Rise and Fall of Enron Essays

Rise and Fall of Enron Essays Rise and Fall of Enron Paper Rise and Fall of Enron Paper The rise and fall of Enron is a company that was lead to its own demise by it’s own leadership and ill business decisions. The motivational theories explained from the readings of Organization Behavior can correlate with the failure of Enron’s internal organization. Even though a company may appear to display successful business practices, the influence of leadership through management can ultimately lead the company to fail. Enron’s code of ethics prided itself on four key values; respect, integrity, communication, and excellence. Codes of ethics should be a reflection of what the owners, investors, and employees work towards as an organization. Executives overlooked those values as they deliberately corrupted Enron by engaging in money laundering, accounting fraud, falsifying income, and other conspiracies. Employees continued to work their scheduled routine hours and showed loyalty by working through lunches and doing overtime, unaware that their invincible company would soon go under leaving them scrambling for answers. As the company struggled and faced financial ruin, executives betrayed their dedicated employees by informing them that Enron’s foundation was solid and continue to be profitable and had not allowed them to sell their stock in the company. At the same time, executives sold their share of the company and received millions of dollars before filing for bankruptcy and being investigated by the United States Justice Department. The unfortunate employees believed that they helped Enron develop into a successful company that it was and saw everyone as family. A combination of motivation and influential theories can explain Enron’s ultimate failure. Enron’s failure as an organization can be described in the theories of motivation. Employees need somewhat of an inspiration to lead their efforts to attaining a solid goal. Edwin Locke’s goal-setting theory and self-concordance can both be brought to explain Enron’s failure. Edwin Locke’s goal-setting theory links motivation to meeting specific and challenging goals to contribute to higher and better task performance and receiving positive feedback would be a reward of pride and triumph. Motivational goals may come from promotions, raises, long term careers, or working for a great company. Self-concordance reflects in the way people reason in practicing goals that are in line with their interests and values. Enron offered those goals to their employees and in returned hired the most qualified, experienced, and self driven people to attain those goals. Working for a very prominent and successful company gave employees the sense of comfort and dependability that breathed prosperity. However, it was those goals that had false hopes. Enron had high aspirations that joint ventures in trading energy with investors in the new virtual market place would be successful but failed and lost millions of dollars. Enron continued to press forward and kept all employees on track but if they were not able to obtain their goals, for the sake of keeping the company above water, they were let go. Once employees dedicate and committed themselves to a strictly structured organized culture, they have a tendency of enduring ethical judgement that is later rationalized in one form or another. Strong leadership, management and organizational structure is what every business should be governed around. The neglect and abuse of that leadership, management, and organizational structure was the ultimate contribution to the failure of Enron. The executives displayed leadership in shaping and exhibiting Enron as a prominent and innovative company that discovered new ways of doing business. Under the leadership of Jeffrey Skilling, he exercised a highly strict culture that included the recruitment of top intelligent and assertive candidates from prestigious universities who were trained to produce deals rapidly. Management encouraged and required a high level of performance by each employee to any means necessary, which lead to breaking ethical business practices. As those ventures failed, executives continued unethical behavior which led to accounting fraud, falsifying income, and a number of other malpractices and abuses of power. Enron maintained to administer a series of appropriate management control which included a performance review system, risk assessment and control group, followed by a code of ethics. These groups worked on behalf of Skilling’s organizational structure and assured the employees protection. The levels of communication between management were evidently clear of doubt in regards to any questionable actions dealing with projects. Enron’s organizational structure proved to ruin the integrity of the company with corruption, influence, and manipulation. Influential leadership can carry power to others in ethical or unethical ways to serve a single purpose. Enron used those powers to create a culture that demanded excellence. Skilling’s leadership role at Enron influenced unethical behavior and directed the organizational culture to discredit the morals and values of the company. While motivation of rank, greed, and power provided management to successfully control the process in which loyal employees worked until the end. References Robbins, S. P. , Judge, T. A. (2011). Organizational behavior (14th ed. ). Upper Saddle River, NJ: Pearson Education. The Organization | July / August 2007 by Clinton Free, Mitchell Stein, and Norman Macintosh MANAGEMENT CONTROLS: THE ORGANIZATIONAL FRAUD TRIANGLE OF LEADERSHIP, CULTURE AND CONTROL IN ENRON iveybusinessjournal. com/topics/the-organization/management-controls-the-organizational-fraud-triangle-of-leadership-culture-and-control-in-enron