Organizational Change At Enron Essay

2208 words - 9 pages

Introduction
"Change is hard because people overestimate the value of what they have and underestimate the value of what they may gain by giving that up" (Belasco & Stayer, 1993). Is the concept of “too big to fail" an accurate term in today’s economy, or does it depend on a company’s ability to undergo change and reinvent itself? More than a decade ago, it seemed almost impossible that the seventh largest company in the Unites States, Enron, would decline so quickly. As change agent, I will analyze the demise of Enron, conceptualize the reasoning behind their failure to undergo the change, and evaluate what changes would have had to take place in order to prevent the company from going ...view middle of the document...


Background of Enron
Enron rode the waves of technological innovation, the economic boom of the 1990s, and economic downturn in the 2000’s (Biggs & Helms, 2007). Enron Corporation was created out of the merger of Houston Natural Gas and InterNorth, major gas pipeline companies in 1985, headquartered in Houston, Texas (Fox, 2003). It transported natural gas through pipelines and electricity to customers all over the United States. Enron was also involved in the development, construction, and operation of power plants, pipelines, and other energy related projects all over the world, including the delivery and management of energy to retail customers. Organizational strengths include, being the biggest gas pipeline company in the U.S., as well as its diverse lines of business (Fox, 2003). Organizational limitations included a failed board of directors, conflicts of interests, and unethical practices (Wheelen & Hunger, 2008). Enron’s mission statement was built around respect, integrity, communication, and excellence. Enron’s corporate culture was that of competiveness and innovation, where employees enjoyed autonomy if they produced quarterly results (Fox, 2003). The culture fed its appetite for new ideas and for creative, hardworking people. Drive and independence also helped enable financial deception, because the company encouraged experimentation but discouraged anything other than success (Fox, 2003).
Problem Identification
After careful review and analysis of Enron, there were a few areas the company needed to undergo systematic changes. These problems are present throughout Enron at the individual, the group, and the total system levels. At the individual level, employees had to achieve goals which were always being raised. The only thing that mattered was adding value to the company, even if it meant breaking the rules (Garsten & Hernes, 2009). Employees at Enron were expected to stretch the rules. At the group level, there were leadership failures that affected the work unit and proper use of human capital. According Fox (2003), leaders were only focused on the bottom-line and encouraged employees to pursue wealth and achieve their goals at any cost. Leaders affected Enron at the group level by misleading the audit committee and board of directors on these risky accounting practices and forcing employees to disregard these matters (Biggs & Helms, 2007). Finally, there were a lot of signals at the total systems level that Enron was failing; Enron’s culture and structure were the main reason for its demise. Enron culture lacked ethical commitment, where all employees were obligated to accept the culture or they were demoted. Furthermore, the culture embraced cleverness and the desire to win at all cost, even if that meant breaking the rules (Fox, 2003). The change in Enron’s mission statement in 1995 reflected extreme arrogance, when their original statement, “to become the premier natural gas pipeline company in North...

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