Organizational Culture and Leadership Styles of Enron

Organizational Culture and drawing cardshiphip Styles of EnronTo begin, matchless should look at the background of Enron and how it became the coarsest energy transaction company in the piece (Needle, 2004) in less than two decades. Founded in 1985 in a merger between Houston Natural Gas and InterNorth, Enron expanded from pipelines to electricity and online occupation. Enron was base in Houston, Texas and it built pipelines, power stations and gas plants in the the States and around the world Kenneth Lay was the Chairman and chief operating officer. jibe to the documentary choose Enron The Smartest Guys in the Room, the arrival of Jeffrey Skilling as chief executive officer was a turning percentage point in Enrons business activities. Skilling was a visionary initiator and he adage the future of Enron as a middleman in nationwide and spheric energy trading. The tide of energy deregulation in the 1990s do it possible for Enrons senior executives to convince investors, pecuniary regulators, and the United States Government that its deal of financial instruments similarly cognize as derivatives was economically sound.ORGANIZATIONAL horti cultu authenticOrganisational destination was adept of the important views which contend a crucial manipulation in the downfall of Enron. Using Scheins layered conceptualisation of culture (Rollinson, 2008) iodine commode begin by analysing the core of the culture similarly known as basic assumptions. In this layer, main desire of an organization is to hit wealth for its sh arholders, employees, and investors. As revealight-emitting diode in the documentary film, the commission and trading floors were preoccupy with value of the Enron stock from which wealth would be generated batch inside Enron literally did whatever they could to ensure that the stock kept rising to attract win investments.The next layer in Scheins model is values and beliefs. Here priming coat of reward and effort be in instan tly recognised as an important aspect of Enron. As menti cardinald before, Enron paid large bonuses to employees and partners who performed their chew over exceptionally well. To receive these rewards some divisions of Enron falsified information regarding their financial performance. In this layer we also find trust and h integritysty which Enron did receive from its customers and employees until its downfall. In fact the buffet and disbelief of its employees and customers evidently supports the model that Enron was a respected business in the investor community and in the government.The final layer, artefacts and creations, argon those most visible to the public public. As the 7th largest company in the USA there was relatively a lot of publicity regarding Enron as the loss attracter in regeneration having received the Fortune honour of Americas Most Innovative Company hexad long clock in a row. It became a norm on the trading floors to cipher overtime in hope of recei ving bonuses. In the documentary, a local anaesthetic priest revea direct how some employees came to see him for counselling as they felt that Enron was winning over their lives. Symbols of hierarchy were also explicit Kenneth Lay, Skilling and most senior managers meshed large offices in the top floors while traders operated on the lower floors. Myths and stories is a very interesting aspect since senior management circulated stories regarding devilish trips inducing the idea of a macho culture where it is admirable to find risks. This furthered the notion that it was acceptable for throng at all levels in the Enron hierarchy to take risks to expand the company. Last merely not least, taboos were considered the few hardly strongly outspoken criticisms it received by few investors and journalists these were ignored completely. This blunt ignorance played a major role in its downfall because it could still be in business today if it had responded to early criticism.LEADERThe re are a lot of definitions for the term Leader. One of the definition which suits the attraction in this case study being A person who holds a supreme or superior agency at bottom its field, and is able to exercise a high degree of control or incline over others.Jeff skilling, the CEO of Enron has been depicted as the leader in this case. He was aggressive, intelligent and have exemplary lead qualities which was incremental in creating a culture of belligerence and incentivised competition in the organisation. He cute to alter the way in which Energy was being traded. He acquireed in initiating a market for born(p) gas wherein it started being traded as stocks. He converted energy into a financial instrument and this led to Enron becoming the largest energy trader in North America.In the movie, Bethany has said that Jeff Skilling was an inspi quick of scent leader who inspired his work force and empowered them. He was a genius who controlled the working environment wit h his intelligence, asking employees to believe that they are the best group of employees and understand that they are associated with the best organization in the world.LEADERSHIP TRAITSTraits are distinguishing qualities or characteristics of a person, while character is the sum total of these traits. The much of these you display as a leader, the more your pursual exit believe and trust in you. The five leading traits/ leading qualities are honest, forward-looking, competent, inspiring and intelligent.Jeff skilling was very practically forward-looking in nature as he always wanted to work up maximum out of the business and wanted Enron to be one of the largest organization in the world. He was inspirational to numerous sight including the parcel holders, employees, media and flat stock brokers/analyst. These multitude blindly deciphered him because of his attractive leadership style. He was one the intelligent minds in Enron. Under his leadership the organisation change from a small energy market player to the biggest energy trading company in North America with a rapidly expanding orbiculate operations network. The company was being driven by the aggressive and individualistic attitude which was strongly ingrained in the system by Jeff Skilling and the policies of the management team up for attaining short term profit. These were palmy in achieving the results in hindsight merely were seriously damaging the ethical balance in the system. His charisma had many apart(p) side tendencies which overlooked the ethical side of the business leading the company to go down in a few years time frame.LEADERSHIP STYLEAn influential definition of leadership states as follows The process whereby one individual influences other group members towards the attainment of delimitate group, or organizational goals. (Barron Greenberg, 1990).The case of Enron singles out two individuals in picky with leadership qualities namely Kenneth Lay and Jeffrey Sk illing. Group members whitethorn be considered to be the employees of Enron unless in the documentary mentioned above, many obtain out that the traders acting the day-to-day business activities are those most influenced by the CEO. From the quote one can also see that the traders desire to be known as the ones making the most money for the company and the desire for Lay and Skilling to be rich and influential are two goals which go well overhaul in hand. However it may be this mutual desire which blind some(prenominal) partners and drove them to greed and illegality. It is now one turns to the role of leadership in the downfall of Enron.Although both Lay and Skilling essentially are managers prescribed by those with the most shares in Enron, it is evident that during their tenure they possessed leadership qualities which affected their subordinates.Using first the descriptive prelude to leadership (Rollinson 2008), one can observe that many people inside and outside the Enron respect Lay for his rise from a modest preacher family to a Washington-insider and CEO of a billion dollar company. In America, individualism is regarded as the overabundant workplace culture and as CEO of Enron Lays influence was therefore significant. In essence Lay embodies the capitalist ideate in the US in particular. Having received the leadership mantel Lay bluntly lied to his subordinates and investors regarding the financial state of Enron as it faced financial difficulties. This prolonged the period of debts and may be the reason to the speed of the eventual collapse.Jeffrey Skilling as well as being the appointed CEO possessed leadership qualities of a contrastive kind. The functional approach to leadership (Rollinson 2008) shows that Skilling arguably acquired his leadership status as accredited with the visionary movement of Enron into the online trading medium. Ironically, it is likely that this new complicated trading paved way for the accounting fraud to come an d ca utilise the downfall.An aspect perhaps less investigated but which also affects leadership is the idea of interchangeable causality (Rollinson 2008). The pursual, in this case the employees in return for their fealty to the leaders also demand something in return. It is acknowledged that many traders received large bonuses for creating wealth for the company. At best this gave employees incentive to work hard with dedication and work overtime and at worst it engaged some, in particular traders, in illegality as shown in the documentary with the California blackouts.5.1 Transactional and transformational leadershipIn transactional leadership, the leader holds the power and has the control over his employees or followers. He provides incentives for followers to do what he wants. Hence, if an employee does what is desired, a reward will follow and he or she does not, a punishment or with holding of the reward will occur.In transformational leadership, positive changes can be o bserved in the followers. Transformational leaders are very energetic, enthusiastic and passionate by nature. They are primarily concerned about the processes and are always knotty in it to make it even better. These kinds of leader interact with their employees, take their suggestions into consideration and help them to succeed in their work.The best leadership is both transformational and transactional. Transformational leadership augments the effectiveness of transactional leadership it does not replace transactional leadership, (Walsman, Bass, Yammarino, 1990). Transaction is an effective and necessary tool for leaders at all levels. Transformational leaders generally resort to the transactional style when they do not find a suitable solution for any of the riddle faced. When the transformational leader sees him/her in a win-lose negotiation he tries to convert it into a win-win problem solving situation. If this is not possible, then he or she can display the transactional s kills necessary as an effective negotiator, (Walsman, Bass, Yammarino, 1990). Transactional and transformational leadership are antithetical from each other but still they are not in return exclusive processes and different leaders may use both of these found on different situations. This may be termed as situational leadership where the leader responds differently under different circumstances showing the behaviour of both transactional and transformational leadership.Jeff Skilling demonstrated both these styles in his leadership. He was transactional in the sense that involved an exchange taking place between leader and follower. He wanted employees to believe on his words and make sure that each and either employee work according to his instructions and timelines, making sure that maximum production is achieved in the minimum time. For this, he kept on motivating employees by rewarding them for the work done. He was also simultaneously transformational where in the follower s were motivated to transcend their own self interests for the good of the group, organization, or society. According to Jeff Skilling, certain elements like hiring the most talented people and providing them a contest environment for them to perform to their best, flattening the traditional corporate hierarchy to encourage personalized accountability, efficiency, and motivation, being first in new markets and adopting the best systems and technology are critical for maintaining an environment where innovation can thrive.5.2 CHARISMATIC LEADERSHIP AND furorIn charismatic leadership, the leader has the ability to communicate and behave in such a basic and emotional way that the followers are inspired and motivated in a great way. Being charismatic may be difficult, but not impossible because many people have the capability to communicate on a very strong emotional level and they even include some personality traits. magnetic leadership is not an essential to be an effective leade r and more ever relying on charisma to lead can also be problematic. Jeff Skilling was one of the charismatic leaders, who lacked other leadership characteristics and skills (e.g. integrity), who led his followers into situations that turned out horribly.At Enron, Skilling aimed at developing a charisma strain around him. He did every possible thing to promote himself and his views which was accordant with the business. The employees at Enron, media and even the market analyst believed his words blindly without mark verifying or questioning any his argument or annunciation made by him. Skilling and Lay were successful in controlling the minds of people. They were internally known as Darth Vader.Charisma is a powerful attribute in many cult leaders which is use in a shun way for self-serving and being destructive to others. Charisma is useful during the cult formation. Only an influential and strong-willed leader can convince others to follow him and belief his words. People mi sinterpret the quality of this cult leader and the leader foster them belief in his special qualities.At Enron, the leaders had the disposition of living in unusual wealth this is a disparity that is used in reinforcing the intuition that the individuals possess extraordinary charisma, insight and abilities. The CEO led an ultra opulent life. A good example is Kenneth Lay, an executive leader of Enron he had to pay a sum of $7 million for an apartment, which together with his wife transformed into a Venetian fortress with deep velvets, dark woods and a period sanctuary (Watkins Swartz, 2003).POWER AND INFLUENCELeaders generally use two kinds of powers- Position power which is due to the position they hold in an organisation and Personal power. We can safely say that Skilling had both at his disposal. In terms of position, he would offer rewards to people who did a good job, hence demonstrating Reward power and also people would comply to his orders as they thought he was at a lev el of authority t make that request and they had to obey. This showed the use of legitimate power. likewise due to the knowledge he had and what was demonstrated in the movie followers even looked up to him, this showed the use of expert power. He also used referent power which was the personal power he could use to influence people. People wanted to gain his approval as they admired him and were fearsome by his charismatic personality and were willing to do anything to stay in his good books or be commended by him.Skilling influenced people by rational persuasion and inspirational appeals by being logical in his arguments but also at the corresponding time appealing to their values and acquiring their commitment as this was needed to prevent the whistle blowing of all the activities that were calamity within Enron. All employees were part of the Enron game, which could only be done by showing them a better future for the organisation.FOLLOWERSFollowers were in awe of Skilling. They drew a blind eye to everything wrong adventure within Enron. The charismatic personality was having its effect on the people, and even though under normal situations they probably would have acted different, under Skillings leadership, they were committed and loyal. They wanted his approval, and they believed in the vision he showed them. They were unaware of the fact that they were being played. Skillings job was to get higher profits for all the stakeholders and that was exactly what he was seek to achieve. As mentioned in the movie, Enron captured the hearts and minds of stock analysts. Employees were very much ring by the healthy environment of the company and the stock price of Enron was an fixation among them. They believed that Jeff Skilling was the person responsible for this and thus followed his instructions to enjoy the benefits of the companys performance. They worked extra hours to execute the demand raised by Jeff Skilling as they were been promised bonuses a nd rewards for the completion of task on time.LEADERSHIP DEVELOPMENTEnhancement of leadership quality and skills of a leader within an organization is termed as leadership development. These skill enhancements results from experience and time spent within the organization.Jeff Skilling was one of the finest minds and that was the reason why Kenneth Lay recruited him and introduced him to Enron. He spent time understanding the essentials of Enron and followed the directions of Lay to get a detainment on the organizational process. Soon he understood that the halo of Enron was found on the belief of the stakeholders who followed Enron strategy blindly. He, as a leader, made sure that the followers follow his words and work according to his strategy. For this he followed the transactional approach to make sure that every employee is giving his best effort to get the work done on time, so that he is eligible for rewards. At the same time he also added some transformational methods to make the employees feel that they are equally involved in organizations development. As per the movie, he even changed up his get up to look more vibrant. He also followed situational leadership methods to tackle different situation and keep everyone on the same track that whatever he is doing is for the betterment of the organization and its stakeholders. His leadership aura spread and everyone started feeling that whatever Skilling does is a stepping stone towards the success of Enron and everyone is waiver to be benefitted from his strategic move. He even became the CEO of company within a few years time frame. He developed, from an employee, to a successful leader who was considered as icon in US industries. This self-confidence of his increase over the period the time and he kept exploiting the re microbes to fulfil his dreams and briefly the dark side of his charismatic leadership was exposed.CONCLUSIONThe reasons for the downfall of Enron were analysed from the leadership and ethical perspectives. The movie Enron The Smartest Guys in the room was a great source of information which helped in conducting an analysis about the cultural and leadership patterns in the organization. It was observed that Enron had an obligation to all its stakeholder but those were not met at the end. Enron executives made unethical and illegal decisions based on their personal benefit but those went totally wrong.The leaders job was to provide the vision for the group but it was done in an unethical manner. The view provided to the employees, media, stock analysts and external world was doctored unethically and improper practises were projected as the best business practises by the ubiquitous skills of Jeff Skilling and Kenneth Lay. The dark side of charismatic leadership was observed in the movie, where Jeff Skilling had a dream and ability to get the company to support that dream but he used his charismatic aura to influence people in wrong direction. He provided a self -manipulated framework by which the employees in the organization can achieve their dreams in the form of rewards and bonuses. But the companys culture did not allow the employees to challenge and question the ideas of Jeff Skilling. Rather they were given the send and timeliness and asked to achieve it by planning accordingly, in order to be eligible for rewards and bonuses. Enron did not allow dissent, people who suggested alternatives were castigated for not being team players. The leaders produced an environment of fear, stagnation and antipathy in the organization and this led to the downfall of the Enron.