Ethics and Communication How Important They Are

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Introduction
Ethics is defined as, “the discipline dealing with what is good and bad and with moral duty and obligation.” Ethics is how we should act and live but why is this important? Those with good ethics can incite trust, commitment, and meaningful communication within a community or corporation.
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While those who are unethical, can damage a company’s reputation and cause legal issues within the firm. As Immanuel Kant stated, “by which persons should act based on principles, or direct duties, that they would want everyone to uphold in all situations.” (Ballard, 2016) Managing an organization ethically is essential to promote company’s values along with improving profitability and efficiency. In this paper we will discuss the importance and impact of ethics in communication.

Enron Scandal
A company can use its ethical reputation to create a competitive advantage or disadvantage. Unethical behavior can be destructive to a company, creating financial risk and errors. When practicing unethically a company risks going out of business or even jail time for the employees. For example, the Enron scandal in 2001 lead to the largest corporation collapse in U.S. history. (Enron Corporation, 2017) Due to their unethical practice and complex financial statements, Enron was able to modify their accounts and hide money from its stakeholders. Eventually, Enron did admit to inflating their numbers and filed for bankruptcy.

Enron Scandal Aftermath
The scandal’s impact was astronomical to the investors and former employees. The scandal led to 30,000 employees losing their jobs, which was an economic issue for their community. The company’s pension fund was taken away, so employees’ loss their retirement funds. The effects of the scandal effected thousands of people, that lives depended on the company for income and stability. If we include the number of family members effected by the lost of employment, the total number of lives impacted becomes even greater.
The investors of the company also were greatly impacted as they loss more than $60 billion in market value with the collapse of the company. Ethical decision-making of Enron’s corporate leader led to the destruction of thousands. Companies associated with Enron, such as Arthur Anderson, who was the accounting firm for Enron went out of business and lost its credentials. Arthur Anderson suffered the same fate as Enron.
Enron and Communication
Sherron Watkins, Enron’s vice president, was aware of the ongoing fraud and corruption that was happening within the company. She did what she could to address and correct the issues but was afraid that going against her boss would lead to her losing her position. There were clearly communication issues within Enron due to poor ethical leadership. If Enron’s President were ethical and taken the time to communicate with his Vice President, the outcomes could have been different and prevented the devastating snowball effect that collapsed the company. Maybe with better communication, Enron could have changed the fate of its company and employees. Leaders will always be faced with important decisions that will affect their own integrity and social responsibilities. In this case, Enron failed at ethical decision making and communication.
Ethical Decision Making
Many companies adapt Corporate Social Responsibility (CSR) initiatives, which refers to the responsibilities that a business has to the society in which it operates. A business exists to produce or provide services which is demanded by society. This allows jobs to be created and income to benefit society. CSR also believes in pursuing profit within the laws. It has been proven that CSR communication is effective. (Lecuver,2017) It’s company that truly follows the economic model of CSR that are less likely to face corruption, as they are maximizing profit within the law and to benefit society.
Conclusion
Ethical decision making can have a great impact on its company. Enron’s corrupt leadership led to the destructive snowfall effect on its society in which it operated. Unethical decision from its leaders cause ill effects on other companies that associated with them and the individuals that depended on them for job security. With efficient communication, the company may have still strived until this day, but instead lack of communication and ethics caused their company to fall. Businesses that embrace the CSR model are more likely to succeed, as they are there for the greater good and are practicing within law.
References

Enron corporation. (2017). World Book, Inc., Chicago. Funk & Wagnalls New World Encyclopedia
Lecuyer, C., Capelli, S., & Sabadie, W. (2017). Corporate Social Responsibility Communication Effects. Journal of Advertising Research,57(4), 436-446. doi:10.2501/jar-2017-051
Robert L. Ballard, Melba Velez Ortiz and Leeanne M. Bell McManus (2016) CHOICE: Current Reviews for Academic Libraries. 54.2 (Oct. 2016): p155+. From Literature Resource Center.
Silveira, A. D. (2013). The Enron Scandal a Decade Later: Lessons Learned? SSRN Electronic Journal. doi:10.2139/ssrn.2310114

Willie Hill

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