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Enron Case

Autor:   •  January 8, 2017  •  Coursework  •  787 Words (4 Pages)  •  760 Views

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Enron Case

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        Corporate accountability as well as the governance of a company tie politics, power and conflicts towards the success of the company. The case of Enron is a perfect example of unscrupulous directors of an organization who overemphasized their powers in running the business leading to failure in the implementation of corporate governance (Cohan, 2002). The company’s executives allowed the key stakeholders to engage in conflict of interests while conducting major transactions. In addition, the company engaged in high risk accounting and the executives earned huge sums of money leading to the ultimate collapse of Enron Company. Extensive and undisclosed off-the book transactions by the executives show how influential individuals can use power vested to them to act against the interest of the majority. For instance, Jeffrey Skilling, a former Enron CEO used his powers to establish a grading system that led to the firing of those employees that failed to meet organization’s goals (Fox, 2003). In this case, the CEO used position powers to influence the behaviors of the employees. Therefore, it is evident that a combination of power, politics and conflict of interest led to the downfall of Enron Company.

        HRM approaches could have been used to prevent the serious scandal that affected Enron Company. A company’s culture and leadership styles can greatly influence the success of a corporation (Jickling, 2003). In particular, the profound culture had negative effects on the company’s ethical and moral standards. HRM approaches such as corporate social responsibility, organizational culture and effective leadership skills would have changed the thinking of the top executives thereby directly their behavior towards the running of an effective company. The leaders lacked moral ethics and integrity in running the organization, creating numerous loopholes that led to the enormous scandal that led to the liquidation of the company (Bauer, 2009). The criteria for hiring and firing employees is also another HRM approach that was abused by the company’s directors and top managers. Rewards were allocated unfairly and the executives acted as the wrong role models for other lower ranked employees in the company. These principles led to the ultimate failure of Enron Company.

        One of the HRM approaches that could have been used to resolve employee conflicts in the organization is a proper reward system. This would have encouraged each employee to work hard and deliver quality work. In addition, the employees could have been motivated to maintain high integrity and sustain the required moral ethics for the continued success of any company. In this case, some of the employees were rewarded highly while others had to bear with peasant salaries and no motivation at all. Consequently, this led the employees to engage in fraudulent behavior to earn better money (Godara, 2010). Therefore, if the company wanted to solve employee conflicts, it would have established a common ground for rewarding the employees. Another HRM approach that could have been used to solve employees’ conflicts within the company is proper hiring and firing system. The company had adopted a strategy of firing employees who did not meet their set targets (Jickling, 2003). Consequently, this led to emergence of an unhealthy culture of competition where people even made errors knowingly to retain the jobs. Thus, a proper hiring and firing system could have been employed to solve conflicts between the company and the employees.


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