Business Strategy: The Enron Company - Essay Example

The Enron Company al Affiliation) The Enron Company As an Enron operation analyst, after the bankruptcy I realize that high-risk accounting, fiduciary failures and other negative activities occurred in Enron because of lack of communication between the board of directors and employees. Crisis communication strategy was a major cause of Enron collapse. Due to Hierarchal structure of the company, the employees could not provide any of their aspirations to the board of directors. Additionally, Enron’s CEO Kenneth Lay, Andrew Fastow, and Jeffrey Skilling had too much power so they in a manner that they did not give the employees opportunities to participate in decision making activities that could Enron forward. Furthermore, the modus operandi of Enron was set in a manner that employees with better performing abilities were in charge of others. This regulation limited communication between leaders and employees in the Company. The hierarchal communication style also led Enron into bankruptcy. The board of directors often came out with irrational decisions because due to the fact that they did not discuss it with other stakeholders. Moreover, the blue print office structures limited communication between coworkers in Enron. In the office, Enron promoted workers with greater performance capacities, to higher positions in that; more performing workers would sit on upper deck, and ordinary employees at lower deck. This also hindered communication between workers. Besides the office structure, the regulations that guided on payment on performance of duty also contributed to the lack communication between workers and the management team: An excessive bonus on employee’s performance made them forget about the obligation to express ideas to the company decision. That is, this method of pay on performance shifted their focus towards working for personal goals rather than company goals and thus kept working without caring about their time, and other employees. Recommendation of a Proper Communication Strategy After working as an operation analyst, I would like to recommend various strategies that would enable Enron develop an effective foundation for a long term development. The first strategy entails, implementing a proper communication strategy. Most successful companies have applied the use an effective communication structure. Failure of the Enron Company can be attributed to their strategic decision making where only the top management team made and implemented decisions; it can also be directly related to the poor modes on providing incentives to workers which shifted their attention towards making personal gains instead of working towards a common Company goal. The hierarchical structure of the Enron Company also limited communication between workers at the lower levels and the top management team. Thus, denying them the opportunity to communicate their ideas to the top management team. According to Hartman and Desjardin, the tone or culture of a firm to control its environment sets the tone of organization, influencing its people. The management of the Enron Company should have realized the challenges posed by the hierarchical structure and sought for other alternative in advance. Consequently, they should have applied a participatory decision making process where all the employees are involved in decision making process before implementing new regulations, or organizing the accounting data. Participatory decision making can also reduce cases of fraud that may occur when certain individuals are allocated the duty of decision making. Apart from the hierarchical structure, the office design was also poor. Enron placed people, who have higher position in upper deck, and normal employees on lower deck hence limiting communication between coworkers. The employers did not have a strong bond and could not share ideas. Kristina Law, an interior designer once said that the environment are highly prevalent today and as businesses and individuals take responsibility and seek to behave in environmentally friendly way. That is, the office design contributes to the success of any company. I don’t think the hierarchical office structure is working well today. In this respect, I recommend the round table office design that will place workers at the same level hence facilitating their capacities to share ideas. Analysis of the Failures of the Enron Company In my opinion excessive bonus for performance is one of the most crucial issues that led to the failure of the Enron Company. This method created a big negative impact to the office environment; at that time, most of the employees forgot their other obligation and focused on working for personal gains. Working in office is not just about making money but, to share ideas with other employees, and companies’ leader and focus towards attaining a common company goal. I think the company would have succeeded survived had it realized that an excessive bonus contributed to some of its crises. The provision of bonuses should be done in a regulated manner. In an interviewed with my father last weekend, concerning the ways in which he has successfully managed his entertainment business in Indonesia. I realized that regulated bonuses are given to workers as a form of motivation; however, uncontrolled provision of in any Company poses greater negative impacts to the success of the company. It will make the workers work irrationally, and don’t talk with others. They will concentrate on getting an excessive amount of bonus. Lack of proper communication structure is also another major challenge that led to the failure of the Enron Company. Working as an operation analyst, I was not able to communicate with the top management team due to the hierarchical structure of the Company. I couldn’t give any aspiration because the board of the directors Jeffrey Skilling, Andrew Fastow, and Kenneth Lay would not give credit to my report. Besides the company leadership structure, the office design also propagated the occurrence of crises in the Company. The hierarchical office limited the communication between employees, and leaders. Conclusion For organization seeking to be successful in the current global business environment characterized by high levels of competition, it is imperative that various aspects of proper organization management are taken into consideration. These aspects are inclusive of; proper communication, effective organizational structures, employee motivation as well as promoting research and innovation among workers. Companies can also learn from their past mistakes or the mistakes of other companies and thus avoid ways that may lead to their failures. Reference Personal Interview with my Father on 25th December, 2012. Read More