Leadership can be defined as a combination of numerous skills that are developable by doing self-evaluation and by enhancing the desire to nurture. It is rather difficult to define leadership but it can be understood as a state, which is influenced by the surrounding circumstances and situations (Northouse, 2015). The leadership style in the given case study is very unethical as it shows that the CEO of the company never hesitates in doing unethical practices. The given case study does give some useful information on the unethical practices, which might attract the readers towards it. The first instance of unethical practices had happened when the company decided to open a subsidiary centre at some offshore locations to avoid the tax burden (Northouse, 2015). They looked like subsidiary centre but they were just set up to avoid the taxes. Moreover, the earning was false. Another instance of unethical practices has had happened when they transferred the energy unethically out of California and forcibly brought about blackouts (Northouse, 2015). It was then again transferred back to California to take the benefits of the requirement and they did the same by selling the energy at a highly elevated price. They cashed in high amount.
The given case study has some problems that are worth to mention, as they are potential problems for the organizational itself and the society as well. Following are the list of three problems, which the Enron Company has:
Leadership style in the company is not an ideal example, which strongly believes in individualism
The leadership style at the Enron Company is individualism in nature. This is evident in quite of places such as the statement of the CEO of the company “Jeff Skilling” as it says that his main attention is on the stock price. The CEO of the company wants to keep the price of the stock up every time. The individualism is highly expressed in the instances when the case study lets its reader aware of a fact that the board of directors had no significant contributions in setting up a false subsidiary at some offshore locations (Nahavandi, 2016). They had only briefed the proposal for 15 minutes, which is never sufficient for the leaders of an organization. This is because of the fact that leadership is defined as a guide who guides through the entire change process. A leader should acknowledge the changes and use all the technologies and the skills to bring effectiveness into the change process. The ability to take the challenges and the ability to put forward some remedial actions for any kinds of unexpected situations are some of the integral values of a leader (Nahavandi, 2016). However, in the given case study, the board of directors does not have any fair grab on the change management process. On contrary to this, the board of directors did eventually go off the line and just took out a 15-minute review of such a big change. They according to the leadership quality should participate highly in the change management process. They should rather try to nurture the change process (Hargreaves & Fink, 2012). In addition to this, the CEO of the company “Jeff Skilling” believes in doing big changes in the process on its own. The CEO of the company does not feel the importance of the participation of the board of directors as well in the change process. The leadership style should be of collective nature, which believes in taking collective works. It takes help of all the stakeholder of the organization (Daft, 2014). Nevertheless, every single stakeholder of an organization is a valuable asset for it. They can also benefit the process sometimes with some of their useful information.
The poor management skills in the Enron Company are also very questionable. It does not represent an ideal style of management, which is very much evident in their management strategies with the different kind of employees. The management in the company does give higher values to those who are profitable to the company. This is indeed ethical but it is highly unethical that they disrespect those who are underperformer (Hickson & Pugh, 2014). They even fire out those who are underperformer. Every year they fire 15-20% of their employees who are less profitable for the company. According to an ideal management style, the management of a company is supposed to guide its team and coach them to raise the level of motivation in them. They try to find out the hidden weaknesses and then try to analyse the best possible way that could bring changes in their chosen candidate’s performance (Goetsch & Davis, 2014). Various techniques can actually rectify the hidden issues in chosen employees. Those various techniques are such as usual informal discussion with the chosen employee, quick admire & feedback and reliable mentoring. However, in the given case study the Enron Company is highly active in firing their underperforming employees out of the company. They also do not like any objections from their employees, which is up against the ethicality. A management is supposed to be of an open nature, which believes in imparting feedbacks to employees on their underperforming. The management should give fair amount of chance to the underperforming employee. They should take some time out of their hectic schedules to have some discussions with the chosen employee (Riaz, Zulkifal & Jamal, 2012). This is highly effective as this would enable the management understand its employees and this would help employees also to come closer to the management’s requirement. They promote their employees, which is fair enough. However, they dismiss the promotion of the bottom ones, which is unethical because they should have also given some chance to groom as a performer. They should also be promoted to motivate their desire to work. This is highly important, as it is best to nurture someone than to lose the same without even enquiring the hidden skills in them (Riaz, Zulkifal & Jamal, 2012).
Ethicality is an integral asset for a prospering organization. Nevertheless, ethical practices bring integrity and honesty at the workplace, which is the utmost requirement for a successful business (Ciulla, 2014). The Enron Company is involved in series of unethical practices, which is never acceptable from the perspectives of ethicality. The one instance of unethical practice has happened when the company constructed a subsidiary on some offshore locations with the help of its accountants, lawyers and top executives. This looked like a partnership business; however, it was just a false earning resource. The subsidiary was constructed to be safe from the extortion of tax. They tried to escape from the tax payment, which is mandatory for any business. According to the theory of ethical behaviours, this is entirely unethical because ethicality encourages honesty in business (May, 2012). In addition to this, they transferred the energy out of California to build up intentional blackouts. This was just done to hike the prices of energy. They again transferred the energy back to California and they sold the energy at highly incremented prices. This again is the violation of the ethicality at the workplace. Another instance of unethical practice, which is very frequent in the company, is the distribution of performance appraisal scheme to the unjustified employee. The management had committed to appraise the salary of those who have high values to integrity, honesty, dedication and teamwork. However, they appraise the salary of those who have highly benefitted the company with their performance. In course of this, they even ignored the unethical practices, which their chosen employees had committed (Jackson, Cleary & Mannix, 2013). The biggest unethical practice had happened when the company had found to be involved in the biggest bankruptcy in the US history. The company was even penalized for millions of dollars. They acted up against their committed mission, which is to be excellence in service. Excellence in service can ever be achieved by doing such a high numbers of unethical practices. According to theory of ethical behaviours, organizations are supposed to act according to their commitment. The commitment and the core values should be given high importance (Jackson, Cleary & Mannix, 2013). However, the Enron Company could not sustain their committed values.
Conclusion
The Enron Company has series of issues, which has also affected their reputation in the past. They had to face a big loss in the year 2001. They had experienced a high loss in the third quarter of 2001. However, the severity of problems is even more than this. The company was involved in unethical practices at some instances of their business operations. The leadership quality of the company is less collectivism in nature. This is because of such reasons that the board of directors are often away from even major decisions. The management is also biased towards their high performing employees, as this is evident in their unethical behaviour with the underperforming employees. They have committed to honour those who have high values to the honesty and integrity at the workplace. However, they had shown their high inclination towards those employees, which proved their worth for the company. They respected their productive employees over those who have high core values. The unethical practices are also highly evident such as in the case of bankruptcy and in the case of subsidiary set up in some offshore locations.
Transformational leadership style is the one recommendation for the infected leaders of the Enron Company. This would help to rectify the peculiar actions of leaders. The transformational leadership style encourage for a collective kinds of nature such as taking advices of all the members of the organization. The particular leadership style encourages for a transformative nature, which helps to act according to the circumstances. This kind of leadership also helps to identify the issues in the underperforming employees. Moreover, this facilitates a good conversation with such employees, which is extremely helpful for motivating the underperforming employees.
Coaching style would be the recommendation for the unethical managers in the Enron Company. The coaching style encourage for coaching those employees who are underperforming. Moreover, this would also reduce the high attrition rate of the company as it fires out 15-20% employees every year. The coaching style would facilitate close relationships in between the employees and the managers. Coaching style would also encourage the mangers to have equal views to all the employees. Moreover, this would prevent them from biasness activities.
Transparency in decision-making and communications is the recommendation for the ethical issues in the Enron Company. The company’s management and the leaders lacks in transparency, which is also influencing their ethical behaviour in big times. Transparency in decision-making would encourage for ethical practices. Moreover, communicating with the employees and those who are in the organization would help to resolve the issues. This would facilitate a cooperative culture at the workplace.
The transformational leadership style can be implemented in the organizational practices if the leaders establish an atmosphere of teamwork, which is highly missing in the company. Teamwork would encourage leaders for being informative and supportive to the employees when it is needed the most.
The coaching style of management can be implemented in the Enron Company by encouraging the management towards the nurture of underperforming employees. This can be done effectively if the leaders of the company do support the concept. It helps come closer to employees and know about their issues.
Transparency in decision-making and communications can be implemented with the help of the management if they feel that this is important. This can easily be done by communicating with all the employees of the organization regarding an issue. This would provide some good numbers of suggestions from the employees. Moreover, this would ease out the decision-making skill of the management.
References
Ciulla, J. B. (Ed.). (2014). Ethics, the heart of leadership. ABC-CLIO.
Daft, R. L. (2014). The leadership experience. Cengage Learning.
Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper Saddle River, NJ: pearson.
Hargreaves, A., & Fink, D. (2012). Sustainable leadership (Vol. 6). John Wiley & Sons.
Hickson, D. J., & Pugh, D. S. (2014). Management Worldwide: Distinctive Styles Among Globalization. Penguin UK.
Jackson, D., Cleary, M., & Mannix, J. (2013). Editorial: ethical sensitivity: shaping the everyday work environment.
May, S. (Ed.). (2012). Case studies in organizational communication: Ethical perspectives and practices. Sage Publications.
Nahavandi, A. (2016). The Art and Science of Leadership -Global Edition. Pearson.
Northouse, P. G. (2015). Leadership: Theory and practice. Sage publications.
Riaz, M. K., Zulkifal, S., & Jamal, W. (2012). Conceptualizing the relationship between individualism–collectivism and conflict management styles at individual level.
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