Rate this article:
Average rating:
Total votes: 1
Besides bankruptcy, what do Enron Corp. and Kmart Corp. have in common? Legions of rank-and-file employees who might be better off today if they had exercised enlightened self-interest before it was too late.
In terms of corporate cachet, the Houston energy trader and the Troy, Michigan, discount retailer could hardly be more dissimilar. Enron, once number seven on the Fortune 500, was built on a sexy electronic marketplace, state-of-the-art black-box accounting and the greedy enthusiasm of top management, pricey advisors and equity analysts for hire. Kmart, with more than 2,100 stores, grew up on Blue Light Specials and lowbrow apparel.
But even with these differences, the pair of collapsed giants make an instructive case study for employees everywhere who want to take another look at their relationships with employers. Here are three lessons to take away:
1. Seek Perspective on the Health of Your Employer's Business.
Don't just read your company's annual report. You also need to pay attention to what equity analysts and other industry observers are saying about your company's financial prospects.
Unfortunately, you can't take the opinions of one or even a consensus of observers as gospel. As recently as November 2001, a report by investment banker Lehman Brothers Holdings Inc. rated Kmart stock a "buy." Enron, now almost universally despised, ranked number 22 on Fortune Magazine's 2001 list of best companies to work for, according to Hoovers.com.
So it also pays to keep your eyes open to what's going on around you in the workplace and in your employer's marketplace. It doesn't take a Wall Street genius to glean that Kmart has fallen behind Target Corp. in the budget fashionista department and lost the price war to Wal-Mart Stores Inc.
What action do you take if it appears your employer is out of touch and losing ground versus the competition? Go work for the competition.
2. Don't Put All Your Retirement Eggs in the Company Basket.
Shortly before Enron filed for Chapter 11 bankruptcy, in an online chat then-CEO Kenneth Lay encouraged his employees to keep buying company stock. Enron employees have a history of investing heavily in their company's equity; 63 percent of 401k portfolios was in the stock at the end of 2000. Many of Kmart's 240,000 employees also hold company stock. The rest of the story is a sorry headline: Seemingly solid investments melt down to penny stocks.
"Make sure you have no more than 10 percent of your stocks in your company," says Kay Shirley, a certified financial planner and president of Financial Development Corp. in Atlanta. If you get a discount on company stock, go ahead and buy it, Shirley says. Just keep selling enough of it to rebalance your portfolio periodically. Most large companies allow employees to sell their stock within 18 months.
3. Don't Sacrifice Your Ethics for Company Loyalty.
It's your reputation. When Enron minions were asked to cook the books or shred them, depending on the damage-control recipe of the day, their bosses weren't the only ones putting their professional ethics on the line. "The fact that your superiors tell you 'everything is fine' isn't license to ignore your own integrity," says Dawn-Marie Driscoll, an executive fellow at the Center for Business Ethics at Bentley College in Waltham, Massachusetts.
Like any other company, your employer should make an effort to institutionalize its ethical standards through a monitoring system such as an ethics officer, according to Driscoll. "If your company doesn't have any mechanism and you encounter questionable practices, document everything you're doing, what you're being told to do and so on," advises Driscoll. "Then take it to an outside source" for an objective opinion.
Does loyalty to your company -- not to mention fear of losing your job -- make it difficult to raise a red flag? Of course it does. So it makes sense to update your sense of professional obligation, to make it more personal and less institutional.
"Loyalty today is the network that includes your boss and colleagues, and it's about making that portable" to wherever your career may take you, says Susan Battley, CEO of Battley Performance Consulting Inc. in Stony Brook, New York.
Call it professional loyalty, 21st-century-style.
