Organizational Culture and Leadership Styles

To begin, one should look at the background of Enron and how it became “the largest energy trading company in the world” (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 trading. Enron was based in Houston, Texas and it built pipelines, stations and gas plants in the USA and around the world; Kenneth Lay was the Chairman and CEO. According to the documentary film “Enron: The Smartest Guys in the Room”, the arrival of Jeffrey Skilling as CEO was a turning point in Enron’s business activities. Skilling was a visionary initiator and he saw the future of Enron as a middleman in nationwide and global energy trading. The tide of energy deregulation in the 1990s made it possible for Enron’s senior executives to convince investors, financial regulators, and the United States’ Government that its sale of financial instruments also known as derivatives was economically sound.

ORGANIZATIONAL CULTURE
Organisational culture was one of the important aspects which played a crucial role in the downfall of Enron. Using “Schein’s layered conceptualisation of culture” (Rollinson, 2008) one can begin by analysing the core of the culture also known as basic assumptions. In this layer, main desire of an organization is to create wealth for its shareholders, employees, and investors. As revealed in the documentary film, the management and trading floors were obsessed with value of the Enron stock from which wealth would be generated; people inside Enron literally did whatever they could to ensure that the stock kept rising to attract further investments.

The next layer in Schein’s model is values and beliefs. Here basis of reward and effort are in instantly recognised as an important aspect of Enron. As mentioned before, Enron paid large bonuses to employees and partners who performed their job exceptionally well. To receive these rewards some divisions of Enron falsified information regarding their financial performance. In this layer we also find trust and honesty which Enron did receive from its customers and employees until its downfall. In fact the shock and disbelief of its employees and customers evidently supports the notion that Enron was a respected business in the investor community and in the government.

The final layer, artefacts and creations, are those most visible to the general public. As the 7th largest company in the USA there was relatively a lot of publicity regarding Enron as the leader in innovation having received the Fortune honour of “America’s Most Innovative Company” six years in a row. It became a norm on the trading floors to work overtime in hope of receiving bonuses. In the documentary, a local priest revealed how some employees came to see him for counselling as they felt that Enron was “taking over” their lives. Symbols of hierarchy were also explicit; Kenneth Lay, Skilling and most senior managers occupied 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 take risks. This furthered the notion that it was acceptable for people at all levels in the Enron hierarchy to take risks to expand the company. Last but not least, taboos were considered the few but 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.

LEADER
There are a lot of definitions for the term “Leader”. One of the definition which suits the leader in this case study being “A person who holds a dominant or superior position within its field, and is able to exercise a high degree of control or influence over others”.

Jeff skilling, the CEO of Enron has been depicted as the leader in this case. He was aggressive, intelligent and possessed exemplary leadership qualities which was incremental in creating a culture of aggression and incentivised competition in the organisation. He wanted to alter the way in which Energy was being traded. He succeeded in initiating a market for natural 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 inspirational leader who inspired his work force and empowered them. He was a genius who controlled the working environment with 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.