Despite the amount of money Pai has made, the divisions he formerly ran lost $1 billion, a fact covered up by Enron. Skilling hires lieutenants who enforce his directives inside Enron, known as the “guys with spikes.” They include J.Ĭlifford Baxter, an intelligent but manic-depressive executive and Lou Pai, the CEO of Enron Energy Services, who is notorious for using shareholder money to feed his obsessive habit of visiting strip clubs.Pai abruptly resigns from EES with $250 million, soon after selling his stock. This creates a highly competitive and brutal working environment. Skilling imposes his Darwinian worldview on Enron by establishing a review committee that grades employees and annually fires the bottom fifteen percent.
whether or not those projects turn out to be successful.This gives Enron the ability to subjectively give the appearance of being a profitable company even if it isn’t. Lay hires new CEO Jeffrey Skilling, a visionary who joins Enron on the condition that they utilize mark-to-model accounting, allowing the company to book potential profits on certain projects immediately after the deals are signed. After these facts are brought to light, Lay denies having any knowledge of wrongdoing. However, the traders are fired after it is revealed that they gambled away Enron’s reserves, nearly destroying the company. Enron’s CEO, Louis Borget, is also discovered to be diverting company money to offshore accounts.Īfter auditors uncover their schemes, Lay encourages them to “keep making us millions”. The goal would be to make information about empirical research in management accessible to the non-expert, including students, and the focus of the reviews would have to be on the phenomena of business and management, not the development of the academic literature.Kenneth Lay founded Enron in 1985.Two years after its founding, the company becomes embroiled in scandal after two traders begin betting on the oil markets, resulting in suspiciously consistent profits. The first are accessible surveys and reviews of contemporary knowledge about management and business issues.
Going forward, Perspectives will concentrate on two types of articles aimed at this thought leader audience. Serving both these goals more effectively requires a change in strategy and direction for the journal. AMP articles are aimed at the non-specialist academic reader, and should also be useful for teaching. The overall goal of the Academy of Management journals is to serve the interests of the Academy's members, and the specific goal of the new Academy of Management Perspectives (AMP) is to publish accessible articles about important issues concerning management and business.
The onset of these two tactics can establish enduring corruption in organizations and become institutionalized in seemingly innocuous processes.Įffective with the February, 2006 issue the Academy of Management Executive has changed its name to the Academy of Management Perspectives. We describe the different forms of rationalization and socialization tactics and the ways in which firms can prevent or reverse their occurrence among employees. Further, rationalizations are often accompanied by socialization tactics through which newcomers entering corrupt units are induced to accept and practice the ongoing unethical acts and their associated rationalizations. Employees may collectively use rationalizations to neutralize any regrets or negative feelings that emanate from their participation in unethical acts. Rationalizations are mental strategies that allow employees (and others around them) to view their corrupt acts as justified. We argue that the above phenomenon can be explained in part by the rationalization tactics used by individuals committing unethical or fraudulent acts. The involvement of such individuals in corrupt acts, and the persistence of the acts over time, is both disturbing and puzzling. In most instances, the fraudulent acts involved knowing cooperation among numerous employees who were upstanding community members, givers to charity, and caring parents-far removed from the prototypical image of a criminal. Many of the recent corruption scandals at formerly venerated organizations such as Enron, WorldCom, and Parmalat have some noteworthy features in common.
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