Leaders 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 level of authority t make that request and they had to obey. This showed the use of legitimate power. Also 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 awed 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 same time appealing to their values and getting their commitment as this was needed to prevent the whistle blowing of all the activities that were happening within Enron. All employees were part of the Enron game, which could only be done by showing them a better future for the organisation.
Followers were in awe of Skilling. They drew a blind eye to everything wrong happening 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 Skilling’s 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. Skilling’s job was to get higher profits for all the stakeholders and that was exactly what he was trying to achieve. As mentioned in the movie, “Enron captured the hearts and minds of stock analysts”. Employees were very much surrounded by the healthy environment of the company and the stock price of Enron was an obsession among them. They believed that Jeff Skilling was the person responsible for this and thus followed his instructions to enjoy the benefits of the company’s performance. They worked extra hours to fulfil the demand raised by Jeff Skilling as they were been promised bonuses and rewards for the completion of task on time.
Enhancement 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 grip on the organizational process. Soon he understood that the aura of Enron was based 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 going 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 increased over the period the time and he kept exploiting the resources to fulfil his dreams and soon the dark side of his charismatic leadership was exposed.
The 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 leader’s 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 company’s culture did not allow the employees to challenge and question the ideas of Jeff Skilling. Rather they were given the target 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.