Imagination, risk and trust are important cultural values of many organizations. Imagination and risk engage individuals in seeking new ideas for problems, possibilities for technological advances and a playing field for creativity. “Ask why,” as espoused value of the Enron Corporation, certainly sparked interesting conversation in class when viewing, “Enron: The Smartest Guys in the Room.”
“Ask Why,” is precisely what some individuals asked and what others should have asked more frequently when questioning the behaviors of those in leadership. Imagination, Risk and Trust are three espoused values that captured my attention when viewing this film.
Enron leaders operated in the world of magic and let’s play pretend when considering the role of the company. Ideas are everything. An espoused philosophy, “If it is a good idea than you should be able to book the profits of this idea right away” navigates the behavior of leaders. The value of earnings before scruples moved leadership beyond the mart-to-market idea of accounting to one of Hypothetical Future Value. Andy Fastow found that the culture of the organization encouraged financial fantasy. When creating a scheme to generate money, fictitious companies, such as LJM, generated income for top management and the Enron Corporation.
The employees of Portland General Electric, PGE, placed a significant amount of trust in Enron. Their stock was stamped with the seal of Enron, ultimately becoming worthless.
Employees trust is encouraged through a series of meetings with Kenneth Lay. On several occasions, he assured them that the company was doing well. Rocks were being thrown at the company by misguided and irresponsible journalism. His wife, Linda Lay, was used to convince employees to move all of their stock into Enron, while Jeffrey Shilling was quietly moving his funds out of the company.
The Performance Review Committe was created to provide a grade of 1-5 for employees. Each individual was given a rating. Someone had to be a 5, which meant that the procedure of “Yank and Rank” would follow. How can an employee sign over their investments one day only to be ranked a 5 and yanked another day.
The idea that fraud is not fraud if you can keep the perception going fueled many of the risks assumed by Enron.
The Dabhol power plant in India was a huge risk assumed in part by the company. The drinking water in this area is undrinkable, while produce and livestock are dwindling.
The Broadband trading market was slated to earn 53 million in the mart-to-market form of accounting and investing. If broadband wasn’t being utilized from 7pm – 7am, why shouldn’t Enron become involved in marketing this resource?
Traders for the Enron Corporation recount the myriad ways in which they swindled millions of dollars’ worth of utilities from the state of California. Blackouts during the winter months, when the consumption of electricity is only half of that used in the summer, forced business owners to close during the outages. To paraphrase one trader, he didn’t ask why enough when making decisions about the lives of these citizens.
Something to chew on-
While not everyone’s occupation requires imagination in order to do a job well, a culture that expects employees to trust them may be too much risk to assume after the scandal at Enron.