Reward Punishment. Top Down End Result, Bottom Line. Fear is often the dominant emotion

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4 Reward Punishment Top Down End Result, Bottom Line Fear is often the dominant emotion 4

5 Principle centered Leader models desired behavior People matter Leader listens Shared leadership Process is more important than end results (John Wooden) Love, unity of purpose dominates the culture 5

6 Merger of Internorth, an Omaha company and a Texas energy company 6

7 Emphasized perks Bigger office, bonuses, Mercedes, expensive vacations Emphasized stock price, beating Wall Street estimates Began to manipulate books, small at first, then began to book anticipated future earnings 7

8 Ken Lay President Socially and politically active Close to the Bush family Became more and more disengaged from company operations Jeff Skilling CEO Ambitious, unscrupulous, greedy 8

9 Disengaged, highly paid ($300,000 annually), anxious to please leadership of company Created rolling blackouts in California 9

10 Enron rose to #7 on the Forbes 500 index Was named the outstanding business nationally for several years in a row Stock rose to $90 per share Ken Lay received $67 million in bonus money Skilling $42 million in

11 Lay sold $300 million in stock Skilling sent out an to employees of Enron encouraging them to buy more stock for their 401k s while he was selling his stock, knowing it was virtually worthless Enron stock fell to.26 a share at the end of

12 Congressional Hearings Officers and employees appeared before various congressional committees Ken Lay, Jeff Skilling, Andrew Fastow (financial officer) Sherron Watkins, (whistle blower) interviewed Ken Lay died of a heart attack while under indictment, Fastow went to prison, Skilling went to prison for 14 years Nearly all employees lost jobs Over $2 billion in pensions were lost $60 billion in market value was lost by stockholders 12

13 Arthur Anderson, accounting firm, convicted of obstructing justice, eventually folded because of damaged reputation Massive loss of confidence by the public in corporate America (Global Crossing, World Com, Tyco were other companies which practiced unethical accounting) Sarbanes-Oxley was passed by Congress put very stringent oversight practices in place CEO s have to sign off that all practices within their companies are legal 13

14 Knowingly allowed high-risk accounting Ignored conflicts of interest Allowed undisclosed off the books activity Enjoyed excessive compensation ($300,000 per year fees) Not sufficiently independent of Enron business Ethical breakdowns usually start with minor indiscretions and then escalate 14

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17 1970 s & 1980 s Cars, clothes, cash Southwest Conference Imploded SMU, Sudden Death Penalty, 1986 Annuities, Dickerson, James Jim Clements, Board of Regents TCU Kenneth Davis Texas A&M 2,000 page report, Houston, Texas Tech OU, OSU twice on probation with major cheating 17

18 Assistant can t beat them, join them? Sudden Death Penalty ended most of the major cheating Promises of playing time, special favors to recruits still persisted and continue to this day Lack of transparency in who is being recruited persists Andre Franklin If something is not illegal, is it ethical? 18

19 Book interviewing 38 players, 8 assistant coaches regarding culture at Nebraska, years Won 82% of games Ohio State 75%, 60 more wins than any other school, 21 conference championships, ranked in top 10 nearly every year, 5 national championships 19

20 Players cared for Knew their names, 1 st 4 th team cared for equally time in weight room 99 and the 1 Integrity Honesty, keep promises no deals lost right ones Positive environment Lou Holtz Clifton research 3/1, 5/1 positive reinforcement 20

21 People react in one of three ways quit, blame, opportunity - examples from athletics 21

22 Players NFL draft American dream, set for life Coming out of NFL some were broken disillusioned One, two dimensional Factored in the spiritual dimension chapel, mass, devotional period with coaches, pre and post-game prayer, theme of the week 22

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25 Fund raising (average congressman spends 30 hours per week) Special Interests obligation to those who fund campaigns 25

26 Judao Christian Secular 1. Creator 1. Random no cause 2. History purposeful 2. No purpose 3. Absolute standards 3. Post-Modernism - Relative 26

27 Legal or illegal Legal but injurious to others Serves the common good Hard to know Hiroshima, Nagasaki 27