Posted at 10.11.2018
This paper analyses the Enron company culture and the key issues that eventually resulted in the "Enron Corporate debacle" and just why it is so essential that top level management is the key proponent of the culture shaping lower level employees' behavior of moral reasoning. In addition, as there is a need to comprehend how different types of ethnicities may very easily help business to execute, this essay will identify the sort of Enron's commercial culture through applying the assessment musical instruments produced by Cameron and Quinn (1998).
In today's business environment the culture has huge impact on organization's performance. It really is widely recognized by the managers, that the adoption of organisational culture as a highly effective control tool, gives the opportunity to have an effect on on what folks think, consider and value (Ray, 1986).
It is commonly known that different organisations have typical ethnicities. The culture of a group can be defined as:" A routine of distributed basic assumptions that the group learned as it resolved its problems of external adaptation and inner integration, that spent some time working sufficiently to be considered valid and for that reason, to be taught to new associates as the way in which to understand, think, and feel in relation to those problems" ( Schein, 1993: pp373-374). Organisations develop their own culture through history and structure that gives a sense of identification. Therefore, every culture possesses its own practices, knowledge, art work, moral issues, regulation, customs, and any capabilities and habits acquired by specific as an associate of world (Tylor, 1970). It ascertains, through the beliefs, values and norms just how "how things are done around here" (Mullins, 2002: p802). Company theory scholars differentiate that organizational civilizations associate to the concept of a business. However, Huczynski & Buchanan (2001: p627) dispute that the facade symptom of culture "are its most obvious & most accessible forms, which will be the obvious and audible behavior patterns and objects". In the case of Enron, the analysis for the company's downfall shifted well beyond financial and financial debate as the organization culture was shown to be a primary reason and contributing issue (Rapoport & Dharan, 2004). The culture got a shockwave when it arrived compared to that Enron was seen to be a good example of corporate and business citizenship and ethics before its collapse (Sims & Brinkmann, 2003) while in reality the business was cheering a culture for back-biting management possessed with exhibiting short-term gains and inflating the company's stock value. Sims and Brinkmann (2003) point out that this difference between the culture proven to the public and investors and the worth being enacted within the company is an exemplory case of the conflict that can be found between degrees of culture within an organisation as advised by Schein (1985). Conducting the further research of the Enron's downfall it is vital to identify the organizational culture that the company could be identified with. Hence, in accordance to Cameron and Quinn (1998) and their developed marking criteria, there are four types of organisational cultures identified which include collaborate (clan), create (adhocracy), control (hierarchy) and remain competitive (market) cultures. After close research and analyse of the types of organisational ethnicities and relating the requirements to the research study it shows that Enron applied a compete culture, which somewhat, brought the company to downfall. Compete (market) organizations are centered on relationships- specifically, transactions-with suppliers, customers, contractors, legislators, consultants, regulators, etc. Through effective exterior dealings they feel that they can best achieve success. Compete (market) organizations are concerned about competitiveness and efficiency through accent on partnerships and placement (Cameron and Quinn, 1998). Enron executives spent additional time distressing about reputation and getting forward than trading with the each day business processes had a need to prolong the company. The very best managers thought Enron needed to be the best at everything it did. When there been around failures and losses in their business performance, what they do was covering up their deficits in order to safeguard their reputations instead of trying to do something to make it correct. In the case of Enron, the common goal of earning that is frequently anxious in compete culture organizations, did not translate past hard business discounts and unethical business procedures.
In Enron's case, its corporate and business culture performed an important role of its collapse. It was culture of greed and moneymaking - In Enron, greed was good and money was God. There is a little regard for ethics or regulations. Such attitudes infused the whole company from the top down to specific employees. Organisational culture reinforced unethical practises- problem, cheating, and imitation practices were wide-spread. Many executives and managers realized that the business was following some illegal and unethical methods, but the executives and the mother board of directors did not know how to make the honest decisions and corporate ethical culture. Creative accounting and misleading profit studies were a subject of everyday treatment. Denial and reputation management empowered them keep on their unethical and often illegal activities. In addition, if the business makes huge gains in unethical way then individual who joins the organisation would also need to practice unethical what to survive in the business. The management was blinded by greed and ambition, their decisions became seriously flawed. Thus company dropped back and managers had to pay in the form of fines and imprisonment. Thus, disregard to organisational culture and mismanagement in huge proportions and, mainly, greed is among the key factors that helped bring the Enron "the most ground breaking company" to downfall. Enron was looking at the ways of getting bigger, higher and more intensifying than the others in those days. And it appeared to be really well on the path to that focus on. However, the evaluation of Enron's organisational structure shows that top professionals of any company all the time must be sensible of everything that happens in their company. Hence, the Enron's top manager (Kenneth Lay) did not have his aims, right interest and quest in the company. However the success of the business is determined by the professionals' talents to leadership, influence on others and the way the real passions and goals are accompanied by. K. Lay's position as a chairman was just a title for the company and as proof this is the action of passing along the obligations to the Jeff Skilling. That could be viewed as the countdown of the organisational framework breakdown which is related as the key issue to all the businesses.
A sensible decision-making talents and achievements of organisational goals truly correlates with the company's organisational structure. In Enron circumstance, people responsible for making such wise and important decisions were clearly those from the very best of the management; however they didn't really possess the productive targets in their intellects. The ultimate decision-making was kept for the chief financial and chief operating officers whose capacity, in the other palm, excluded any sense of any kind of the responsibility for the consequences could occurred. The basic interest, as it seems from the case study examination, was the financial income- money.
Thus, decision-making was easily blinded with the number of the business offers made and money seen, with no of the thought into the future problems of the organisation, such behaviour could cause. According to Reh (2002), "It is the leader's job to supply the eyesight for the group. An excellent executive will need to have a wish and the ability to get the company to support that dream. But it is not enough to merely possess the dream. The leader must also provide the framework where the people in that corporation can help achieve the fantasy. That is called company culture" (p. 1). "Generally, corporate and business culture identifies the prevailing implicit values, attitudes and means of doing things in a corporation. It often displays the personality, philosophy and the ethnic-cultural background of the founder or the leader. Corporate culture dictates how the company is run and how people are marketed" (Wong, 2005, p. 185).
The command of the Enron could not handle providing the assistance to help the business to make it through. Hence, this is the clear evidence that Jeff Skilling proclaimed the Enron's corporate and business culture- the culture of greed, problem and deception. He required profits by any means, in addition the hiring practices became enthusiastic about finding hostile, greedy, unethical employees who could deliver on the organisation's demand for short-term profits. There's a direct connection between the way a business and its people carry out themselves and the control within it. There was no esteem or accountable decision-making in the Enron. The management of the business was totally broken down by the company's executives, who displaced their responsibilities to unprofessional staff and there is no demanding standart of the performance for his or her business. "The older management didn't maintain a marriage of openness and trust with employees. Workers who questioned the intelligence of a few of Enron's decisions and practices were either disregarded or silenced. Older management cared more about self-enrichment than the needs of employees. They proved little respect for meaning and ethics beyond underneath line" (Wong, 2005, p. 185). So when the top professionals transformed a blind eyeball on the legal aspects when undertaking financial procedures, the clear meaning of the tolerance of the against the law practices was directed.
After analysing the case study It is suggested that the most important lesson is the fact that corporate culture issues - it can either bring prosperity or devastation to the business. A company must promote an organisational culture with moral thought process as Peters & Waterman (1982: p75) highlights that "without exception, the dominance and coherence of culture became an important quality of the wonderful companies". This culture should be top level management as they are key characters, which employees will follow. If executives of a company consider the short term important thing to be the most important factor to success then lower level employees will soon find the message and find the "game" rules. This environment is subjected to the activities such as intentionally breaking the rules, if results cannot be achieved within the legal framework.
From studying the Enron circumstance it is seen that collapse was brought on by a lack of respect, insufficient concern of management and real goals. To indicate that the substantial amount of deficits of the business damaged the lives of the Enron's employees and the investors who respected and heavily committed to the business. In the end dealing with to account that organisational culture is able to bring an enormous difference and guide the company to success and prolong realistic rewards (Hoecklin, 1995) by possessing effective management (Miroshnik, 2002), the Enron's example demonstrates that when there exists unhealthy corporate culture in the company which lacks the real leadership, true pursuits, true goals, sensible decision-making and the key issue is greed for money, then such a small business is subjected to end up being the bankrupt.