Free Business Essays - Enron Creditors Recovery
Enron Creditors Recovery
Enron changed the way the public sees big corporations. Because of the greediness of the executives, many people lost their retirement savings and jobs. One thing Enron did after emerging from bankruptcy was change its name to Enron Creditors Recovery Corporation. There were also numerous law changes created by the SEC to help prevent scandals like this from ever happening again. Enron’s first mistake was not to keep the interests of perhaps their two most important assets: Their organizational and public interests.
In order to survive in the business world Enron Creditors Recovery Corporation, ECRC, must protect many things in order to survive. They need to protect the few assets they have left in order to sell them at the highest possible price. Since their survival depends on being able to repay their debts protecting their assets should be a top priority and the more money they bring in from the sale of these the faster they will pay of their debt. The company also needs to protect their employees and there must be clear lines of communication throughout the organization in order for this protection to take place.
The company should make the importance of ethics more prevalent. Since the fall of Enron was due to unethical and illegal acts the Creditors Recovery Corporation should have a very large focus on legal practices and a strong ethical code. There need to be strict polices, which are developed guidelines regarding conduct in the workplace, and they need to be followed to the letter (Goodall, 180). With a new ethical code of conduct people may be more likely to become the whistle blower and report unethical actions if they see them taking place.
Since the Sarbanes Oxley act was created after the fall of Enron, many of the previous things that took place will not be able to take place again under these new regulations (Baker and Bealing). ECRC also needs to make sure they have purged the organization of all of the employees that were involved in the scandal. They must keep trying to show that they have learned from their mistakes and they are now a reliable organization.
Identity is very important to any organization, but unfortunately Enron did not protect their identity in the first place and the organization began to spiral out of control due to all of the illegal and unethical acts. The name Enron is very tainted after the scandalous events that were exposed. There is not much of an identity left to protect now however, they are in a rebuilding process and need to make good choices in order to re-establish their identity in a successful way. They may be able to rebuild faster and appear to be more reputable if they completely rid themselves of the name Enron. ECRC can try to protect their identity by stressing that they are serious about paying off their debts.
With the fall of Enron all of their Credibility, which is a demonstration of believability and trustworthiness, was lost (Goodall, 133). They had to rebuild and start from square one to develop credibility from the ground up. Again, it still might be in their best interest to change their name completely so it does not carry such a negative connotation. They also need to act in a socially responsible manner. After the fall of Enron many practices need to be abandoned and new practices need to take place.
Since ECRC is determined to pay back their debts they need to find an accounting firm that has a good reputation and good credibility. There will need to be better accounting practices used in order to promote transparency, which is openness in the organizational processes (Joseph, Gilman, Raven). This extra transparency will allow more people to keep an eye on the practices being used. They also need to emphasize that they are seeking ways to pay people the money they are owed due to the fall of Enron and that the board of directors has been changed and these people will be sure to see their goals through.
Public interest can be considered as the “general welfare” or “common well-being” of the people. It is the information that the general public should know about the company. In the case of Enron, the public and its employees should have been made aware that the company was having problems. When they waited until the last minute to tell the media it caused much more problems.
There is no single thing that we can do to instantly fix what has happened in the past with Enron, but we can take steps to fix problems that could occur in the future for other companies and/or organizations. Our group strongly feels that the best thing for a company to do is to be upfront and honest with the public from the start. There should also be a new board of directors that is responsible for making sure their employees are acting in legal activities and doing their job.
In every company there needs to be a system of checks and balances. In the Enron fiasco, everyone including the financial advisors, managers, and lower level employees had made assumptions about Enron’s stock prices. They assumed that because the prices were continuing to go up and nothing unusual was happening in the office that everything was just fine and everyone was doing what they were suppose to. Enron was a very credible company and demonstrated believability and trustworthiness in the years before the failure so no one thought to check up on employees or see where the money was going to. There needs to be some sort of a system where people check how other employees are doing in their specific area of work.
Our book discussion something called a problem-solution pattern. It is basically an organizational structure that begins with a problem and offers a solution or potential solution. Enron and any organization with problems should to use this to fix potential problem or answer questions.
Enron’s failure also raised a lot of questions about how companies were being run and how they were following rules. “The Enron failure has brought a direct focus on how well the systems of regulation and oversight of the accounting profession are working in achieving their ultimate objective that the opinions of independent auditors on fair presentation of financial statements can be relied upon by investors, creditors, and the various other users of financial reports.” (Protecting the Public Interest)
Right after the public found out about what had been happening with Enron, the government decided to call in the Securities and Exchange Commission (SEC) to do an investigation on the company and how it was run. The SEC was established in the 1930s after the stock market crash of 1929 and the Great Depression. They evaluated and are still to this day looking over many different companies and their boards, especially the larger ones, and making sure that something like the Enron scandal doesn’t happen in the future. The Companies must answer a series of questions like, “Is there a clear understanding of whom the board is serving and its fiduciary responsibility to shareholders and related impact on the capital markets?” These boards are the essential link to fair financial reporting and protecting the public’s interest.
With all the forms of media that are available today, from emails and internet, to television and newspapers, Enron would have no problem getting their message out to its organizational interests and public interests. A tool that would be useful to help communicate to others about what has happened and how the company would be going in a new direction would be by using the CCCD Process. The CCCD Process consists of four steps: Choosing a strategy, Creating a message, Coordinating the communication event, and Delivering the message.
Enron would need to choose the strategy on how they want the company to proceed, whether it is to dissolve the company or try to move forward with new executives and try to change the image of Enron. They then would need to create the message that they want their different interests to hear. They would then need to coordinate with their different offices on how that message will be relayed. Finally they would need to deliver that message. Internet and newspapers would be inexpensive. They could spend money on TV commercials in order to boost there public image.
When communicating to their interests, it is important to remember that they need to be treated differently. With respect to their public interest, Enron is a global company with assets and interests all over the world. Therefore they should speak to their “public” on a world level. Fraser Likely, a public relations and communication consultant has been studying public relations around the world for more that ten years. Likely suggests that the Headquarters based in Houston, Texas should not be the ones to communicate their plans to the whole world. He says that there should be a “separate, distinct, tailored program to each region or country” and not to send the exact same message to all parts of the world. This will help ensure that the major goal and intent of Enron’s message can be communicated accurately to the diverse countries and people around the world (Likely).
Rick Maurer asked the question: What happens when a new project must be implemented and you weren’t in on the planning, and you weren’t consulted on the ways to implement the new project? This is the problem that the managers of Enron would be facing. It was because of the immoral and illegal acts by their superiors that made the problem, and now they are left to communicate to their subordinates what is happening and what direction the company is going in now. Maurer has four categories of responses that may be helpful to Enron when dealing with their organizational interests: Reflect before you act, Influence the people who made the decision, Get your team involved, and Build strategic alliances. Maurer states that in the first category, it is important to reflect on your own feelings about the new direction.
Your superiors have already had time resist some of the changes that are going to happen that it is OK if you feel them as well. It will be helpful to have all of the questions and concerns that any exist figured out because the employees will probably have the same questions. In the second category it is important to realize that some things can’t be changed, no matter how much you disagree with a decision. He says to try to offer changes that will let the project continue forward, but in a way that you can support (Maurer1).
The third category is to get your team involved. This would be a very hard task for the managers of Enron, but if managers can show that they are on the side of the employees, this can help to transition to the new phase of the company’s direction. To help build strategic alliances, Maurer says that it is important to communicate early and often and that employees appreciate honesty, even when the news is not going to be good. Also, you need to follow through on your promises. Nothing will destroy relationships faster than lying and not completing what is promised to the employees. When that happens, it is hard to move forward and be successful (Maurer2).
It is important for a company to have the trust of their employees and stockholders, and their customers in order to be successful. The stock market has shown that at the first sign of some questionable activities, investors are ready to bail and employees are constantly looking out for their best interest. Hopefully, other corporations can look at Enron and other companies like them who have gotten greedy at the risk of the company and learn that it is better to play by the rules and everybody wins.
References
Goodall Jr, H L., and Sandra Goodall. Communication in Professional Contexts: Custom Edition for Arizona State University. 2nd ed. Thomson Wadsworth, 2008.
Gudikunst, Arthur . "Enron - A Study of Failures." The Faculty Network Fall, 2002 1-11. 25 Apr. 2008 http://bryant1.bryant.edu/~facdev/Web%20Sites/newsletter/fall02/agudikunst.htm
Henry Kaufman. "The fallout from Enron: Lessons and consequences. "Vital Speeches of the Day 68.15 (2002): 461-465.ABI/INFORM Global. ProQuest. ASU Library, Tempe Arizona. 27 Apr. 2008
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Likely, Fraser. “What Do We Mean By “Act Locally”?.” Strategic Communication Management 10.5 (Aug. 2006): 5-5. Communication & Mass Media Complete. EBSCO. Fletcher Library, Phoenix, AZ. 26 Apr. 2008 http://login.ezproxy1.lib.asu/login? url=http://search.ebscohost.com/login.aspx?direct=true&db=ufh&AN=22149098&site=ehost-live.
Joseph, Joshua, Stuart C. Gilman, and Cheryl L. Raven. "Conflicts of Interest: Balancing Appearances, Intentions and Values." Ethics Resource Center. 2002. 26 Apr. 2008 <http://www.ethics.org/resources/articles-organizational-ethics.asp?aid=861>.
Maurer, Rick and Rick Maurer.. “Caught in the Middle.” Journal for Quality & Participation 26.2 (Summer 2003): 35-35. Academic Search Premier. EBSCO. Fletcher Library, Phoenix, AZ. 26 Apr. 2008 http://login.ezproxy1.lib.asu/login? url=http://search.ebscohost.com/login.aspx?direct=true&db=uph&AN=10295662&site=ehost-live.
Walker, David M.. "Protecting the Public Interest." United States General Accounting Office 5 Mar. 2002 1-38. 25 Apr. 2008 <http://www.gao.gov/new.items/d02483t.pdf>.
William E Bealing Jr, Richard L Baker. "The Sarbanes-Oxley Act: Have We Seen It All Before? "The Journal of Business and Economic Studies 12.2 (2006): 1-10,75.ABI/INFORM Global. ProQuest. ASU Library, Tempe Arizona. 27 Apr. 2008 <http://www.proquest.com.ezproxy1.lib.asu.edu/>
