Ethical Culture Project
PART 1:
Enron displayed all four cultural dimensions which are: high-risk taking, outcome orientation, aggressiveness, and low/no people orientation as a company. Kenny Lay, who was the CEO and Chairman from 1985-2002, displayed high-risk taking during the Vahalla scandal. He had two oil traders, Louis Borget and Tom Mastroeni that would make bets for Enron on whether the price of oil would rise or fall. This is a risky market because you can lose ten times your original investment, and it was hard to make the amount of money legitimately that they were at the time. Borget and Mastroeni were gambling with Enron’s money. Jeff Skilling organized high-risk company trips where he would plan dangerous activities that Enron employees would participate in. Andy Fastow, Enron’s chief financial officer, wanted to please his boss, Skilling, so he tried to increase Enron’s stock up even though they were 30 million dollars in debt. He got hundreds of special companies to prop up Enron’s stock by making Enron debt disappear. To outside investors it looked like cash was coming in, but Enron was hiding their debt in Fastow’s companies so investors couldn’t see it. Fastow was participating in outcome orientation, and Skilling encouraged him to do so. Skilling created a very aggressive company culture for Enron by implementing a performance review committee (PRC) that people were graded a one to a five and 10% people had to be a five and if they were they would be fired. The “rank and yank” method was initially designed to evaluate the skills and achievements of employees achieved that year morphed into something else. Since employee’s annual bonuses, future jobs, and keeping their job depended on the review of the PRC, managers did whatever they could to keep, promote and protect their favorite employees. They showed no people orientation during the in the