Enron was an electrical, communications, pulp and paper, and natural gas company. In 2001 the company was on the edge of bankruptcy. The company was in a financial nosedive as stocks dropped from over $90 only to hit the bottom of the barrel. Overnight the story of the Enron scandal became the focus of the world’s attention. In 1990, the accounting procedures became corrupt, part of which was the manipulation of stock prices. Enron started having troubles because of the lack of leadership and management protocol being followed. The low stock prices made leadership take harsh action towards their accounting procedures. In order to make the company look better in the eyes of the shareholders, executives where dependent upon finding new and more reliable capitol while also trying to cover up the accounting deception. Like any lie, the need to continue the scam magnified with each fiscal year. In the end, everything finally came out and an empire fell. The following paper will discuss organizational-behavioral theories that could have predicted why Enron as a company failed. Then by comparing and contrasting the contributions of leadership, management and organizational structures to the failure.
First, the development and growth theory includes the stages of group development, team cohesion, and conflict resolution characteristics. (Robbins & Judge, 2011) Based on this theory, Enron failed due to negligence in adopting policies for recruitment and training partners in ethics. The strong organizational culture formed among each other caused part of this downfall as well. Contingency and trait theory could also have been used to predict Enron’s failure. Leadership demands that a person’s behavior must line up with the situation in front of them. Also leaders must behave according to the strategies and regulations the organization developed. (Robbins & Judge, 2011) Enron leadership failed due to the lack of leaders who solved problems;... [continues]
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