Free

Enron: The Smartest Guys in the Room - Essay Example

Comments (0) Cite this document
Summary
The paper "Enron: The Smartest Guys in the Room" informs about the company Enron that was suffering from huge losses and the financial statements manipulation was just a cover up.The shareholders needed the reflection of the company performance and maybe they would have saved the firm from bankruptcy…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER95.6% of users find it useful
Enron: The Smartest Guys in the Room
Read TextPreview

Extract of sample "Enron: The Smartest Guys in the Room"

Enron: The Smartest Guys in the Room Question After Enron was declared bankrupt, the three company directors were summoned to a hearing by the congress. The interrogation revealed that the company had been causing artificial shortages for energy in order to hike prices. Besides, this would make the company’s stock more marketable. In his testimony, Skilling, who was one of the directors, stated that all his actions were meant to safeguard the shareholders’ interests. In fact such assertions were wrong since they were against the company policies and the stakeholders interests. Yet, Skilling acted ultra vires when he manipulated the financial statements to appear as if the company was making huge profits. However, the audit showed that the company was suffering from huge losses and the financial statements manipulation was just a cover up.
Therefore, if he intended to safeguard the stakeholders’ interests, he should have been truthful on the actual Enron’s financial situation. The shareholders needed the definite reflection of the company performance and maybe they would have saved the firm from bankruptcy. Indeed sharing the right information would have informed them on the right course of action in relation to their shareholding. Nevertheless, by wrongfully manipulating the company’s financial statements, he duped stakeholders into buying more of the company’s stocks. Arguably, a clear presentation of Enron losses in the statements would have affected the stakeholders’ investment decisions towards the company (Independent Lens N.p).
Additionally, apart from the shareholders, Skilling had other parties to protect. He should have protected the company’s consumers from the harm caused by fluctuation of energy prices. On the contrary, Skilling increased the energy prices without considering the implication it had on the consumers. For instance, he created an artificial shortage of energy in California, which forced the energy prices to shoot nine times the normal price. Such actions showed that Skilling is an individualistic person who works neither for the interests of the consumers nor that of the shareholders. The company’s employees should also have been considered in Skilling’s actions. However, he chose to trick them just as he did to the shareholders. Instead of rewarding them for their loyalty to the company, he enticed them to invest all their pension money into the company’s shares. Finally, he sucked over 20,000 Enron’s staff, and subsequently facilitated the loss of their total pension funds (Independent Lens N.p).
Question 5
Enron emphasized on the rank and yank model of employee evaluation. The model refers to evaluation of the employees’ performance through a vitality curve. Therefore, the employees who falls under the curve are sacked while those who ranks high are retained. Consequently, the model is a brutal employee hiring and retention technique. It offers employees less opportunities for improvement. Even a newly hired employee could be fired just because he or she fails to rank high on the vitality curve. The method meant to separate the performers and non-performers and was used extensively in the 1980s to early 2000s before its real effect on the employees were fully known. Following the failure of some big companies including Enron, majority of the companies that used the model scraped it off (Economist N.p).
The rank and yank model has never been an effective employees evaluation model. Even though it is meant to select only the best, it creates a hostile environment for the employees. Once a group of employees has been fired, the remaining employees work in perpetual fear wondering whom among them would be next in the firing list. The performance of such workers reduces significantly due to this fear. Furthermore, the model measures only certain aspects of employees making it easy to by-pass special characteristics an employee may possess. Therefore, the company loses important talents among the fired workforce, which may not be present among the remaining workers. Finally, just because employees rank high on the vitality curve does not mean that they are the best performers in the job (Economist N.p). Job Performance is subject to teamwork. The ranking should, therefore, consider the lower ranking employees’ contributions to the performance of the highly ranked employees.
Works Cited
Independent Lens. "Enron: Smartest Guys in the Room." 4 April 2007. Independent Lens. http://www.pbs.org/independentlens/enron/film.html. 18 November 2015.
The Economist. "Ranked and yanked." 16 November 2013. The Economist. http://www.economist.com/news/business/21589866-firms-keep-grading-their-staff-ruthlessly-may-not-get-best-them-ranked-and-yanked. 18 November 2015. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Enron: The Smartest Guys in the Room Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
Enron: The Smartest Guys in the Room Essay Example | Topics and Well Written Essays - 500 words. Retrieved from https://studentshare.org/business/1701949-enron-the-smartest-guys-in-the-room
(Enron: The Smartest Guys in the Room Essay Example | Topics and Well Written Essays - 500 Words)
Enron: The Smartest Guys in the Room Essay Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/business/1701949-enron-the-smartest-guys-in-the-room.
“Enron: The Smartest Guys in the Room Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/business/1701949-enron-the-smartest-guys-in-the-room.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Enron: The Smartest Guys in the Room

Enron The smartest Guy in The Room Movie

...?“Enron The smartest Guy in The Room” movie very well sketches the entire history of Enron, from its foundation till downfall. The chain of events from the Enron’s rise to final days has very well been portrayed in the movie. The artists are former employees of the corporation, as well as reporters who give an account of the mannerisms of top heads involved in the fraud and their inherent strengths and weakness .They give their own interpretations about the main incidents, which led to the bankruptcy of the corporation. (Findarticles.com ) It's more than a movie - it can be termed a case by case in-depth analysis of a giant corporate...
2 Pages(500 words)Essay

Genedr socialization

8 Pages(2000 words)Research Paper

Enron

...First 28th April 2009 Enron – The debacle and lessons learnt Introduction Quoted as the “Largest bankruptcy filed in US History” by the 7th largest company in the United States, Enron is a remarkable lesson to learn in the premise of “from riches to rags”, whereby a company, specifically top management, loses its integrity in 2001, most in part due to personal greed, resulting in the worst energy crisis, billions of dollars in losses, people losing their jobs and status as a willfully fraudulent company. This research paper is an attempt to trace the roots of Enron, its executives, the steps they took to reach to the top, what exactly went wrong, and how this wrong was further fueled by...
10 Pages(2500 words)Research Paper

Enron

...Enron scandal # submitted Crimes are not a new thing in this world that we human beings are living in. Of all thecrimes that I have come across in my entire life, I have to admit that the Enron scandal was one that I could not relate to directly. It was something that I needed to read more about as it was a scandal that took place in the business world and it took me longer than usual to understand the gravity of the situation that took place in America. In my opinion, the government was not expecting too much from the companies in the USA as the event of Enron scandal had shown this to be very much true. It was only after the scandal that the government decided to do something about the...
1 Pages(250 words)Essay

Five Guys

...merchandising channels of distribution, on top of expanding their menu. Under menu expansion, Five Guys could explore different menus in order to adapt to various geographical locations, as well as offer healthier produce, substitutes, or use other oils in place of peanut oil. Five Guys could also add variety in their toppings to include unusual sauces. The current trend in the market favors fast food chains, with increasing numbers of people opting to eat out. A significant demand exists for Five Guys fast food restaurants, especially with the recent expansion to Canada. Room for growth in the Canadian and US markets also exists. Threats Competition from key rivals is...
5 Pages(1250 words)Case Study

-Enron: The Smartest Guys in the Room, 2005, a documentary

...Enron: The Smartest Guys in the Room Enron: The Smartest Guys in the Room Enron: The Smartest Guy in the Room (2005) is a documentary film directed by Alex Gibney. The film is based on the largest business fraud in the American history. The film is based on the best selling book 2003, ‘Enron: the Smart Guys in the Room’ by Behany McLean. The film portrays the fraud of the Enron Company that influenced American market. This document aims to study the organizational purpose...
4 Pages(1000 words)Assignment

The smartest guy in the room - the enron documentary

...The Smartest Guy in the Room - The Enron Documentary Business ethics entails the development of appropriate and socially acceptable phenomena in running business processes. Arguably, the internal and external environments of every business organization are always focusing on ensuring that the management practices pursue the intended purposes. Therefore, the practice of ethics prevails in business after the public is certain that the company’s performances aim at achieving sound objects without fraudulent practices (Perrucci and Earl 320). Enron’s unethical practices that further embraced deregulation approaches on its stock’s prices influenced the...
2 Pages(500 words)Essay

Enron: The smartest guys in the room

... The Smartest Guys in the Room The Smartest Guys in the Room is a cooperate documentary about the corrupt commercial practices of the Enron corporation. This documentary stars John Beard, Tim Belden and others. It is directed by Alex Gibney. The Smartest Guys in the Room infers a leader as an individual who dominates a specific position and is able to exercise control and influence over the others. Jeff Skilling, the CEO in this documentary is depicted as the leader according to Bethany, who describes him as a one who empowered them and inspired their work force as employees. In addition, Skilling is further depicted as the leader who motivated the employees with his intelligence, made the employees believe that they are the best... of...
1 Pages(250 words)Assignment

Enron

...in a market economy. Harvard International Review, 25(3), 76-82. McLean, B. & Elkind, P. (2003). The Smartest Guys in the Room. New York: Penguin. Mekay, E. (2003). Enron used U.S. government to bully developing nations. Retrieved from http://www.indiaresource.org/news/2003/4245.html. Nelson, K.K., Price, R.A. & Rountree, B.R. (2008). The market reaction to Arthur Andersens role in the Enron scandal: Loss of reputation or confounding effects? Journal of Accounting & Economics, 46(2-3): 279-293. Niskanen, W.A. (2005). A Crisis of Trust. Lanham, MD: Rowman and Littlefield. Public Affairs Television. (2014). Enron and other Corporate...
20 Pages(5000 words)Research Paper

Answering the questions after you watched the movie "Enron: The Smartest Guys in the Room"

...Ethical Analysis of the film Enron: The Smartest Guys in the Room What are the leadership problems presented in this film? The main leadership problem of the company was that it completely ignored the fact that its actions will lead to the collapse of the company and multi-million dollar losses of the companys investors. The company’s leadership saw its main task to use the features and image of the company for their personal gain, while this policy led to the destruction of the company. The companys management exercised risky actions, which could not lead the company to success. 2. What are the ethical problems presented in the film? Ethical issues presented in the...
4 Pages(1000 words)Movie Review
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Enron: The Smartest Guys in the Room for FREE!

Contact Us