Enron pt 3

Date: July 12, 2008
Time: 11 PM
Place: Kitchen

Kenneth Lay has a leadership style know as “The Cavalier” which these types of leaders are known for being characterized as show offs of the leadership world- not necessarily egotistically but because it motivates them. Often they will stun the audience with acts of derring-do and controversial behaviors. These leaders enjoy the limelight and are more frequently in the press.” (Gainmore blog: 2006). Kenneth Lay was also characterized by his peers as “a man of big ideas, a crusader for free markets and a risk taker in the Texas wildcatter tradition.” (Yardley, J & Schwartz, J, 2002) Jeffery Skilling was President and CEO of Enron from 1996 to 2001 when he abruptly resigned his posts. Mr. Shilling’s leadership style can be traced back all the way to his early years in High School “where he was not only known as a scholar but one with a penchant for somewhat dangerous activities. He thrived at Harvard Business School where he excelled as a top scholar.” (Free C, Macintosh, N, Stein, M, 2007) Many on Wall Street were impressed with the way in which Mr. Skilling transformed Enron from what was known as “old economy” way of doing things to one that Wall Street embraced. “Skilling‘s leadership style and vision were evident in all aspect of Enron’s corporate culture. Skilling was one to have control over almost every facet of the organization, particularly in regards to accounting procedures which were designed to “massage” reported earnings in order to meet analysts’ expectations. This form of “cowboy capitalism” put a lot of pressure on all of Enron’s short-term traders.” (Free C, Macintosh, N, Stein, M, 2007) Jeffrey Skilling was not just know for control of Enron’s units but he was admired for his emphasis on earnings, rewards status and the deliberate role modeling, teaching and coaching which involved exposing employees to exaggerated claims. Skilling was also known for recruiting, selecting and promoting the best and the brightest from top universities in the country. Those who were recruited by Shilling had to have certain characteristics which were very smart, aggressive, glib, extraverts and who would ultimately become a ruthless trader. Schilling style of leadership can also be characterized as if you “did not make the grade you were either transferred to another unit if you could find someone who would take you or be terminated.” (et al)
When Kenneth Lay had stepped down from the CEO post and then gave the reigns to Jeffrey Skilling that was the beginning of the end for Enron. All of the management controls that had been in place to ensure that Enron would be a viable entity for many years to come were systematically eroded with Mr. Skilling’s leadership style. With the breakdown of controls it was easy to let the company get away from those that is was supposed to make sure that everything stayed in checks and balances. As Enron’s focus changed from being a supplier of natural gas to being a rogue trader on Wall Street this profoundly affected its ability to police itself. Part of the problem was that there was a breakdown in the moral and ethical guidance that normally a corporate culture has. There was a great amount of fraud that was going on with Enron and the accounting irregularities that Arthur Anderson has signed off on. Just by the very nature of both Mr. Lay and Mr. Shilling taking this as was stated earlier “cowboy capitalism” taking risks that were not truly weighed out. By this I mean that the committees that were in place to make sure that Enron was not taking unnecessary risks were giving Mr. Skilling a rubber stamp approval. We also know that there were many other factors that made it easier for Enron to “get away” with what they did for so long. Mr. Lay’s connections to major political figures, lapse in oversight by the Securities Exchange Commission (SEC) and some of Arthur Anderson’s auditors giving Enron a green light when in actually they were in deep economic chaos. The most pressing issue that caused one of the largest collapses in U.S. History was that there was a culture of “if bad news is given lets cover it up and make sure that everything is bright and cheery.