March 30, 2021

The Wolf in Sheep’s Clothing

Sherron Watkins speaks on blowing the whistle on Enron
The Wolf in Sheep’s Clothing
The Wolf in Sheep’s Clothing

At the beginning of March, Sherron Watkins, the former VP of Corporate Development at Enron Corporation prior to its collapse in fall of 2001, spoke to Haskayne students enrolled in two final-year courses, Ethical Leadership, and Corporate Governance and Ethical Decision-Making. Both virtual events were sponsored by the Canadian Centre for Advanced Leadership in Business. Watkins was selected as one of three “Persons of the Year” in 2002 by Time Magazine.

Watkins gave two different talks that supported material being taught in the courses. The first had a focus on corporate governance and ethical leadership, showcasing changes in corporate governance that have been brought forward after the fall of Enron. For the second version, Watkins focused on moral courage and the risks of blowing the whistle, explaining the role of the whistleblower and some of the implications for those who choose to come forward and report.

After learning about the potential accounting fraud happening at Enron, Watkins drafted an anonymous letter, explaining her suspicions to the CEO at the time, Ken Lay. Watkins compared herself to a crewmate on the Titanic, reporting a leak that would cause the ship to sink, while the captain (the CEO) chose to ignore her warnings. Not only was her warning ignored, but Watkins was stripped of her responsibilities and later found out that the CEO wanted her fired for her reporting.

Watkins was shocked by this response, she believed that actions lead to results and that if she reported a problem it would be looked into and treated seriously. She thought that Ken Lay would investigate the problem and come up with a solution, but his decision to do nothing was not a choice she thought anyone was capable of. Watkins highlighted some advice for students that, after years of reflection, she often wishes that she had brought a group of people to confront the CEO, which would have prevented him from the “sticking his head in the sand” approach that he chose and force him to deal with the situation.

After the investigations began, many employees were asked how they did not notice the red flags around them. Watkins indicated the failure to be vigilant could be attributed to Enron’s corporate culture. “What have you done lately for the company?” was a common question asked by management. This mentality kept employees exclusively focused on achieving their own results. Suspicious matters were not discussed. Saying no to something or disputing a decision was often seen as a career-limiting move. This corporate culture paired with an outside auditing agency led to suspicious accounting reports going unnoticed. When people did try to speak out, their messages were poorly received, and many were forced to be demoted while some had to resign. At both talks, Watkins discussed with students some potential strategies to create organizational cultures and reporting structures to help curb unethical behaviour.

After being excluded from corporate America for whistleblowing on Enron, Watkins has found a new passion in teaching about ethics and integrity. She does this by speaking at post-secondary institutions and guest speaking at conferences - sharing how the scandal happened and how to prevent it from happening again at other companies. Watkins provided concrete advice to Haskayne students, many of whom will be graduating this spring and entering the corporate world.

Many people think that one day a big ethical concern will arise, and they will recognize it and take action. The reality is that these ethical problems get their foot in the door, and often appear as small, easy to ignore situations, and then bubble into bigger and bigger things. Watkins focused on giving students an overview of the forces that bred an unethical culture at Enron and provided them with tools to help them address future ethical dilemmas in their careers. Students were encouraged to be courageous when confronted with unethical behaviour, using active listening to hear what is really happening, and working for leaders who are passionate about what the organization does, which helps to keep self-interest at bay. By using these tools when faced with an ethical problem, students can properly handle the situation and not end up as a bystander or an offender like many employees of Enron.

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