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  • Essay / Cultural Analysis of Enron: Accounting Fraud - 686

    Cultural Analysis of EnronEnron, which was the seventh largest company not long ago, was forced into bankruptcy in 2001 due to the collapse of its once prosperous organizational structure. Enron was considered and widely recognized as one of the most innovative companies of its time, and its fall came as a big surprise to many. However, Enron's steady rise in profits has attracted the attention of some. In fact, Enron was found to have committed multi-million dollar accounting frauds. What set Enron apart from other companies was its aggressive organizational culture. It was considered the advent of a “new economic religion,” as Enron mentions: The Smartest Guys in the Room. This new economic religion revolved around the fact that money and wealth were the primary motivators of everything. The aggressiveness and emphasis on the importance of wealth was evident through the company's use of a performance review committee. It was a “rank and cull” system in which each year each employee was presented before a board of directors and assigned a grade. If you weren't the best, you'd be fired. Enron laid off up to 15% of its employees. At the same time, this obsession with money was apparent as they posted stock prices everywhere, including in the elevators. The company would increase the stock price and cash in its profits immediately. One employee even said, "If I go to my boss's office to discuss my compensation and if I step on someone's throat and it doubles down on them, well, I'll step on their throat." » Such thinking has become basic assumptions of organizational culture because it has become an acceptable organizational corporate value to do whatever is necessary, even if it is unethical. Therefore, most of the values ​​adopted in the middle of the paper indicate that there were no accounting problems either. As a result of this global scandal, 20,000 employees lost their jobs and health insurance, for a severance payout averaging about $4,500. Employees lost around 1.2 billion in retirement funds and retirees lost two billion in pensions. To prevent such cultures from developing, organizations should ensure they enforce their code of conduct rather than simply hoping for the best and putting real sanctions in place for employees who fail. to follow them. They should also ensure that they integrate and discuss ethics as much as possible in the workplace, such as during meetings and announcements. Meanwhile, publicly committing to being an ethical organization will keep a company more aligned and focused on doing the right thing, because it is now in the public eye and has given its word to abide by its rules..