Integrative Case – The Downfall of Enron Part I 1. Ken Lay served as CEO and chairman and Jeffrey Skilling also served as CEO. They both were responsible for planning, organizing, controlling and leading the company. They set goals for the company and organized how they would be achieved.
Kay’s role was as the figurehead and the leader. He also served as the spokesperson for the company and made many of the decision on the future of the company. As CEO’s they both possessed effective communication skills, where decisive, which was evidenced by their vision for the company and refusal to admit wrong even at the end, and visionary. Throughout Lay’s tenor the company continued to grow and prosper at a fast pace. 2. The challenges faced were those of a changing workforce, competitiveness, and globalization, as well as ethics and social responsibility.
While many companies were downsizing in the mid-1980 s, Enron continued to grow and expand despite their lofty goals. They ventured out into foreign markets to be more competitive. The workforce also became more diverse and the characteristics changed. Employees during Enron’s tenor were less devoted to long-term career prospects; instead they were more interested in financial gain at any cost. Ethics seemed to be a secondary thought for most people during Enron’s time. To meet these challenges Enron executives had to make working for their company more attractive and lucrative.
3. The contributing factors to their ineffectiveness were poor planning and leadership. The company grew to quickly. In their desire to grow and expand, the company’s senior management did not establish and follow ethical practices that would sustain the company. Controls were not established in key places, such as, accounting practices and principles. Senior management failed to appropriately manage the activities of lower level managers and set a bad example.
The Essay on Bad Choice Company Enron Choices
What do you stand for? Choices make us who we are and what we stand for and eventually what we become. There is a lot to be said about character. The character of our society has decayed over the past fifty years. We have witnessed this on our televisions at home. No longer do we see principle-based programming like "Father Knows Best." Now we see shows like "All in the Family", "Roseanne", and " ...
Part II – The People 1. Enron sought out young, ambitious, recent college graduates and placed them in entry-level positions and then gave them the autonomy to make big trade decisions. The few star performers were promoted very quickly. Taking this hiring approach benefited the company because it kept labor costs low due to the employee’s inexperience. It also provided increased innovation and creativity because these recent graduates were exposed to cutting-edge techniques and were prone to take more risks, and it helped to socialize workers into Enron’s culture and behavioral norms. The downside to this approach was that these individuals were inexperienced and prone to taking large risks.
2. Enron employees were motivated by vanity and greed. Management used promotions, hefty raises and bonuses to motivate their employees. The focus was placed on meeting financial needs. It was effective in motivating those who were extremely ambitious and did not have concerns for ethical practices but put their focus on earnings and acquiring wealth. 3.
Enron used a 360-degree feedback performance management system (PMS).
Performance was directly linked to rewards. The system can be beneficial to managers because it typically gives them a much wider range of performance-related feedback than traditional evaluation provides. The disadvantage to this type of PMS is that if used inappropriately the focus can be placed on individual biases and politics. That is, if an employees peer dislike them, the PMS can be used as a means to hurt that individual. Enron should have more closely managed their PMS so that its focus remained on constructive rather than destructive criticism.
Also, they could have removed the link between the PMS and rewards. Part III – The Leadership 1. Lay and Skilling can be characterized as highly educated, extroverted, over achievers. Kay’s personality traits are high energy, openness and an attraction to complexity. Kay was a charismatic leader.
The Essay on Human Resource Management Labour Relation
Human Resource Management Labour Relation A Union Contract is an official agreement signed by the employer and the employees of the company covering the most important issues of the employment, among which are: the amount of payment for each job, list of the holidays, terms of vacations, insurance, pensions, description of the seniority system, an orderly plan for settlement of complaints. The ...
On the other hand, Lay was autonomous, extremely self-confident and arrogant. These traits caused them to be too oblivious to the inappropriate dealings of the company because their focus was on achieving and acquire more wealth and higher status. 2. Lay and Skilling clearly created an agenda for the company. They provided the direction and aligned the appropriate people to meet their needs. They also provided the motivation and inspiration for their employees.
However, they failed to provide the appropriate management, direction and oversight of the company’s dealings. 3. Lay used personal power and Skilling used position power. Lay’s was categorized as smooth and charming.
He was optimistic about Enron’s future and fiercely defended the company’s dealings. These are traits of personal power. Skilling on the other hand was described as “brash” or “abrasive.” With these traits people followed him due to his position in the company because he lacked the personality and sincerity to motivate others to follow him willingly. Part IV – The Organization 1. Enron’s organizational structure and culture emphasized flexibility, “loose-tight” design, “creative destruction,” decentralization, minimal reporting and control, and competitiveness. Managers were given the ability to act without the knowledge or permission of others.
The division of labor was muddled by this approach. Corporate executives practiced hands off management. They also practiced the principle of “creative destruction”, wherein the organizational structure is constantly changing. Enron executives should have established a clear division of labor so that roles and tasks were clearly defined and directors and managers were held accountable for their actions and the actions of their subordinates. A better hierarchal authority structure was required with stronger external communication, reporting and tighter control requirements. Those tasks delegated to directors and managers should have been monitored.
2. Enron’s cultural values and norms were as follows: a. Competitiveness. Risk taking – “No shots, no ducks”c.
The Essay on How Frequent Organisational Changes Affect Employees
Today’s business world is constantly evolving. To keep up with the rapidly shifting environment, companies introduce process changes frequently within their organization to improve performance, and outdo their competition. In this memo, the pros and cons of frequent organizational changes are first investigated. By going through the effectiveness of adopting specific activities and leadership ...
Insisted on results. Do not stand in the way of employees, so we don’t insist on hierarchical approval. Hands-off management. Innovation regardless of the outcome.
Employees are empowered to do what they think is best Because Enron encouraged innovation, the company grew and prospered very quickly. Employees were motivated to be creative and come up with the next great idea or innovation to increase revenue. These values also hurt the company because it put constant pressure on employees to achieve and constantly pushed them to excel in order to produce more revenue for the company and advance in the company. This forced employees to use unethical practices.
They were often left to use their own devices to achieve the aforementioned results. There were no checks in balances in place with respect to managing subordinates. 3. Organizations must change in order to meet the needs of the changing workplace, environment, technology, and economy in order to be competitive. Change is good for an organization if it is done in a controlled and structured manner.
Change is also risky because it is often met with resistance. For example, people may feel threatened and fear power loses and subsequently, resists the change. Change can also be ineffective if it is narrow and doesn’t concern itself with people and is over determined. In Enron’s case, the organization was constantly changing with no collective rhyme or reason..
