The Major Role of a Chief Executive Officer - Case Study Example

 Strategy and Operations Assignment Lessons learnt from Enron case a. The role of the CEO and Board of Directors CEO and board of director play a significant role in ensuring the growing concern of an organization is protected. The major role of a Chief Executive Officer is to lead in the execution and the development of the company’s strategies by creating shareholder value. The CEO is also required to be entirely responsible for the various daily management decisions that are used to the subordinates in making short-term decisions, as well as some long-term decisions or plans. Essentially, the CEO is a direct link between the management of a company and the board of directors. Additionally, the CEO is required to communicate on behalf the company to the employees, shareholders, government, as well as the public. The duty of the Board of Directors is much related apart from the role of hiring the CEO. Essentially, the boards of directors are responsible for hiring directors of a company. In addition, it is the role of the directors to assess the strategies and the overall direction of the organization. The bankruptcy of Enron is most associated with the failures CEO and board of directors’. It is the responsibility of the CEO to ensure that all expenditures within an organization are within the endorsed yearly budget. Additionally, it is the duty of the CEO to protect the interest of its shareholders by ensuring that the price of the company’s share does not reduce in value. Lay-Skilling Fastow leadership failed to protect the interest of the shareholders as the stock of share drastically reduced as well as EPS (Earning per Share). A decrease in the value of shares means that few investors will be interested in investing in the company and hence the company will struggle to raise adequate capital for its operation (Johnson, 2003, p. 45). B. Organizational culture Organization culture is human behavior within an organization and the ability of individuals to attach to those behaviors. Organizational cultures signify the beliefs, principles, as well as corrective values of the members the organization. Various cultures can be represented in an organization including values, norms, visions, systems, symptoms, assumptions, symbols, habits among others. Organizational culture is critical to the success of organizations. Enron organizational cultures were based on communication, integrity, as well as excellence. The organization ensured that client, vendors among other individuals or organizations are reverently treated without any form of arrogance and callousness. Enron also if integrity is enforced in every business transacting that is within its jurisdiction. Integrity was enforced by openly conducting their business transacting without having any hidden mission. Additionally, the company has significantly emphasized on good communication and excellence (Sims, et al., 2003, p.45). Nevertheless, it is urged that the record-breaking bankruptcy of Enron Corporation be because of inadequate ethical corporate behavior. The company was believed a high corporate greed. The company was considered greedy in terms of high pricing products among other capitalism activities. As the sixth largest energy company in the universe and seventh largest company in the United States, Enron was required to give back to the society by providing community services such as cleaning, social amenities among other activities. Rather than providing these social services, the company overpriced individuals for the various products the company was dealing with including natural gas, paper, electricity, communication markets as well pulp (Time, 2015). Essentially, putting in mind the efficiency and effectiveness provided by the organizational cultures and the commitment of Ken Lays to the company, it is still in a dilemma how the organization could have collapsed so spectacularly. To be precise, the company reported revenue of $101 billion in the year 2000. Consequently, during the first three-quarter of year 2001 the company reported an increase in revenue by recording $140 billion. The reason the company was declared bankrupt in December 2001 is still a dilemma to investors, suppliers, creditors, debtors among any other individual who may be concerned. Enron drastic bankruptcy is a clear indication of a total disconnection between the leadership (BBC News, 2002). C. Corporate citizenship and social responsibility Currently, companies have shown desire to invest in societies taking care of the environment. Corporate social responsibility has become a way of giving back to the society or community. Although most companies engage in social responsibility as a way of improving their reputation to the public or community, the society benefits as well. Various advantages are associated with corporate social responsibility including high sales turnovers, high revenues, and competitive advantage among other benefits. In fact, most organizations, are capitalizing on the various social responsibility to gain a competitive advantage over their competitors (Bratton & William, 2002, p. 1275). Although the company has been involved with various fraudulent activities, Enron has participated in various social responsibilities including health, environmental performance, as well as safety record. In addition, the company was preparing to address the right of human among other community issues (Gordon & Jeffrey, 2002, p. 1240). Chernobyl Disaster a. Leadership The accident of Chernobyl is considered one of the most critical incidents ever to happen in a nuclear power plant. The accident left over thirty workers dead and other hundreds injured. In addition, it led over 115,000 individuals to evacuate while the radioactive material affected a significant number of individuals. Just like any other organization, good leadership is critical to the management of the organization. Leadership is the act of leading individuals towards the achievement of set goals. Leaders direct individuals in various ways including setting a clear vision for the employees, motivating employees, building the morale of the employees among others. The investigators of the Chernobyl highlighted that poor leadership skills were the main cause of the accident. The leaders of the plant were required protect the employees by making the right decision after signs of the explosion. The researchers acknowledged that, the majority of the workers who died in the accidents were trying to contain the situation. Prior to the severity of the accident, a considerable number of workers were capable of escaping without getting hurt. Instead, some went to the control room, in effort to contain the accidents. A good leader should be able to analyze the situation effectively and make the best decision to ensure the safety of other of employees if guaranteed (US Today, 2011). Sometimes it is challenging to make the right decision as a leader especially when the consequences of the outcome are significant. The reason a great number of people in Belarus was exposed is poor leadership skills among the management of the nuclear plant as well as the government. The management of the nuclear plant was afraid to advise the government of an evacuation strategy. The management was adequately informed of the danger that the radioactive material could pose to the resident of the region. Rather than advising the government for an early evacuation, the management leaders opted to remain silence until the situation became uncontainable. b. Employee engagement and involvement To have an effective organization and management that supports employees’ development and success as well as performance, managers need to have good decision-making skills. For a manager, it is critical to inform the senior executives of the various decisions that an individual is planning to make for the ultimate performance of the organization. For instance, the accident of nuclear plant might not have happened if the manager informed his seniors that semi-skilled personnel are monitoring the radiation control. It is believed that there were one hundred and sixty workers on the day of the Chernobyl Disaster. This number includes employees from the various department including maintenance personnel, technicians, plant operators among other employees. The primary cause of the Chernobyl accident is believed to be a flawed reactor design that is alleged to have been operated by inadequately trained employees. The whole accident initiated from one unskilled worker who skipped checking unit four of the radiation tank. Nevertheless, the employee played a very critical role neutralizing the spread of the radioactive material. Although a considerable number of employees were traumatized and weak to act, they played a crucial role in rescuing the other trapped employees, containing the explosion among other involvement (UNDP and UNICEF, 2002, p.56). c. Performance management There is a very close correlation between management decisions and the performance of an organization or institution. The choices that are made or the choices that are skipped which could have done determined the effectiveness of the management. Sometimes human decision-making can negatively affect the performance of an organization due to various reasons. Human decisions making process can be affected by emotion especially if the outcome is affecting the decision maker at a personal level. Sometimes emotions hinder individual to make decisions even though they are the right decision. Human decision-making is sometimes slower especially where one has to relate various variables to achieve an outcome. Some decision is extremely critical and can negatively influence performance of an organization if effective measures are not take at the required time. For instance, failure of the management to make the decision of the best time to evacuate outlay the lives of two employees .Also the decision of the management to make the right choice in advising the government the extent of the accident. The government could have made evacuation order before the radioactive material spread to the various geographical location in the country. In effort to ensure that issues such as emotions do not affect the performance of the organization, the government has developed decision-aiding tools. For instance, in 1991, after the Chernobyl accident, the government of Russia together with other countries that were affected by the radioactive material joined hands to deep programs, test sites that can be used to make efficient decisions for the main goal of the company (Demin & Yatsalo, 2001, p. 4) Elements of intellectual property An intellectual right is a right that is given to an individual either natural or legal in relation to the conception of their minds. In other words, intellectual property is exclusive rights of the usage of a creation for a specified duration. Almost every organization, as well as an individual, is aware of protecting ideas. There are various elements of intellectual property right. These intellectual property rights include trade secrets, trade patents, copyrights, as well as Trademarks. Intellectual property right entirely depends on the services or products that are offered by a company. Over years, software development industry has significantly lost due to breach of intellectual property right. Malicious programmers have been modifying and redistributing codes without getting consent from the authorized organization or individual. For instance, Table 1 shows some of the various intellectual property rights that Ajoft software Development Company has decided to protect its products. Type of Intellectual Property Rights covered copyright Use of performance of original works of art, literature, drama or any other form of expression Patent Manufacture, use or sale of inventories Trademark The use of words, symbols , names, designs, combinations as well as pictures that are used by the organization to identify a particular product, service or brand Trade Secrets Ensures the privacy of documents, data , formulas or anything that require confidentiality Table 1 Intellectual Property rights (Ajoft Software development Company, 2011) References Ajoft Software development Company, 2011. Intellectual property rights. [Online] Available at http://www.ajoft.com/ [Accessed 9 April 2015]. BBC News, 2002. The Enron scandal has far-reaching political and financial implications. BBC News Online reviews the key facts to help you make sense of developments.. [Online] Available at: http://news.bbc.co.uk/2/hi/business/1780075.stm [Accessed 8 April 2015]. Bratton & William, W., 2002. "Enron and the dark side of shareholder value," Tul. L. Rev.76, p. 1275. Demin, V. & Yatsalo, B., 2001. “Chernobyl” Lessons Learned for Post-Emergency Response, Moscow: RRC "Kurchatov Institute. Gordon & Jeffrey, N., 2002. "What Enron means for the management and control of the modern business corporation: some initial reflections,." The University of Chicago Law Review, pp. 1233-1250. Johnson, C., 2003. Enron’s Ethical Collapse: Lessons for Leadership Educators. Journal of Leadership Education, 2(1), pp. 4-54. Sims, Ronald, R. & Brinkmann, J., 2003. "Enron ethics (or: culture matters more than codes)." Journal of Business Ethics, 3(45), pp. 243-256. Time, 2015. Behind the Enron Scandal. [Online] Available at http://content.time.com/time/specials/packages/0,28757,2021097,00.html [Accessed 8 April 2015]. UNDP and UNICEF, 2002. The Human Consequences of the Chernobyl Nuclear Accident A Strategy for Recovery, Washington Dc: UNDP. US Today, 2011. Leaders accused of neglecting Chernobyl legacy. [Online] Available at: http://usatoday30.usatoday.com/news/world/2011-04-25-chernobyl-anniversary-.htm [Accessed 8 April 2015]. Read More