Good Leadership, a Prelude to Cooperate Feat - Research Paper Example

GOOD LEADERSHIP, A PRELUDE TO COOPERATE FEAT Good Leadership, a prelude to cooperate Feat In its day, Enron was a force to reckon with. Boasting of a state of the art management team, employing the most talented MBAs in the country, in just a few years, it became a favorite among many Wall Street analysts and was one of the biggest organizations in the world. In fact, even weeks to its declaration of bankruptcy and eventual desolation, many analysts and traders had a bullish rating on Enron. In analyzing this firm’s post mortem, accounting irregularities and audacious entities whose sole purpose was to provide off balance sheet financing are usually the focus of our discernment. What many flout is that prelude to its fall; Enron had a fully-fledged, state of the art and even award winning management team. How could such a jolly turnout to be so bad, what was being overlooked? The answer lies in its leadership and organization’s culture. In this paper, a review on the management, leadership and organization culture of Enron is discussed. More specifically the leadership style of Jeffery Skilling as the CEO of this corporation will be analyzed and how his approach to leadership was principal to the eventual fall of Enron. According to Forbes magazine’s Amy Rees, a company cannot afford to have poor leadership if its main aim is success both monetarily and otherwise. Whenever a company has good leadership, employee retention, morale, corporate culture, good communication, integrity, and employee satisfaction are inevitable. These factors serve to catapult a firm to even greater heights. Ross Perot one of greatest visionary of our time once said that leaders have to lead by example and inspire people, not try to manage or manipulate them, only inventory could be managed, people just have to be lead. To do an extensive SWOT analysis on the thesis statement of this paper, it is vital to detail what good leadership entails. What character traits, type, or style of leadership makes a good leader? In the 20th century most scholars believed that leaders were born, not built, you had to have inborn qualities that were vital in leadership. While to some extent these assumptions still hold for the most part, today it is possible to become a leader through learning the ropes or by instilling character traits such as charisma, integrity, or assertiveness in oneself. In short, Leadership can be taught (Giuliani & Kurson, 2002). A leader often has to borrow from different leadership styles and school of thoughts depending on the circumstances at hand, if he is to lead effectively. There is no magic bullet when it comes to leadership; you have to have qualities of a laissez fair, democratic, and autocratic leader all depending on the circumstances. A good leader often will swing around these three leadership styles. In essence, leading any organization or group of persons to success will require good communication skills, honesty, creativity, positive attitude, intuition, ability to inspire and delegate duties to members of the group, commitment, and a good sense of humor. With the above premise in mind, the strengths of our SWOT analysis and the opportunities that come with these strengths can easily be understood. In addition, the intrinsic counterarguments that negate these strengths are easy to analyze. Jeffery Skilling failed as a leader because he ignored some of the above qualities of leadership. While he had a few good qualities such as creativity, a good sense of humor etc. mostly he did not have the most important once such as honesty, commitment etc. Ethics and integrity are akin and often play a pivotal role in corporate success. This paper defines corporate success as the overall increase of investor’s capital, insisting on sound business practices, growth of equity and general employee satisfaction. Jeffery Skilling actions violated almost all bases of honesty and integrity. A leader must lead by example, Jeffery Skilling instilled a corporate culture were the bottom line was more important than ethics and integrity. It did not matter how results were obtained as long as the approach was making the company money it was okay (Good leadership, 2012). Skilling’s mark to market accounting methodology was meant to hoodwink investors that the financial standing of the business was exceptional. The idea was to raise investor, analysts, and the public’s sentiments toward the company thus raising the share prices of Enron. In May of 2006, Jeffery Skilling was found guilty on counts of fraud, conspiracy, and insider trading. It was proved beyond reasonable doubt that Skilling had engineered a series of financial scheme and deals meant to hide debts from investors, this lead to losses to investors that were in billions of dollars. After the bust of the Enron bubble, there were many debates on the conduct and ethics of company executives. Such debates played a big role in the enactment of the Sarbanes-Oxley Act. Though a number of factors can influence ethical behavior, none is powerful enough to change the moral behavior of an individual. Based on Weeks & Nantel analogy, only a properly promoted, devised, distributed, and enforced code of ethics that is updated on a regular basis can change the ethical behavior of an individual and hence an organization. This code of ethics acts as a means in an organization that forces it to comply with ethical standards (Weeks & Nantel, 1992). Although no system of controls can prevent all types of unethical behavior or misconduct, a company can demonstrate that it has satisfied its commitment to implement good procedures by insisting on living up to code of ethics such as those detailed in Sarbanes-Oxley Act. Another big aspect of leadership is ability to inspire and motivate a group in this case employees. Most of the approaches used to understand motivation have divergent implications and are meant to increase satisfaction and performance. Theories, such as Maslows hierarchy of needs, Alderfers existence-relatedness-growth theory, and Herzbergs two-factor theory are often essential tools any leader can use to motivate his followers. First proposed by Abraham Maslow in 1943, the Maslow hierarchy of needs is often represented in a pyramid in which most fundamental needs which Maslow referred to as deficiency needs of an individual at the bottom while needs of self-actualization at the top. In this approach, Maslow acknowledges that different levels of motivation could occur in the human brain. Maslow focused on how these intrinsic needs of an individual motivated them to act in a given way. In order of importance, Maslow highlighted physiological needs, safety, need to be loved and belong, self-esteem needs, and self-actualization needs as what motivates an individual. Jeffery Skilling understood to some extent these needs and used them to instill a corporate culture albeit a negative one. Skilling rewarded results not matter how these results were obtained (Hughes, Ginnett & Curphy, 2012). His Darwinian approach to capitalism motivated his employees to produce results through whichever means. Every year, the button fifteen percent performers at Enron had to go, it did not matter what results they posted. This condition created an environment rife of competition since employees felt that some of their financial safety was being threatened. What was happening at Enron’s trading floors was a version of mob phenomenon that unfolded over several months driven by negative undercurrents (Dembinski, 2006). It is a fact that at least two thirds of employees at Enron were aware of the unethical practices that were going on at Enron yet none was willing to come forward and question their superiors. Most of them felt that unethical practices were honorable as long as they brought the business money. According to Gustave Lebon’s book Crowds; in a mob phenomenon, a de-facto leader emerges and prompts individuals that would ordinarily never do some things risk their lives to do just that. Individuals have a need to belong according to Maslow hierarchy of needs; this need to belong to a given group became the driving factor at Enron. In this paper, an analysis of how corporate culture was fundamental in the eventual ruin of Enron is outlined. The paper has discussed how the leaders at Enron played a pivotal role in defrauding investors of Billions by elaborate schemes (Le, 1960). Led by Chairman Ken Lay, Chief Financial Officer Andrew Fastow, and the CEO Jeffrey Skilling, Enron present a classic of what corporation can become if checks and balance are not maintained. The paper has looked in detail what good leadership entails to prove that good leadership is the cornerstone of corporate success. The paper has also looked at various methods of motivations. In particular, the paper outlined the Maslow hierarchy of needs as it applied to the case of Enron. References Dembinski, P. H. (2006). Enron and world finance: A case study in ethics. Basingstoke [England: Palgrave Macmillan in association with the Observatoire de la Finance. Hughes, R. L., Ginnett, R. C., & Curphy, G. J. (2012). Leadership: Enhancing the lessons of experience. New York: McGraw-Hill Irwin. Trends and Lessons. ICFAI University Press. India. Giuliani, R. W., & Kurson, K. (2002). Leadership. New York: Hyperion Good leadership. (2012). Retrieved from Le, B. G. (1960). The crowd: A study of the popular-mind. New York: Viking Press. Weeks, et al.(1992). Corporate Codes of Ethics and Sales Force Behavior: A Case Study. Journal of Business Ethics, vol. 11: 753-76. Read More