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Essay / Research Paper Abstract
This 4-page paper describes the organizational cultre of Enron, and why it led to the company's failure. Bibliography lists 6 sources.
Page Count:
4 pages (~225 words per page)
File: D0_MTenronfai.rtf
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Unformatted sample text from the term paper:
was a company hailed by Wall Street and others during the late 1990s as the ideal company for the so-called "New Economy." However, there were warning signs among the organizational
culture and leadership that pointed to the fact that the company was due to crumble. Its been said that ethical behavior and an ethical culture needs to come from
the top. Conversely, governance without ethics also is a top-down scenario. In the case of Enron, management forced an aggressive accounting policy to boost earnings (Hamilton, 2004). Led by chairman
Kenneth Lay and CEO Jeffrey Skilling, the company was encouraged to "translate any deal into a mathematical formula" that could be traded or sold to the special-purpose entities that were
set up to take on debt (Hamilton, 2004). Though SPEs in and of themselves arent awful, the way in which Enron used them was. But how was the company able
to get away with this? In short, the organizational structure permitted it. For example, Kenneth Lay headed up the board of directors - meaning he decided who could sit on
the board (Gordon, 2002). Most executives of corporations are accountable to their boards of directors - but if executives also sit on the board, there is no one to patrol
their behavior. Along with this, Enron believed in its own publicity as the poster child of corporate culture for the "new economy" (which, at the time, pitted the more modern
dot-coms against the stodgy, less flexible, bricks-and-mortar companies). The company focused on earnings growth and individual initiatives and entrepreneurism (The Environment was Ripe for Abuse, 2002). Not that any of
these things are bad in and of themselves - but at Enron, they were taken to extremes. The problem here is that growth and initiative were pursued by unethical corner-cutting
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