From Top to Bottom: The Fall of Enron
Raquel M. Scott
Lisa Cook
Enron was an energy marketing corporation that suffered from a financial scandal, which involved Enron and its accounting firm. The scandal consisted of the discovery of irregular accounting procedures, which took place during the 1990’s. The irregular accounting procedures included manipulating stock prices. This caused Enron to file bankruptcy in December of 2001. Based on the background of this scandal, there were some management and leadership issues involved during the scandal. The following will identify the management and leadership failures which led to the Enron scandal, as well as how these failures could have been predicted. As well as show how proper organizational behavior of management and leadership could have impacted Enron in a positive manner.
From Top to Bottom: The Fall of Enron
It Began at the Top
Enron was created through the merger of Houston Natural Gas and Internorth by Kenneth Lay. A few years later, Jeffrey Skilling was hired as CEO of the company. During Skilling’s reign, he brought aboard his own executives. Not only were these executives able to find loopholes in the reporting of financial information but also able to hide the losses of billions of dollars from failed business ventures and also investments. But most importantly, the executives and Skilling were able to hide these discretions from the board of directors and the audit committee. Therefore, the success and failure of the organization began at the top.
Pointing Fingers
With any organization some of the major players consist of the senior leadership, board of directors and internal and external auditors. Out of all these key players, everyone failed to do their job. The success of the organization lies in the collective efforts and smart decisions made by these individuals. The downfall of the organization cannot be prevented...