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

M7A2 2

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

insufficient to accurately represent their true financial standing to auditor and investors,

(Chandra, 2003).

M7A2 3

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

answer these questions, we must first evaluate the foundation from which Enron operated, it’s

Code of Ethics.

M7A2 4

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

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.

M7A2 5

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.

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).

M7A2 6

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

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

M7A2 7

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

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.

M7A2 8

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,

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,

M7A2 9

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

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

M7A2 10

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).

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

M7A2 11

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

and eliminating anxieties. The accuracy and completeness of information is also stressed in the

SHRM code, (shrm.org).

M7A2 12

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

misleading. However reference to the quality and transparency of public statements and

disclosures, is lacking, (Smoking Gun, 2011).

M7A2 13

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

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

M7A2 14

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.

M7A2 15

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.

M7A2 16

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.

M7A2 17

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.

M7A2 18

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.

M7A2 19

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.

M7A2 20

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.

M7A2 21

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

M7A2 22

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,

M7A2 23

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.

M7A2 24

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

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.

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.

M7A2 27

Letter to the CEO/Senior Leaders

December 8, 2013

Enron Corporation1400 Smith StreetHouston, Texas77002

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

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.

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