Hr Crisis Management: an Enron Case Study

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1. The collapse of Enron has cast revealing light not just on the corruption of business leaders, auditors and politicians but on the appearance of deregulated capitalism as it has emerged from the stock-market bubble. It has highlighted, too, the vulnerability of the broad layers whose pensions are tied up in the savings routine so ingrained in the economy. This failure has affected not only Enron's employees but tens of millions of holders of 401(k) and defined-benefit retirement schemes.

Enron's demise was significant not just because of its size (other concerns failing at the same time, such as K-Mart or LTV Steel, had more employees and pensioners) but because it had represented the cutting-edge of corporate strategy, living proof that financialization and deregulation were the wave of the future. Enron was far more interested in maximizing trading opportunities than producing electricity. Its momentum came not from productive investment or innovation but from financial engineering.

Following the company's collapse, Enron has become a by-word for corporate irresponsibility. The financial misrepresentation that covered-up the giant black hole at the heart of the company's finances have fuelled interest in how such corporations can be identified and held to account.

The firm projected itself as a highly profitable, growing company - an image that quickly turned out to be an elaborate mistruth. Enron's statements about profits were shown to be untrue, with massive debts concealed so that they didn't show up in the company's accounts.

Not only that, but the company was seen to have been extraordinarily active in political lobbying - with large numbers of legislators close to the company in one way or another. This fact had not been enough to save it, but raised questions about how appropriate such closeness between a corporate and the political system actually is.

The question on many lips concerned just how the situation could have evaded...
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