Examining a Business Failure
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Examining a Business Failure
Greed was the main motivation of Enron executives, which led to the result, failure. Every person in upper level management of the company saw a way to obtain some money and performed in an unethical manner to ensure that obtaining that extra money would not negatively reflect on him or her. “The SEC is investigating shady deals in which they allegedly enriched themselves, and formed partnerships designed to hide $500 million in losses” (Infinite Energy, 2010, para. 4). Skillful crafting of accounting documents was done to make the company look more profitable than it was, and the accounting firm of Arthur Andersen chose to overlook incorrect accounting entries. The Infinite Energy website says that accounting practices deliberately obscured profit and loss to confuse stockholders and regulators (Infinite Energy, 2010). Companies like Arthur Andersen, Vinson and Elkins, and Merrill Lynch were paid huge sums of money to ensure that Enron had a positive appearance to stockholders and the public (Castelarhost, 2005, para. 1). “The most important lesson from the Enron collapse is both the centrality and fragility of organizational trust” (Curral & Epstein, 2003, p. 1).
Misuse of Trust
In every organization, upper level managers are the leaders who give the instructions for business operation to lower level managers and his or her subordinates to implement the actions necessary to operate a business successfully. Every company employee depends on the leadership of his or her manager to provide a plan to achieve the vision of the company. Wholeheartedly trusting leadership personnel is a guaranteed plan for disaster unless safeguards are in place to ensure the ethical operation of the business. Curral and Epstein (2003) remind readers that everyone knows people prone to selfishness and have agendas that may put his or her own interests first.
After the Failure
Enron’s juggling act came to an end when the company filed for bankruptcy in...
Greed was the main motivation of Enron executives, which led to the result, failure. Every person in upper level management of the company saw a way to obtain some money and performed in an unethical manner to ensure that obtaining that extra money would not negatively reflect on him or her. “The SEC is investigating shady deals in which they allegedly enriched themselves, and formed partnerships designed to hide $500 million in losses” (Infinite Energy, 2010, para. 4). Skillful crafting of accounting documents was done to make the company look more profitable than it was, and the accounting firm of Arthur Andersen chose to overlook incorrect accounting entries. The Infinite Energy website says that accounting practices deliberately obscured profit and loss to confuse stockholders and regulators (Infinite Energy, 2010). Companies like Arthur Andersen, Vinson and Elkins, and Merrill Lynch were paid huge sums of money to ensure that Enron had a positive appearance to stockholders and the public (Castelarhost, 2005, para. 1). “The most important lesson from the Enron collapse is both the centrality and fragility of organizational trust” (Curral & Epstein, 2003, p. 1).
Misuse of Trust
In every organization, upper level managers are the leaders who give the instructions for business operation to lower level managers and his or her subordinates to implement the actions necessary to operate a business successfully. Every company employee depends on the leadership of his or her manager to provide a plan to achieve the vision of the company. Wholeheartedly trusting leadership personnel is a guaranteed plan for disaster unless safeguards are in place to ensure the ethical operation of the business. Curral and Epstein (2003) remind readers that everyone knows people prone to selfishness and have agendas that may put his or her own interests first.
After the Failure
Enron’s juggling act came to an end when the company filed for bankruptcy in...