective Code of Conduct. Retrieved
from http://www.ethics.org/resource/ten-writing-tips-creating-effective-code-
conduct
Federal Trade Commission, FTC Guide to the Antitrust Laws. Retrieved from
http://www.ftc.gov/bc/antitrust/antitrust_laws.shtm
Library of Congress, Enron Legal Aspects. Retrieved from
http://www.loc.gov/law/help/guide/federal/enron.php
The smoking gun. (2011). Enron Code of Ethics 2000. Retrieved from:
http://www.thesmokinggun.com/file/enrons-code-ethics?page=0
Ojo, M. (2011). Avoiding another Enron: The role of the external auditor in financial
regulation and supervision. Rochester: Retrieved from
http://search.proquest.com/docview/189860874?accountid=34899
Street, M. (2009). Taking Sides: Clashing Views in Management (3rd ed). McGraw-Hill Learning
Solutions. Retrieved from
http://digitalbookshelf.argosy.edu/books/0077486587/id/id_0073527327_001_000767
United States Department of Justice, Foreign Corrupt Practices Act of 1977, Retrieved from
http://www.justice.gov/criminal/fraud/fcpa/statutes/regulations.html