Enron's Leadership And Management example essay topic

In this module, we are discussing behavior in organizations beyond the individual level. We have read and learned about issues of group processes, power relationships, and conflict management. For this case study, I am asked to characterize the internal politics and group dynamics of Enron during their times of conflict and distress. Enron's organizational structure was politically motivated to the point of utter greediness among the executives. Internal politics were the norm between employees in order to preserve their job and prove their immediate value to the organization. The top leadership drastically affected the group dynamics because the power relationships that formed between executives created fear among employees and severely damaged any successful attempts for group processes.

Conflict management was a simple but reprehensible process; if there was a conflict, it was resolved quickly and usually with someone fired. There was no room to question the authority or decisions of management. We have all heard about the Watergate scandal and the Martha Stewart scandal, however, nothing was as big as the Enron scandal. It was the biggest corporate scandal in the history of the United States.

There are many speculations and opinions about what caused the collapse of the corporate giant. There is no simple answer or diagnosis for the collapse of Enron. There were many underlying factors that contributed, but its leadership ultimately led to its collapse. Enron's leadership and management were very greedy and run very political.

This was obvious with the billion-dollar oil-trading scandal in 1987. Traders had falsified transactions to boost volume and fatten their wallets. The chairman at the time, Ken Lay, knew all this because the company needed the revenue. Once the competitor's became suspicious, Ken Lay feared that Enron's trading partners would have demanded the company to cover its position with cash it did not have. The company later fired its traders and bluffed the market about its loss. However, there was more to the story then this.

Top executives became greedier. Managers began calculating their bonuses and following the lead of upper management. It got so bad that the demand to make more money created an environment where raising questions about a deal was considered disloyal. Based on testimony from former employees, Enron was a great place to work. However, when Jeffrey Skilling was promoted to president and chief executive officer in 1996, things changed. During the times of conflict and distress, Enron's employees were treated poorly and politicking hit an all time high.

Mr. Skilling was determined to have a corrupted staff that believed in his vision and anyone who did not was fired. For example, it became apparent that those who tried to stop deals received poor ratings and released. Mr. Skilling designed a rating system that was known as "rank and yank."This was the informal name for a performance review process in which employees were evaluated at regular intervals by management groups and the lowest-ranked were purged". (Schwartz, 2002) This method of expulsion kept employees on their feet and internal politics high. It was all about what you are bringing to the company now or within six months from now, no matter what the cost. If it took longer than that, then it was not discussed.

During this time, there were power relationships that had formed between top executives to keep the company afloat and to prevent one employee from telling on another. This dramatically affected group dynamics within the organization. The group processes were also amongst these same lines of non-existence. The employees were afraid to gather and try to implement a better way of communicating. Fear was rampant throughout Enron as no one wanted to go against the grain or question a decision or process. The plan of defrauding the company was not intentional; once the mindset changed from looking at the short-term versus the long-term, temptation and greed settled in and took over.

Conflict management is something that every organization faces. How an organization handles conflict determines their success and failures. Enron's conflict management style was reprehensible and one that was an integral factor in its downfall. Enron's rank and yank evaluation method struck fear in the minds of its employees and ensured that no one would question the authority or decisions management made, even if it dealt with millions of investors dollars. Employees that knew problems existed in their company did not know the full extent or how large they actually were because they were always swept under the rug.

There was no communications between offices. Enron top leadership knew how to keep people quiet and silence any rumors about problems in the organization. In conclusion, Enron's collapse was a combination of many factors but mainly attributed to the poor leadership and unethical standards they adhered to. Executives at Enron became so greedy they were willing to do whatever is necessary to make more money no matter what the cost. Jeff Skilling's management style and power hunger created this environment. It was obvious that Mr. Skilling dictated to Enron's staff.

Everyone had to do it his way or he found himself out in the street. Furthermore, the group dynamics was non-existent due to Mr. Skilling's tyranny. The only decisions that were made must have an impact on the company within a six-month period or it was not worth discussing. Conflict management was resolved in such a way that employees learned to keep their mouth shut in order to preserve their job. There was no two-way communication, just one way or the highway.