Enron: The Smartest Guys In The Room

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The actions of top management greatly influence a company’s organizational culture. A company’s organizational culture is created by: the actions and behaviors of the leaders, what leaders pay attention to, who gets rewarded and who gets punished and the allocation and attention of resources. The downfall of Enron was a result of the organizational culture created by top-level management. The two top-level executives of Enron, Jeff Skilling and Kenneth Lay, set the norm of making sure Enron was able to maintain the appearance of value (shown by Enron’s stock continually rise). The leadership behind Enron created a negative organizational culture by: emphasis on profitability, failing to communication with employees, and using procedures that…show more content…
The culture of Enron can be considered extremely aggressive because the employees were highly aggressive and competitive towards each other as opposed to easy going. Numerous other successful companies can also be described as having an aggressive organizational culture; but the reason the aggressive culture of Enron led to unethical behavior was because it forced employees to act in certain manners to keep their jobs. There is evidence of this shown in the movie, Enron: The Smartest Guys in the Room, when the COO, Jeff Skilling, implemented a system known as “rank-and-yank”. This annual process consisted of Enron ranking its employees against each other, and then terminating the people at the lowest end of the rank (the yank). Skilling believed that intelligence and ability are fixed and unchangeable and gave employees a limited amount of time to prove their worthiness. The usage of this system forced employees to censor themselves because they knew they were always being watched and naturally, employees that wanted to keep their job would obey the system. By Enron executives using this formal procedure, it shows that they were forcing employees to conform to their standards and suppressed any possible

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