Ethics in engineering management

ETHICS IN ENGINEERING MANAGEMENT Khairul Anwar

Problem involved ethics • Cases of Enron scandal, Global crossing, Love canal and

space shuttle challenger case. • All of those uprising problem mainly because of un-ethical decision

Enron Scandal • The Enron scandal, revealed in October 2001, eventually

led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the de facto dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. • In addition to being the largest bankruptcy reorganization in American history at that time, Enron was attributed as the biggest audit failure.

Who is Enron • In 1985, Kenneth Lay merged the natural gas pipeline

companies of Houston Natural Gas and InterNorth to form Enron.

• Enron's stock increased from the start of the 1990s until year-end 1998 by 311% percent • By December 31, 2000, Enron’s stock was priced at $83.13 and its market capitalization exceeded $60 billion

What happens • unethical practices by using accounting limitations to

misrepresent earnings and modify the balance sheet to indicate favorable performance. • Arthur Andersen legal counsel instructs workers who audit Enron's books to destroy all but the most basic documents.

The aftermath • December 2, 2001; file for bankruptcy and at this time

stock close at 26 cents from $ 83.13.

• Enron's $63.4 billion in assets made it the 5th largest corporate bankruptcy in U.S. history • 19,000 lost jobs and 62% of employees' savings plans relied on Enron stock that was purchased at $83 in early 2001 and was now practically worthless.

• Sarbanes-Oxley Act of 2002 was enacted to protect investor

Universal moral standards

• By using such set of universal moral standards as a

yardstick, different codes of ethics can be compared and evaluated.

Why ethics is important • Corporation with strong, positive overall reputation attract

and keep the best customers , employees, suppliers and investors.

• Corporation are made of people; what people say and do create the corporation reputation • How to grow ethical conscience among employees?

Code of ethics • A formal, written document that contains normative

guidelines for behavior. • This code usually publish and implement among the worker to set a standard for employees to follow. • Please check your workplace later on for code of ethics.

Guidelines for making tough ethical decisions • Norman Augustine, CEO of Lockheed Martin proposed 4

questions • Is it legal?

• If someone else did it to you, would you think it was fair?

• Would you be content if it appeared on the front page of your

hometown newspaper?

• Would you like your mother to see you do it?

• If all the answer is “yes”, then probably what you do is

ethical.

Guideline for company executive

Example

Answer

Assignment In the perspective of an engineering manager, what is your opinion about ethical decisions? Give one example?

2. For products intended for global markets, customers’ wants and needs are different from one market to another. How can a centralized global team build up a product to serve as a “platform” for the global market?

1.

Due date: 26 April 2013, Friday

THANK YOU FOR YOUR ATTENTION.