Enron Argumentative Essay
The corporate cultures of organizations in the United States and across the globe have been cited in the past as vital components in the management of businesses and organizations across the globe. In this respect, the existing corporate culture determines whether a business or organization would thrive or fail on the particular industry of operations. Having stated this, the leadership at Enron, a company in the United States that was faced with unethical issues in the running of its activities has been an important case study tool for understanding organizational leadership and operations in the recent past. This essay will therefore analyze the issues related to power and control within Enron’s case study which led to a ‘corporate culture that resulted in unethical behavior and the collapse of the company. The issue at the company would be examined from the perspective of classical organizational theories, human relations theory, radical theory and contingency theory.
To begin with, the leaders at Enron utilized the attention mechanism to maintain control and power in the operations of the company. As it has been mentioned by Sims & Brinkmann (2003, p.247), ‘the issues that capture the attention of a leader would also capture the attention of the greater organization and will become the focus of employees’. Speaking in other words, the management at Enron focused on issues that were able to move the masses or rather the whole organization by capturing their attention. In this respect, the way the organization was run was based on the issues that attracted more attention rather than on skills and knowledge of organizational management.
Salzmann (2008, p.7), using the contingency theory argues that the strategies, structures and practices of an organization depend on the way in which environmental variables become relevant to it. In other words, organizational life and management are situational and as such, they were subject to contingencies. In this respect, the focus on certain issues in the company such profits at all costs contributed to the emergence of unethical behavior that led to the fall of the company. Whereas it is not unethical to focus on profits when operating the company, such focus need to be done within certain limits without which the company would be forced to break rules to attain its goals of maximizing profits as was the case for Enron. Note that high performing employees were lavished with cash when going on holidays as long as they performed well.
Another issue that was related to power and control was role modeling. The examples that are set by the leadership of businesses and organizations across the globe play a significant role in the in determining whether work ethics would be upheld. According to Sims & Brinkmann (2003, p.249), whereas Enron maintained strong commitments to communication, respect, integrity, and excellence, there is evidence to support the fact that the management at the company twisted some of the ethical rules to sooth their situations. In other words, the leadership at Enron played a vital role in modeling the unethical behavior that cropped up in thecompany.
In reference to the classical theories of management, most organizations use bureaucratic system of management that allows employees to depend on top management to make important decisions, plans and execute tasks (Griffin & Moorhead 2009, p.39). In this respect, the behavior of the top management was also poised to be reflected among the rest of the employees. With this in mind, the unethical behaviors of the management of Enron companies trickled down to the lower rank of employees and became and issue that was widely accepted. It is vital to understand from this perceptive that top management act as role model for lower rank employees. As a result, the unethical behavior that is condoned by the top management would also be accepted openly by the rest of the employees. Arguably, the leadership of Enron almost certainly dictated the company’s outcome through their own actions by providing perfect conditions for unethical behavior (Sims & Brinkmann 2003, p.250).
The issue of rewarding employees for their productivity also contributed to the fall of Enron. To begin with, the reward system that is employed by companies is meant to motivate the employees who are rewarded as well as those who are not to enhance their productivity in their respective department. To begin with, the human theory of management recognizes that employees are human beings who have needs that must be met for them to continue being productive in the company. According to Rose (2009, p.44), workers cannot be regarded as mere parts in the organizational machine. This theory therefore focus on the fact that human beings must be motivated in order to remain productive. This can be done by meeting their various needs such as time off, rewards, etc.
Having stated this, it is important to mention that whereas Enron had a reward system that was meant to meet the needs of the employees and as result motivate them, this system was crooked and operated on unethical foundation. In reference to (Sims & Brinkmann 2003, p.250), the company’s compensation structure contributed to an unethical work culture, too – by promoting self-interest above any other interest. Furthermore, research on the company operations indicate that Enron’s management promoted the notion of ‘win-at-all-cost’ that allowed only the best team to remain with the company while being less concerned with whether the perpetrated actions violated the code of ethics or not. For instance, the top management favored employees who performed the best, forcing the company to adapt into its system an unhealthy competition that violated ethics.
The selection and dismissal criteria that have been adapted by Enron also contributed to unethical behavior in this company. According to Sims & Brinkmann (2003, p.251), the selection of newcomers to an organization is a powerful way of how a leader reinforces culture. In this respect, most leaders in different companies across the globe use the recruitment or rather selection methods to enhance their organizational culture. Note that the selection methods are employed could either lead to the success of failure of the company. SSimilarly, the way a company fires its employees also contributes to the way the company communicates the organizational culture. In reference to Enron’s cases, the management created an unethical selection and dismissal culture that saw employees being employed and fired in an unethical manner. According to (Sims & Brinkmann 2003, p.251), associates graded their peers, which caused a great amount of distrust and paranoia among employees whereas Enron’s employee reviews added to the competition by reviewing job performance in a public forum and sending the bottom 5% to the redeployment office – dubbed the “office of shame”.
In reference to Gareth (2006, p.330), handling of conflicts among employees as well as addressing issues that could induce discriminatory culture could result in problems in handling of the employees. Essentially, Enron enforced unethical behaviors that portrayed the coercive traits of the management. In reference to Prasad (2003, p.62-63), some organizations rely on transparently coercive and intimidatory means of control, literally bringing Weber’s ‘iron cage’ metaphor to life, with workers in such an environment being viewed as adjuncts of machines. This was the case for Enron that discriminated against employees who had low performance rates as well as those that failed to comply with the management’s unethical behavior.
Finally, another issue that contributed to the failure of Enron regard how the company dealt with or rather reacted to crisis. The reaction of the top management towards crisis in a business or organization that emanate from a particular form of organizational culture could have detrimental effects on the ability of the organization to thrive. This is as a result of the fact that defending some form of unethical cultural practices could be translated into justification of these practices in the company. In this regard, the reaction of Enron towards the financial crisis that this company was experiencing was more of a blame game rather than accepting and resolving the mistake that had been done by the management. According to Sims & Brinkmann (2003, p.248), once the Enron situation came to light, the reaction from the Enron executives was telling; the executives were busy shifting the blame and pointing fingers. In other words, the management team at Enron did not want to accept the fact that they had committed a mistake and focus on resolving the problem.
In summation, there are various issues related to power and control within the Enron which led to a ‘corporate culture that resulted in unethical behavior and the collapse of the company. It is important to understand that the issues that arise from the case of Enron regard ethical malpractices. Note that the analysis found out that in almost all the leadership issues that arose from the case study, the leader of this company led the way in disobeying the code of ethics that existed in the company. This unethical behavior resonated among employees leading to the failure of the whole company. Therefore, one can conclude that the leadership of Enron intentionally led the way towards the failing of this company.