Ethical Planning

In the recent past whenever we turned on the TV or read the newspaper we heard of some kind of scandal that had rocked the stock market; among these scandals perhaps the biggest was the Enron Corporation. The scandal arose not due to the financial market or the decline of demand, but due to the lack of ethics in the way that the company decided how to operate and report to its stock holders. This lack of ethics created a riff between most of the companies in the United States and the people that either held stocks in those companies or people that relied on the services that were provided by those companies. This lack of ethics also forced the government to pass legislation which would hold management teams responsible for the actions of their companies in the future. In this paper we will look at how management teams need to use ethics when they are in the planning phase of the four functions of management to create an ethical plan of operation, and how laws can hold these teams accountable if they fail to operate ethically. We will also look at the Enron Corporation and use it as an example of how its unethical planning and decision making forced the company to fall from being one of the most powerful companies in the world to filing for bankruptcy.

Planning is possibly the most important phase within the four functions of management. It is during the planning phase that management determines the organization’s mission, vision, values, goals, objectives, roles and responsibilities to its customers and stock holders. An organization’s success or failure relies heavily on management’s plan. It is in this phase that a management team needs to make ethical decisions related to the direction that a company should take or how the company will operate. So before we can talk about these ethical decisions we must first understand what ethics is. Ethics is defined as “rules or standards governing the conduct of a person or the conduct of the members of a profession” or “A theory or a system of moral values” (ethics, 2005). In other words, ethics is a guide for how management conducts business, either being a written guide or unwritten. Ethics helps management teams answer questions of what is the right or wrong thing to do. Many times conflicts arise during the planning phase because of conflicting concepts between members of the management team about what is the right thing to do. This is an example of ethics playing a role during planning because many times the right thing to do is not always a good thing for business. An example of this in the case of Enron is how the management team made their decisions. Enron’s management team made decisions based solely on what was good for business instead of making decisions based on ethics. From the reports released after the scandal, it would appear that Enron’s management was making their decisions based on the bottom line, which is, as with any non-profit business, money. Initially no one seemed to mind that the majority of the decisions were not ethically based because Enron’s profits were soaring, even setting new stock market records. While these business decisions seemed to work and the stock was growing at an immense rate, eventually Enron’s management team found themselves in a dilemma. This dilemma was due to the fact that management found it difficult to trade profit making for an ethical approach to conducting their business.

Once a corporation’s management team forgets to use ethical decisions when planning it is not just the upper echelon that feels the impact, it is the consumers as well as the rest of the employees. When a corporation’s management team makes unethical decisions they are taking a risk which can lead to strict consequences. A specific example of a company not using ethics in their decision making process was shown in the 2001 California power shortfalls. Starting in the summer of 2001, rolling brownouts as well as blackouts caused companies in California to suffer profit losses due to decreased productivity. These power interruptions also caused the general population to spend an unpredictable summer dealing with such issues as limited home power, traffic jams due to downed traffic signals and general reduced creature comforts associated with