The paper "Analysis of Three Articles of Enron" is a great example of management coursework. Enron had until 2001 been a successful corporation based in the United States. The company had a diversified portfolio from which it realized its revenues and employed its more than 20,000 employees. Enron’ s core business was in electricity generation, natural gas pipelines and broadband provision. Jeffry Skilling was the CEO at the time Enron Collapsed. The top executives at Enron managed to collapse the once successful entity by creating an aggressive and irresponsible organizational culture that rewarded profitability and short-term illegitimate gains at the expense of ethics in as far as accounting and corporate governance are concerned.
Skilling together with Andrew Fastow the Chief Finance Officer and several other top executives engaged in fraudulent dealings including manipulative accounting, insider trading, and misrepresentation of financial statements to the extent that Enron’ s losses did not appear in its financial statements thus misleading shareholders, potential investors and business partners. The top leaders were indeed arrogant and selfish to the extent that they rewarded themselves and their cronies using the company’ s finances at the expense of the company’ s survival and profitability.
Values such as honesty and respect even though publicly acclaimed had no value to the management as long as profits and the illusion of false profitability could be sustained through clever and potentially illegal practices approved of by the top executives. Visionary leadership, ethics, accountability, responsible corporate governance and honesty are all essential elements of organizational culture according to (Robbins, Judge, Millet, & Boyle, 2011). All these lacked in the case of Enron. It is in light of this that this paper seeks to analyse three articles by (Sims & Brinkmann, 2003), (Stein & Pinto, 2011) and (Tourish & Vatcha, 2005) on Enron’ s Case to highlight managerial lessons that can be drawn from the scandal.
This will be achieved through three topics, namely; Ethics versus profitability, Gangs and Workgroups in organisations, Cultism in organisations. Ethics versus profitability – analysis of (Sims & Brinkmann, 2003) Enron had enjoyed a successful run in the early 90s to emerge a very profitable and valuable company in the eyes of investors and business analysts. According to Sims & Brinkmann, (2003), the leadership wanted to maintain this position however difficult it may have been.
The leadership could not take the idea of Enron’ s losses reflecting and thereby reducing the value of the company’ s share and so had to manipulate accounts, push employees to the limit to bring fishy deals on board and corrupt authorities to evade scrutiny. The subsequent actions by the management to conceal losses and maintain a false sense of pride in the organisation is what relegated ethics to the corner and encouraged unprofessionalism, immorality and criminality at Enron according to the analysis by Sims & Brinkmann (2003). Enron’ s top executives led by Lay, Skilling and Fastow were determined to conceal the losses, the debts and the liabilities of the organisation through special investment vehicles that could not reflect in the company’ s financial books.
They also encouraged an aggressive carefree attitude within the organisation where the means were justified by the end. This most definitely meant that the employees and the organisation as a whole did not have ethical boundaries within which they were supposed to conduct themselves.
It is important as argued by Sims & Brinkmann (2003) that leaders play a critical role in creating and implementing a culture that safeguards and promotes ethics in an organisation. judging on this assumption, it will be correct to say that Enron’ s leadership failed to do so.
de Jong, J., & Hartog, D. 2007. How leaders influence employees' innovative behavior. European Journal of Innovation Management , 10 (1), pp.41-64.
Hond, F., & Bakker, F. 2007. Managing corprate responsibilityin action: Talking, doing and measuring . Ashgate Publishing.
MacKinnon, B. 2011. Ethics: Theory & Contemporary Issues - Concise Edition, 2nd ed.: Theory and Contemporary Issues, Concise Edition. Cengage Learning.
Madu, B. C. 2008. Organization culture as driver of competitive advantage. Journal of Academic and Business Ethics , pp.1-9.
Robbins, S., Judge, T., Millet, B., & Boyle, M. 2011. Organisational Behavior (6 ed.). Frenchs Forest: Pearson .
Schein, E. H. 1985. Organizational Culture and Leadership: A Dynamic View. San Francisco: Bass Publishers.
Sims, M., & Brinkmann, J. 2003. Enron Ethics (Or: Culture matters more than codes). Journal of Business Ethics , 45 (3), pp.243-256.
smallman, C., McDonald, G., & Mueller, J. 2010. Governing the corporation; structure process and behavior. Journal of Management and Organisation , 16 (2), pp.194-198.
Stein, M., & Pinto, J. 2011. The Dark Side of Groups: "Gang at Work" in Enron. Group and Organization Management , 36 (6), pp.692-721.
Tourish, D., & Vatcha, N. 2005. Charismatic Leadership and Corprate Cultism at Enron: The Elimination of Dissent, the Promotion of Conformity and Organisational Collapse. Leadership (4), pp.455-480.