Enron Case :
Enron was the first nationwide natural gas pipeline network in the United States. As the company grew, executives shifted the company's primary focus from energy delivery and infrastructure to investing in the stock market. As a result of its new focus, Enron's recorded revenues grew from under $10 billion in the early 1990s to $139 billion in 2001, which garnered successful reviews from all observers including those on Wall Street. In fact, in 2001, Enron was no. 5 on the Fortune 500 list (Jickling, 2003).
Enron did not always invest in successful business ventures, such as the dot-com investments in Internet and technology in the late 1990s. Due to its unprofitable ventures, Enron experienced significant losses in 2000. Instead of accurately reporting the trading profits from its energy ventures and losses from others, Enron falsified its accounts to public investors. In just a matter of months, Enron went from one of the fastest-growing organisations to filing bankruptcy. Ultimately, shareholders, including thousands of employees who held stock as part of their pension, lost billions of dollars because the stock became worthless (Jickling, 2003). Consider the internal conflicts that resulted from such personal, financial loss.
In this Shared Activity, you review the Enron scandal and consider how power, politics and conflict might have influenced the decisions of its executives. Do you believe HRM approaches could have been employed to prevent this conflict? If so, how?
References
Jickling, M., (2003) The Enron Collapse: An Overview of Financial Issues, Congressional Research Service, The Library of Congress, CRS Report RS21134, Washington, DC, Available at: http://royce.house.gov/uploadedfiles/rs21135.pdf, (accessed: 19/12/12)
To prepare for this Shared Activity:
• Review the Cohan (2002) case study and the other Learning Resources.
• Reflect on the relationship between power, politics and conflict and how it may have impacted the Enron scandal. Then, consider how HRM approaches may have assisted through conflict resolution or the application of new approaches to change the outcome.
To complete this Shared Activity:
• Post an entry from the perspective of an Enron manager and address the following points:
• Explain the relationship between power, politics and conflict at Enron.
• Explain how HRM approaches could have been utilised to assist employees through conflict resolution and why. Then, explain what HRM approaches could have been adapted that might have changed the outcome in this case.
Explain what HRM approaches could be adapted or employed at Enron to build a more ethical organisation.