Enron Paper- Examining a Business Failure
Enron- Examining a Business Failure
University of Phoenix
Organization Leadership
LDR/531
Mr.
January 12, 2010
Enron- Examining a Business Failure How did a multibillion dollar company arrive to the point of non existence? Was it the lack of organizational structure? Or maybe the lack of ethical management and leadership? One thing is certain and that is Enron has given the world a glance at how a leader within the energy industry, could have it all one minute, yet in a blink of an eye it can all be gone. Enron’s circumstance was not a random act coincidence but a perfect example of the repercussion and consequences a business will face when there is an absence of integrity, structure, and overall firm management and leadership. In looking further into the collapse of Enron’s empire it is imperative that analysis of the company’s failures be brought to light. In addition to the discovery of its failures also identifying specific organizational behavior theories that could have predicted or explained the company’s downward spiral into disaster.
Enron’s failures began at the top of the chain which included management. According to Fayal, 1916, planning organizing, coordinating, leading, and controlling should be carried out by competent and efficient managers, and in looking at Enron’s management this was missing from its top executives. Although Enron’s top management consisted of 17 directors with MBA backgrounds and impeccable records, they were influential icons that lacked systematic approach to the business structure in regards to financial accountability and oversight of the daily business process. In contrast financial incentives for executives appear to have been a common struggle for many in the company, and were a common culprit in steering this business’s ethics into the wrong direction. In Enron’s case that green monster known as “greed” got the best of executives and destroyed what little was left of ethical business
University of Phoenix
Organization Leadership
LDR/531
Mr.
January 12, 2010
Enron- Examining a Business Failure How did a multibillion dollar company arrive to the point of non existence? Was it the lack of organizational structure? Or maybe the lack of ethical management and leadership? One thing is certain and that is Enron has given the world a glance at how a leader within the energy industry, could have it all one minute, yet in a blink of an eye it can all be gone. Enron’s circumstance was not a random act coincidence but a perfect example of the repercussion and consequences a business will face when there is an absence of integrity, structure, and overall firm management and leadership. In looking further into the collapse of Enron’s empire it is imperative that analysis of the company’s failures be brought to light. In addition to the discovery of its failures also identifying specific organizational behavior theories that could have predicted or explained the company’s downward spiral into disaster.
Enron’s failures began at the top of the chain which included management. According to Fayal, 1916, planning organizing, coordinating, leading, and controlling should be carried out by competent and efficient managers, and in looking at Enron’s management this was missing from its top executives. Although Enron’s top management consisted of 17 directors with MBA backgrounds and impeccable records, they were influential icons that lacked systematic approach to the business structure in regards to financial accountability and oversight of the daily business process. In contrast financial incentives for executives appear to have been a common struggle for many in the company, and were a common culprit in steering this business’s ethics into the wrong direction. In Enron’s case that green monster known as “greed” got the best of executives and destroyed what little was left of ethical business
Bibliography: Yukl, G.(2006). Leadership in Organization, 6ed. Prentice-Hall, Inc. Judge,A., Robbins,S. (2007). Organizational Behavior, 12ed. Prentice Hall, Inc. H. Fayol, Industrial and General Administration (Paris: Dunod, 1916). Woodrow W. C., Demirag, I. “Enron: The Failure of Corporate Governance.” (Winter 2002): p105 (18). The Journal of Corporate Citizenship