Examining Enron??™s Failure
Enron was an American energy marketing corporation that went through a financial scandal, which involved Authur Anderson, LLP. Authorities found that there were irregular accounting procedures, that took place during the 1990s. This scandal, was an irregular accounting issues that involved manipulating stock prices. December of 2001, Enron had no choice; but to file for bankruptcy. The background of this scandal turned a lot of heads, the leadership and management issues that were involved while this scandal was taking place. As stated, I will be identifying the leadership and management failures which led to the scandal of Enron and how established the organizational behavior of leadership and management could have affected the form of Enron.
The Enron??™s Failures
The executive team at Enron was suppose to create an enterprise which would escalate affluence between the shareholders. Enron??™s stock prices were revealed to be less attractive and certain assertive accounting procedure measures were required by management. Enron started this new type of accounting direction and they needed to strengthen the deceit with every fiscal year. Enron had to keep moving forward.
Enron??™s leadership failure
The governance of the corporation of Enron failed to utilize their duties. The ample of evidence that Enron??™s leadership forced the creation of an atmosphere of personality around themselves, the consequences that evinced each of the major defects that are identified. The Audit Committee should have censored the auditors and their work. The earnings and pricing of the stocks were increasing and no one internally investigated the accounting operations of Enron or Author Anderson (accounting firm). Gudinkunst (2002), states that Enron??™s ethical issues were a problem from the beginning to the end. The leadership that Enron had in the beginning suddenly.
Enron??™s management failure
The employees of Enron were involved with the failure of the organization that ended up turning and suffering because of greed. 100 attorney??™s and accounting staff were employed. The management and leadership dealt with the employee??™s procedures were not questioned because of the employees incentives were raised high (i.e. high salaries, bonuses), this was to help hide the organization??™s debts and uplift their profit (MSN Encarta, 1993-2009). Morals and ethics of management did not seem to matter too much.
Organizational Behavior Theories
One of the behavior theorist, Maslow states that humans have wants and needs. The triangle of Maslow, discusses the physiological(water, food and sustenance), safety (needs protection), social (sense of belongingness), esteem (recognition), and self-actualization (need to fulfill oneself). Enron??™s management??™s self needs dealt with the need to fulfill their pockets. Maslow says that the higher-order needs were more important than the lower-order needs (Hunt, Osborn, and Schermerhorn, 2005).
Compare and Contrast Management and Leadership
Positional powers relies on management, that is apart of status or authority.
Personal power relies on leadership, this allows management to develop mutual and determined
relationships. This is due to supporting personal distinctive, satisfactory and supportive
behavior. Management does not realize that the key to leadership is influenced by persons that
does not consequently, have positional ability of a manager. According to Brian M. Sullivan
(2006), leadership is creative, innovative, and proactive. He says, that developing strategic
responses motivate and involve managers that implement actions-oriented plans.
Sullivan (2006), states the contrast of leadership and management is involved in reactive
tools, when problems initiate that is when executives respond.
Enron??™s failure was not the result of questionable activities by the executive management team. Enron??™s reasoning of bankruptcy and failure??™s foundation from contributors from both outside and inside the organization. Enron??™s downfall was a result of variation of structure and power all The reason for failure and bankruptcy were based on contributors from both inside and outside the company. The downfall of Enron occurred due to the imbalance of power and arrange of all levels.
Conger, J. (1990). Why Chief Executives Fail. Retrieved on July 30, 2009 from
Gudinkunst, A. (2002). Enron- A study of failures, who, how, and why The Faculty Network. Retrieved July 30, 2009 from
“http://web.bryant.edu/~facdev/Web%20Sites/newsletter/fall02/agudikunst.htm” http:// web.bryant.edu/~facdev/Web%20Sites/newsletter/fall02/agudikunst.htm
Hunt, G. J., Osborn, N. R., & Schermerhorn, R. J. (2005). Motivation Theories.
Retrieved on July 30, 2009 from ecampus.phoenix.edu
Sullivan, M. B. (21 June 2006). Leadership vs Management. Retrieved July 30, 2009,