The story of Enron Corp. is the story of a company that reached dramatic heights, only to face a dizzying fall. Its collapse affected thousands of employees and shook Wall Street to its core. At Enron's peak, its shares were worth $90.75; when it declared bankruptcy on December 2, 2001, they were trading at $0.26. To this day, many wonder how such a powerful business, at the time one of the largest companies in the U.S, disintegrated almost overnight and how it managed to fool the regulators with fake holdings and off-the-books accounting for so long.
For those not familiar with the Enron scandal, most of the top executives were tried for fraud after it was revealed in November 2001 that the company hid its mountains of debt and toxic assets from investors and creditors. At the time, Enron was ranked the sixth-largest energy company in the world.
Top Enron executives sold their company stock before the company’s downfall, whereas lower-level employees were prevented from selling their stock due to 401K restrictions. Enron filed for Chapter 11 protection in December 2001 and instantly became the largest bankruptcy in U.S. history at that time. This left thousands of workers with worthless stock in their pension. The lower-level employees lost their life savings due to the collapse.
WoW! When I read this story tears came to my eyes because people lost all their life savings. Ethics is concerned with the kinds of values and morals an individual or a society finds desirable or appropriate. Ethical theory provides us with a system of rules or principles that guide us in making decisions about what is right or wrong in particular situation.
In essence, ethical theory provides a basis for understanding what it means to be a morally decent human being. Ethical leaders always know how to do the right thing. It may be difficult to define precisely what “right” is, but a leader who is ethical is not afraid to do what they genuinely believe to be right – even if it is unpopular, unprofitable, or inconvenient.
Here are 5 Attributes of an Ethical Leader
Honesty It goes without saying that anyone who is ethical will also be honest and loyal. Honesty is particularly important to be an effective, ethical leader because followers trust honest and dependable leaders. Ethical leaders convey facts transparently, no matter how unpopular they may be.
Respect others One of the most essential traits of ethical leadership is the respect that is given to their team. They are open to other opinions and encourage people to voice different ideas within the organization. An ethical leader shows respect to all members of the team by listening to them attentively, valuing their contributions, being compassionate, and being generous while considering opposing viewpoints.
The ability to set a good example The defining feature of the ethical leader is that in addition to the foundational qualities mentioned above, they are seen to act from their own well-developed set of ethical principles, setting a consistently good example for others to follow. An ethical leader can inspire the workforce by staying true to his or her own ethical standards.
Encourages initiative Under an ethical leader, employees thrive and flourish. Employees are rewarded for coming up with innovative ideas and are encouraged to do what it takes to improve the way things are done. Employees are praised for taking the first step rather than waiting for somebody else to do it for them.
They’re not afraid to be challenged Having one’s subordinates call you out, disagree with you, challenge your judgment; all of this calls for great understanding and tolerance. Ethical leaders understand that it’s part of a culture of continuous improvement. There can be no “I’m the boss, don’t you dare challenge my authority.” It is part of not taking oneself too seriously. Self-deprecating humor is used to good effect.
Ultimately, good ethics is good business. The organization that does the right thing, and is seen to be doing the right thing is the one that will prosper in today’s more connected and accountable world. People expects moral behavior in our leaders and will punish those that transgress through loss of reputation and jail. The old paradigm of win-lose is giving way to win-win. Ultimately, good ethics is good business. The organization that does the right thing, and is seen to be doing the right thing is the one that will prosper in today’s more connected and accountable world.