The Enron Legacy
In the modern business era, there is no other name that calls to mind corporate greed and deceit quite like “Enron.” Of course, the sordid rise and fall of this former giant has been well chronicled in such works as The Smartest Guys in the Room by Bethany McLean and Peter Elkind, and Conspiracy of Fools: A True Story by Kurt Eichenwald.
However, as bad as the Enron scandal was, there are a few positives that have come about in it’s aftermath.
For instance, CEOs that are confronted with a shortfall in earnings have a stark example of what could happen in the worst case scenario if they cook the books the way Kenneth Lay did. As Mark Morrison wrote in BusinessWeek, “Fewer big company bosses are managing in the Lay mold of pushing subordinates to make the numbers work each quarter, the rules be damned. The Sarbanes-Oxley requirement that the CEO sign-off on and accept more direct responsibility for reported results is one reason. The government’s effective legal pursuit of Lay and others who committed white-collar crime is probably an additional deterrent.”
Also, Rich Klein notes on his blog ‘Riverside Views’ the increased scrutiny given to corporate leaders by journalists and other media members since Enron. In the old days, a CEO, CFO, and general counsel might have gotten away with “no comment” or “we’ll try our case in court” because the media wasn’t always paying that close attention to how companies operated behind the scenes. But it’s a new ballgame. Smart companies know that they must engage the public when facing a crisis if they want to survive.
Of course, perhaps the greatest warning to today’s leaders is the legacy of the name Kenneth Lay. Despite a lifetime of receiving awards and recognitions from organizations such as Child Advocates, the NAACP, and the U.S. Navy, his name will always be vilified and associated with corruption; not to mention the bankruptcy of thousands of employees retirement savings.
Who would want to be remembered for that?
Enron, Kenneth Lay, legacy, aftermath
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