Ethics, Enron and intrigue (Editorial, June 3, 2002)

By John Hobel
|Canadian HR Reporter|Last Updated: 06/19/2002

With

Canadian HR Reporter

's June 3

Guide to Management and Executive Development

examining the preparation of corporate leaders, it seems apropos to look at how business ethics factors in. It’s an issue Enron and Andersen have brought to the forefront in what may be the best case study business students will ever have.

It’s such a rich source of material that Alan Saks, HRM professor at Toronto’s York University, feels compelled to add references to Enron and Andersen to a new HR management text he is just completing.

Because of its scope and the negative impact it has had on so many stakeholders, the scandal has generated a great deal of interest among business students and will for years to come, says Saks.

Enron/Andersen is such an intriguing and complex case it has all the makings of a sensational novel. But fiction it’s not, and as such the scandal has raised awareness to new heights about the need for ethics in business.

For HR, Enron is an opportunity. The scandal demonstrates the need for ethics to be codified and embedded in corporate policies — a task that falls into HR’s domain. HR is sometimes considered the place where an organization’s conscience resides, if it has one, and this type of policy and program development is right up the profession’s alley.

Ethics is a natural area for HR to be involved in, says Pat Fitzgerald, an HR professor at Halifax’s Saint Mary’s University. She compares it to the work HR has done to raise awareness about sexual harassment. While sexual harassment issues still exist, HR’s development of programs and processes has helped change organizations. Indeed, sexual harassment is an ethical issue — the challenge now is to get all levels of management to view unethical decision-makers with the same degree of disdain as sexual harassers. Unfortunately, too many business people are still confusing aggressive bottom-line thinking with running roughshod over laws and morals.

But Fitzgerald says she’s heartened to see 90 per cent of Fortune 500 companies have developed policies enshrining ethics. Many are also taking steps to protect whistleblowers. The only time organizations change is when they see a positive effect on the bottom line, so it’s essential that companies with ethical standards are also successful industry leaders, she says.

Corporate ethics also makes the job of managing human capital easier.

Ethics is a way of keeping the best people — most want to work for an ethical firm. HR tasks, such as recruitment and selection, staff development and productivity improvements, require an atmosphere of trust between employees and employers — trust which flows from a foundation of corporate ethics. Enron and Andersen show how a loss of trust equals loss of both employees and customers.

In the years ahead, globalization will further test organizational commitment to ethics. Employees will be working and making connections around the world, and will encounter people and places where bribes and other unethical behaviours are common place. Enron and Andersen have come along just in time to teach North American business students about the ethical standards that will help them negotiate their way through future dilemmas.

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