Fortune Business Magazine - Issue 7
By Deepjyot Grover & Nilaan Sritharan
The Good, The Bad, and The UGLY!
With thousands of businesses across the globe, many companies practice ethical behaviours throughout a daily basis. The ethical behaviour a company chooses to pursue reflects their morals, values, and beliefs. In this segment we will be taking a closer look at the ethical standards of two companies. More specifically, one of the company analyzed has a negative impact in the environment in today's world (low ethical standards) whereas the other is the absolute opposite and has a great impact in the environment (high ethical standards). After analyzing the two companies, we will then create a Code of Ethics which will highlight common practices that a company should adapt.
Current Initiatives | Corporate Social Responsibility (CSR)
To start off, Google has implemented a "Green" project in which they are trying to create a better environment. By using efficient alternative energy sources such as renewable power, Google has taken a correct step in order to achieve it's goals. Google has invested over $1 billion US dollars towards renewable energy projects and has created new facilities with "green power". Furthermore, Google is constantly looking for ways to minimize their environmental impacts, thus they are committed to being efficient as possible. Over the past decade, Google has cut down 50% of the energy used in their data servers. In fact, Google is the first major Internet service company to gain external certification of their environmental, workplace, and energy management standards. By receiving ISO 14001, ISO 50001, OHAS 18001 certifications, Google has kept it's word of creating a better environment. Read more on efficiency by clicking here.
Secondly, Google has partnered up with Government agencies, NGOs, and commercial organizations to provide support with any natural disasters. Since 2005, Google has started the "Crisis" program in which Google helps countries by making informational systems such as shelter locations, emergency numbers, and donation opportunities easily accessible on the web. Also, Google issues out periodic "Public Alerts" through their system to inform the public about any disasters causing damage and provide information on how to stay safe. To expand, Google has assisted with nearly 35 natural disasters and has helped with response efforts.
Lastly, Google has helped thousands of non-profit organizations through its "Grants" program in which they support these organizations through its famous ad-word service. Here's a brief video that sums up the concept. Basically, Google supports these organizations to spread their message, mission, and initiatives through Google's search engine. In order to be eligible for the grant program, the organization must hold a valid charity status, agree to nondiscrimination, providing donation receipts and use, have a functioning website with substantial content, and must some sort of a non-profit organization. More details can be found here.
Life at Google
Google's global headquarter is located in Mountain View California employing about 8,000 Googlers in this location. Some facilities found in this location include: nap-pods, hundreds of bikes and scooters, beach volleyball, bowling alley, climbing wall, over 25 cafeterias and more than 100 micro-kitchens and seven fitness centres.
Data Centers of Google
Google's data centers are efficiently designed to use little energy as possible. Google designs and builds their own facilities reducing any unnecessary energy wastage.
Google believes in giving back to its community. Out of their revenues, they donate 100 million in grants covering disasters, community projects, teams, clubs and many more.
Data Centers of Google
Overview of the Company
Enron Corporations is an energy trading and communications company based in Houston, Texas. Enron was formed in 19585 by Kenneth Lay after merging Houston Natural Gas and InterNorth. The company employed approximately 21, 000 people and operated one of the largest natural gas transmission networks in North America totaling over 36, 000 miles. It was the largest marketer of natural gas and electricity in the United States and managed the world largest portfolio of natural gas risk management contacts and pioneered innovative trading products. In 2000, Fortune ranked Enron the 7th largest innovative company in the United States. Unfortunately Enron filled for bankruptcy in December of 2001 and was the largest such filling in United States history. Today Enron is poorly known for corporate greed and corruption, its demise cost investors and employee over $70 billion in lost capitalization and retirement benefits.
When Enron was formed in 1985 from a merger of Houston Natural Gas and InterNorth, Eron Corporation first focused on nationwide natural gas pipelines. As the years when by the firm’s business focus shifted from regulated transportation of natural gas to unregulated energy trading market because it seemed to have been that there was more money in buying and selling financial contracts linked to the value of energy assets than in actual ownership of physical assets. With the increase of competition, Enron decided to use modification and international investment to keep its market position in the late 1990’s. Unfortunately this brought Enron enormous amounts of large amount of losses but Enron never declared any information about its losses until October of 2001. Instead Enron achieved an amazing bottom-line through overstating revenues and hiding liabilities in the late 1990s. Due to manipulated and financial statements, Enron never mentioned the risks which they should have told to their investors. This led to executives of Enron disclosing a great earing forecast through the media and encouraged many more investors to purchase Enron stocks. They also convinced many of their employees to invest their pensions in Enron’s stocks. The audit company for Enron, Arthur Anderson helped Enron hide these frauds for approximately five years. As many analysts or Enron employees doubted Enron’s financial condition, they would keep them to be silent and fire them later. As Enron continued this, Enron stock price skyrocketed, peaking at $90 US. from 1998 to 2000. In December of 2000 many employee heavily invested in Enron Stock, the company had a program in which it contributed additionally shares of stock to savings and retirement plans when employees chose to fund them with Enron. This led to both investors and employees suffering from the disaster when Enron collapsed. In August of 2001 when CEO, Jeffery Skilling departed, Enron reported a loss of $618 million two months after. This led to the beginning of the Securities and Exchange Commission (SEC) investigating the company. In November of 2011 SEC discovered off-the-book overstated revenues which lead to the company’s stock declining to less than $1 US. In December of 2, 2011 Enron filed for bankruptcy protection. Many of the investors and employee lost billions of dollars.
Competitive environment contributed to the covering of the errors and cheating because employees tended to be uncooperative and seldom communicated with each other. The employees were unwilling to ask questions because asking questions was regarded as humiliating. Besides that, they were also less willing to share resources and information because they competed with each other. So in Enron, no persons asking questions as well as no one want to answer questions. Because of this working environment, few employees at Enron actually understood their jobs. As a result, they just tried to hide errors and made their work look good. Additionally, they ignored the errors and cheating of others. They never mentioned their doubts about others’ works. Because they thought if others were not actually wrong, the person who mentioned questions would be laugh at. So employees at Enron were quiet.
The culture of Enron emphasized too much on the financial goals. The person who can achieve the budget numbers would be the hero of the company. Both executives and most of employees focused on making profits for themselves through making good financial numbers instead of a real increase of the company’s economic value. Enron also was concerned less about the needs, values, desires and also the well-being of the employees. From the ethical aspect, employers should respond to their employees and keep the goal of benefiting them. In such a company, ethical standards were just window dressing. No one followed them. For example, the conflict of interest policy was waived to let the officers of Enron served as officers in off-the-book entities.
Code of Ethics
- Maintaining a healthy work environment: The concept is simple, the stronger the work life environment, the higher the productivity. This ethical concept should be practised in every organization in order to generate revenue. Organizations should understand the value of their employees and ensure that employee retention is high. This concept familiarizes organizations to promote a work-life balance as employees feel more valued and are more loyal towards an organizations. According to data, the higher the work-life balance the higher the productivity which ultimately will generate a higher income.
- Promote Corporate Social Responsibility (CSR) and raise awareness: This concept encourages all organizations to back to society. By law a company is obligated to give back to society through monetary or non-monetary methods. The higher the awareness, the more informative the customers will be. This will increase the loyalty and further develop a strong relationship between an organization and its customer(s). By raising awareness of corporate social responsibility companies can be considered to be moral and regarded as a ethical organization.
- Emphasize equal opportunity employment: During the process of hiring/termination it is crucial for the company to consider everyone as equal. Any type of discrimination including: .... should not be tolerated by any organization under any circumstances. By assuring fairness, organizations can keep itself diversified and equal. Equality is one of the major ethical issues in today's world. By eliminating discrimination companies can safeguard their reputation and stay ahead of the game.
- Obey the law and preserve confidentiality: It is important for all companies to comply with legal laws and regulations. Improper conduct will tarnish a company's reputation. Thus it is advised to comply with all legal laws and regulations. However, if there seems to be a conflict, the company's legal advisers should appropriately present their issues to a court of law. It is highly important that employees must preserve confidentiality. You might have heard the saying "Whatever happens in Vegas stays in Vegas", likewise companies should also incorporate that rule in their code of ethics. Thus, whatever happens in a company must remain in a company. Insider Trading, Whistle-blowing, Bribery, and others all violate the concept of integrity and ethics. Therefore, a company must make sure that this doesn't happen and must take serious actions in order to prevent these types of situations from occurring.
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The Good, The Bad, and The UGLY!
By comparing the two companies Google Inc. and Enron Corp. through each of the companies’ moral, values and beliefs we can understand why Google is a priority to an ethical business compared to Enron’s poor ethical behaviour. Having great ethical behaviour is a priority because it will determine whether or not the company will succeed like Google to being a top corporation in their field or fail into bankruptcy like Enron. Integrating ethical behaviour into a company is crucial for their success,