When Tough Performance Goals Lead to Cheating

When Enron, one of the world’s largest energy companies, collapsed in 2001, it sent shock waves through the corporate world. Revelations of systematic fraud, deception, and corruption across the organization showed the devastating consequences of unethical behavior in organizations. The Enron scandal raised the fundamental question of why such behavior occurred — and became institutionalized — in the first place. One answer, provided by both independent investigators and company officials, was that Enron’s goal-setting practices, which involved setting difficult and specific performance goals for employees, were at the heart of the misconduct.

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