Discussa about the Business Leadership as well as Effective Management that Created Problems and issues for the Company.
Business leadership is due to the effective inspiration, encouragement and motivation of individuals in achievement of visionary, goals and objectives. The business leadership is maintained through exclusive and outstanding business operations within the actual business. The manager is also responsible for dealing with the actual business operations and leads towards its successful management. This report provides a comprehensive study on the business leadership analyzing as well as diagnosing the problem. Theory and practice has also been discussed along with adequate recommendations for mitigating the potential issues.
Enron was formed when natural gas pipeline company Internorth merged with Houston Natural Gas and was later diversified to provide services and products related to electricity, natural gas and communication (Allen, 2016). During third quarter of 2001, Enron failed because of loosing market confidence that was followed by a major loss and write-downs of the assets. The increased loans of the firm caused the company to get a collateral damage that made further borrowing impossible for the organization. The financial deals as well as related huge burden of debt alongside the aggressive practice of accounting ensured hidden costs regarding the accounting to be safe. According to Barr (2015), the operating results from profits of around $105 million is resulted from a non-recurring charge of $410 million that helped Enron to clear the decks for further future growth. Enron used various techniques and strategies to sell assets creating false earnings. The offshore entities were used for avoiding inflation of assets, avoid taxes and hide losses incurred to the company. Enron transferred energy out of California through unethical means for creating blackouts that enabled them to raise the price of electricity (Bloodworth, 2014).
The energy was then transferred back to California and was sold at higher prices that helped them to gain a huge amount of profit. The stock price was down however to around $15 (Bolden, 2015). Due to faith in the business, the stakeholders continued to hold the stock and helped Enron to recover from bankruptcy. Integrity, respect, communication and excellence are the core mission statement of Enron as claimed by the organization. Major cause for the disruption caused in the business organization includes erosion of ethical behavior from the employees of Enron due to forceful company innovation that is implemented on employees, individualism and pursuit of profits. According to Culpin (2015), the organizational culture was also responsible as majority of the lower performing employees were fired on a regular basis that was approximately 15-20% of the employees. The Enron was the largest and most complicated case of bankruptcy in the history of United States that caused a devastating effect on investors as well as employees.
Analysis and problem diagnosis
Enron was much focused and oriented towards persuasion of the innovation, individualism and unrestrained profit. Enron had a risk taking culture as well as incentive bonus that made staffs in manipulating estimates of profits. According to Edwards (2016), the encouragement of unethical practice caused the organization to degrade employee morale and adequate workplace culture within the organization. The ethical behavior of the employees was also decreased to a much lower percentage. The senior management usually sets key determinants of ethical culture within the organization. According to Kamali (2015), the senior management of Enron created a mission statement that stated that the integrity, communication and ethics within the organization is valued. However, in the actual scenario it was not the case, they created many kinds of unethical behavior by lying to people regarding the organizational actions as well as execution of numerous unethical operations that led to generating millions of extra profits. Moreover, false claims was also carried that was executed by hiding losses incurred to the company that created disruptions among business executive and lured them to benefit personally from the organizational fund (Kinsler, 2014).
Poor organizational culture
Only the top performing employees were promoted and appraised by the appraisal committee and the other employees were dismissed. Approximately 15-20% of the lower performing employees were replaced and fired by employers. Major problem for Enron was the poor organization culture that discouraged blowing whistle within the organization along with the fear for job security. Only rewards were paid to the employees that went along with the unethical practices of the organization (Godfrey, 2016).
Lack of transparency
The managers could promote ethical awareness among the employees of Enron to prevent them from adopting unfair policies and other unethical behavior within the organization. The business top management should not be involved in any kind of unethical behavior such as transferring the electricity outside California purposely to increase the price of electricity and again selling them to the city at a much higher price (Harris, 2013). The board of directors also did not display adequate team member skills as well as team working abilities. There was lack of communication between the directors and lack of integration regarding business objectives among the director that lead to many problems within the business. The business Directory or the board directors were not briefed regarding the partnership and seven of them were sued due to rising of question.
Conflict in interest
Due to interest conflicts, the business directors were not allowed to sustain any kind of ethical measures within the company and there was no questioning to the authority regarding behavior as well as ethical operation. Most importantly, the businesses did not promoted and sustained any kind of common vision orientation among the employees as well as the board of directors that lead to various conflicts within the organization (Hill, 2014).
Theory and practice
Leaders have a huge impact on organizational culture as they influence the realization of sales as well as other actions that has an impact on the company (Metcalf, 2013). Strong leadership helps in establishing a stronger organizational culture that helps in motivating the employees influencing proper behavior and ensuring that product as well as the quality of work from the employees is high. Model behaviors are such behavior in which leader talks and lead for example, the leaders of Enron needs to be very good in communication as well as speech that display their organization skills. A high value and involvement into great business expects employees to change their actions established out of purpose for believing and helps to motivate employees of the leaders to communicate within annual forecast (Mogren, 2016).
For managers of the company, project objectives of different directions provide opportunities that help in communicating with their employees regarding the original purpose of the project along with its objectives. It helps in correcting a particular performance of a specific job and exceptional customer experience. As per Tafvelin (2014), it also provides the company with opportunity in supporting the purpose for the role expectations of employees and sends employees with the required skills and improvement of the professional skills that helps in making a difference. It also helps them to provide resources, tools and opportunities that allow growing and gaining confidence along with meeting expectations and ability of the organization culture. Effective coaching and training are also used for enforcing the company’s mission and vision. The regular communication expectations form of personal objectives delineation is also responsible for managers that enforce a culture of accountability in which one can understand regarding the things that are done by them. Internal process as well as systems and cultural elements are also placed for adequate improvement of customer satisfaction rating (Wallo, 2013).
Leadership within a company is very much necessary to persuade other employees in doing well for the organization. They are also useful in making difficult decisions in any kind of complex business situations. The leaders delivering effective presentation on success makes popular decisions in the organization. Hence, the efficient leaders help in achieving organizational objectives through effective leadership by creating long-term commitments towards the employees. They are also very good at sharing of visions with the employees within the organization (White, 2015).
It is also used to register sales employees to get involved in the business operations with much more enthusiasm and sophistication as well as increasing the performance of quality. This is done through communication, clear sharing of roles and responsibilities with employees, feedback report and promoting culture within an organization to establish adequate organizational culture. According to Dovey (2016), it is important for implementation and development of strategies that helps in allocation control of the resources by choosing the employees that is fit for a particular assignment. An effective leader also improves the culture of the organization by effective project image to the employees that helps employees in understanding the importance. For a highly capable individual that contributes to the team member with competitive manager and effective leader that catalyzes the commitment towards pursuit of an organizational objective and company stimulation of vision around with high performance. It also means promoting goodness through professional as well as employee performance level.
It is recommended to Enron to stop creating earnings through unfair option. Entities also should be stopped for avoiding taxes as well as profits and hide losses through unfair means. Infinite conflicts of interest should also not be allowed to relax for personal benefits. As per Dowding (2015), Enron should incorporate a sustainable environment that will help in promotion of open culture along with the directors as well as the members of the organization. They are allowed to understand speaker decisions and hence analyze questions as well as configure the interest of the organization. Leaders within Enron should sustain and promote whistle blowing among the organization and employees as well as report any kind of unethical behavior regarding financial as well as personal gain of an individual. Effective policies should be implemented along with regulations usually by the senior management of the organization. Respect, integrity, communication and excellence as well as the majority of the purpose of the mission statement should be incorporated in the minds of the employees (Davis, 2015).
Senior management should also be adequate in the leadership ability by promoting organizational culture as well as sharing the vision and mission statement of the organization. Among the employees of the organizational, culture should be taken into consideration by providing adequate opportunities to employees along with proper feedback as well as making statements regarding the performance. According to Peters (2015), appraisal should also be applied for good work letting employees help them to focus more on the job and produce quality works along with performance. As per Halsall (2016), the organizational leaders should promote the organizational culture through effective training and development to the employees in which the employees must be trained regarding their job roles and promoted the opportunity to improve the relevant skills through proper learning methods. Further, the employees should also be shared regarding their organizational objectives very well so that they become competent in achieving the organizational goals and help the organization to maximize profit.
It can be concluded that Enron has adopted unfair and unethical policies in promoting their business and maximize their profit. During third quarter of 2001, Enron failed because of loosing market confidence followed by a major loss and write-downs of the assets. The increased loans of the firm caused the company to get a collateral damage that prevented them to borrow new money. The offshore entities were used for avoiding inflation of assets, avoid taxes and hide losses to the company. Enron transferred energy out of California through unethical means for creating blackouts that enabled them to raise the price of electricity. Major cause for the disruption caused in the business organization includes erosion of ethical behavior from the employees of Enron due to company innovation, individualism and pursuit of profits. The ethical behavior of the employees was also decreased to a much lower percentage. Only the top performing employees were promoted and appraised by the appraisal committee and the other employees were dismissed. Approximately 15-20% of the lower performing employees were replaced and fired and new employees were hired. The business top management should not be involved in any kind of unethical behavior such as transferring the electricity outside California purposely to increase the price of electricity and again selling them to the city at a much higher price. The board of directors also did not display adequate team management skills as well as team motivational abilities. Most importantly, the businesses did not promoted and sustained any kind of common vision orientation among the employees as well as the board of directors that lead to various conflicts within the organization
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