Former Vice President of the Enron Corporation, Sherron S. Watkins, provided her insights into the collapse of Enron and offered her views on ethical leadership in a speech to the university Tuesday as the tenth guest of the President’s Speaker Series.
Watkins, who testified that she warned chief executive Ken Lay that there were accounting inconsistencies within the company before its downfall, touched on the corrosion of the company, the importance of honesty and living a life of integrity and provided several tell-tale signs of an organization that is due for an unethical future.
According to Watkins, the Enron scandal was eerily similar to Han’s Christian Anderson’s fairy-tale “The Emperor’s New Clothes.” Ken Lay fell into the emperor’s shoes when he focused too much on the outward appearance of things, instead of the details.
“Ken Lay was never looking at the details of Enron. He was always the outward face, looking at internationally what we were doing, bringing power or natural gas to developing countries. He was very much involved in politics, very much involved in the public face of the company, but never looking at the details,” she said.
During the speech, Watkins took the opportunity to address the leaders in the audience. With the aid of her experiences at Enron, she was able to pass on several key warning signs of unprincipled practices transpiring within an organization.
“Employees that are not star performers that do something ethnically wrong, they always get fired. But the star performers that violate the company’s procedures are too often given a second chance,” said Watkins. “So when you work for a company and you see the star performers and that the rules do not apply to them, you know that disaster will happen.”
Watkins also warned the leaders to practice a zero tolerance policy in their working atmosphere, stating that an organization, “really can’t afford an ethnically challenged executive.”
As soon as news of Enron’s collapse reached the public, the media looked upon top executives for answers. One of the fingers of blame was pointed at the recently deceased Ken Lay, but during her speech, Watkins admitted she sympathized with him.
“He did go down with the ship fighting to keep Enron alive,” she said. “There are still some positive feelings toward Ken Lay.”
Former CEO of the Enron Corporation and active participant in the accounting fraud, Jeff Skilling, was sentenced to 25 years in jail.
“That kind of stick needs to be held over leaders’ heads to make them think twice about how they approach their role as a leader,” she said. “Anything short of the two years – you saw with insider trading – rarely gets people’s attention the way a couple decades does.”
The quoted material in this article is courtesy of The Huntsville Item and Today@Sam.