What is a case study?

What is a case study?
A case study is a vehicle for learning about organisational and management issues. It provides a simulated organisational situation through which theoretical concepts and approaches can be applied and their feasibility and suitability assessed, thereby providing greater insights into organisational and management issues. The case study approach seeks to identify issues, analyse problems, and develop solutions to these problems and to assess implementation challenges arising from these solutions. The case study method is based 0n real life practical problems and, as such, seeks to make the issues come alive for the students.
Case studies vary considerably in length, in the amount of information contained, in the number of issues raised and in the ways they are taught. Sometimes the problem for analysis is clear and sometimes it has to be dug out of a wealth of, often conflicting, information. A case study rarely contains all the information one would like. However, managers are rarely in a position to make decisions with complete information. Managers make assumptions where information is incomplete, but taking care to justify those assumptions.
Case studies rarely have right or wrong answers; answers may be more or less appropriate depending upon the strength of the supporting arguments and the use that is made of the available information. Sometimes that information is in the form of financial data, data about customers, or in the form of opinions expressed by different stakeholders. The student needs to assess the validity of the different kinds of information and the weight to be given to it. All of this can, of course, be very frustrating, but managing involves making decisions with limited information, limited time and limited resources.
Skills developed by case study method
Case analysis promotes the discussion of organisational problems and as such is problem-oriented, rather than concerned with the acquisition of knowledge. The case study is concerned with practice: what are the problems of the organisation and how can these be solved? Theory can provide a framework against which solutions can be tested. Case studies may be designed to develop:
• Comprehension: students need to grasp the detail of the case, often in a limited space of time, and to differentiate between relevant and irrelevant information
• Analysis: students need to break the case study into its constituent parts and examine the relationship between them
• Problem diagnosis; often it is unclear what the problem is and why, for example, an organisation is not performing as well as expected
• Problem solution; case studies often require the generation and evaluation of different options. A key question is often ‘what would happen if X did this?’
• Application of theory; often a case involves the application of general managerial concepts or theory to a specific example
• Use of quantitative tools; a case may allow the application of quantitative data so that students can understand how data can be used
• Presentation skills; an important part of a case study may be the presentation of findings either orally or in the form of a written report. A key management skill is communication and the suitability, feasibility and acceptability of solutions offered
• Inter-group communication; it is very rare that managers work in isolation and most managers work in teams for at least part of their time. The case study method can help develop skills required for working in groups. A good case will generate discussion, allow the students to form opinions and provide the material to defend those opinions. During discussions new insights are likely to emerge.
How to analyse cases
It is important that, in the first instance, students should read the case and understand some of the issues. It may be appropriate to read the case quickly to arrive at an overview and then to analyse the different dimensions. Where group work is involved, this could be done in subgroups where each subgroup examines a particular issue before reporting back to the main group. Typically cases might be broken down into issues covering finance, external environment, structure, people, and processes and so on. It is important, however, that in subdividing the case students do not lose sight of the overall picture.
The case will raise a number of problems that need addressing and students will need to identify major and minor problems and prioritise their importance. Alternative solutions may be generated and evaluated. Typically, cases require a decision and an implementation plan involving short-term, medium-term and longer-term solutions. Solutions will be tested against the context of the case, the appropriateness of the organizational structures and processes, and the challenge of the wider environment. A case is there to simulate real life and, most importantly provide a learning opportunity for students.
Source: Lawton, A and D. McKevitt (eds) (1996) ‘Case Studies in Public Services Management’ Blackwell, Oxford pp2-4
Needs to follow
Assignment 2 involves a case study analysis in the answering of three questions. Case studies are designed to utilise theory in the analysis of a particular example, in this case Enron.

Comprehension
Enron is both a simple and a complex case to follow; simple in that it clearly has to do with general problems of leadership, rewards, culture, unethical behaviour and so on. Complex insofar as unravelling the financial dealings is difficult. I do not expect to see too much discussion of the financial complexities but would expect to see the location of the case within the wider context of corporate culture within the USA and the key issues for Enron (225 words)
Analysis and problem diagnosis
You will need to demonstrate that you can apply theories of leadership to help you analyse the particular problems that faced Enron. What are cause and effect, what are the most important issues and could they have been avoided? AS the whole point of case analysis is the application of theory to practice I shall be looking at how well you apply the different theories as an explanation of what happened. You also might wish to consider the extent to which leadership was the problem and not some other factor (450 words approximately)
Theory and practice
You will need to demonstrate that the case study can help understand the theory that looks at the relationship between leadership and culture specifically. Thus you will need a definition of culture and an analysis in general terms of the relationship between theory and culture. Does leadership shape culture or vice versa? How easy/difficult is it to shift culture particular if it is part of prevailing social and cultural norms? (450 words approximately).
Recommendations
What can we learn from the Enron case and what recommendation can you make for the role of leadership in curbing unethical behaviour? Thus a key part of any case analysis are the recommendations. I would expect to see recommendations that address the dimensions of suitability, feasibility and acceptability. Are your recommendations suitable for a case such as Enron? Are they feasible in terms of not imposing too big a burden on a company such that it becomes over-regulated? Are they acceptable to key stakeholders including the public eg the public in various countries would probably like to see some curbs on executive rewards, particularly in the banking industry. Other stakeholders eg governments, seem much more reticent. (450 words approximately).
Presentation
How well is it written, how is it structured and how convincing are the arguments
(i) I expect clear and coherent arguments.
(ii) I expect grammar, spelling, punctuation etc to be correct.
(iii) I am also looking for a logical structure.
(iv) References should be correctly used both in the text and presented in an appropriate manner at the back. Either use the Harvard system or APA.
There is no set format for this but I would expect to see the use of sub-headings to delineate the different questions asked.
Case study
The Enron Story1
The Background US company Enron was formed in 1986 from the merger of natural gas pipeline companies Houston Natural Gas and Internorth, and in the following 15 years diversified to provide products and services related to natural gas, electricity and communications. Early in 2001the company employed around 22,000 staff. Ken Lay was Chairman of the Board and Jeff Skilling was CEO.
Enron failed when the market lost confidence in it following major profit and asset write-downs in the third quarter of 2001. This caused loans to become due as stock market collateral collapsed making new borrowings impossible. Enron suffered the usual fate of a failed business; it simply ran out of cash. However, the lost confidence was not the cause of the collapse but merely its latest symptom. Enron failed because in the words of one commentator it was the proverbial `Emperor’s New Clothes’. The assets and expected earnings which underpinned its meteoric rise into the Fortune top ten were largely illusory, while the tangled web of related companies and financial deals hid a huge burden of debt. Its aggressive accounting practice and market power ensured that the secret was safe, at least in the short term. In 1997 the company reported operating results of $515m and profits of $105m as a result of non-recurring charges of $410m that `allow us to clear the decks for future growth’ [Enron press release 20 January 1998]. From this point to summer 2001 the published financial results were spectacular, with the company meeting or exceeding rising earnings targets in 20 successive quarters. Operating results were $698m in 1998, $957m in 1999 and $1.266bn in 2000, the last full year reported. With the help of their accountants and lawyers, top executives created subsidiaries that looked like partnerships and made it possible to sell assets and create false earnings. Offshore entities were used to avoid taxes, inflate assets and profits and hide losses. Conflict of interest rules were relaxed to allow executives to benefit personally from questionable ventures that in most cases were a drain on company funds.
One example of unethical practices was the transfer of energy out of California to create blackouts thus raising the price of electricity. Then the energy was transferred back to California and sold at higher prices, generating billions of dollars in extra profits.
Key Individuals Jeff Skilling, Enron’s Chief Executive is quoted as saying that his priority as Chief Executive Officer (CEO) was `to keep the stock price up’. In an interview on 28 March 2001 with FRONTLINE about the California power crisis Jeff Skilling said, `We are the good guys. We are on the side of the angels’. His interviewer asked him, `A general comment that I’ve heard about Enron, and to a certain extent about you [is] that you’re very, very smart, very, aggressive. You’ll lay out your argument, “The rules in California are terrible”, but then once you see what the rules are, you guys push those rules to the edge in an effort to make a buck’. Skilling replied, `That’s probably fair, yes. Once you set the rules to a marketplace, we adhere to the rules. If that’s what you’re saying, that’s what we do.’ Interviewer, `But you know what I mean you play the game hard. You take it right down to the . . .’. Skilling, `We adhere to the rules. If they set up the rules, we adhere to them. It’s like the tax code. No one expects you to pay more taxes than you owe. And so you’re expected to interpret the rules and conduct your business in that fashion . . .’. Jeff Skilling resigned in August 2001 for ‘personal reasons’ and was allowed to sell significant amounts of his own stock at a premium price. When Ken Lay took over as CEO he repeatedly emphasised the need to reinforce the message about the value of the company’s shares. He made appearances to investors and the public telling them that Enron was heading in the right direction, at the same time as top executives were rapidly selling their own shares. By August 15 the stock price was down to $15 but many trusted Ken Lay and continued to hold their stock and buy more of it. Four months later Enron filed for bankruptcy.
The Board of Directors
The Board of Directors is responsible to the shareholders for the company’s business. They should be the guardians of the ethical code and sufficiently in touch with the business to be effective. Enron’s board appear to have fallen short in many respects. They were not fully briefed on the extent of the partnerships, allegedly taking only fifteen minutes to review some of the more dubious transactions underlying the surge in earnings. Subsequently of the 17 Directors, 7 were sued for insider trading and 6 had a trading or sponsorship relationship with Enron thus raising questions of conflicts of interest.
Executives and senior management
It is generally considered that the key determinant of the ethical culture of an organisation is the example set by senior management. Enron is no exception. In principle Enron claimed to subscribe to a morally worthy set of values insofar as Respect, Integrity, Communication and Excellence are at the core of its Mission Statement. Respect is defined as `We treat others as we would like to be treated ourselves. We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness and arrogance don’t belong here.’
The Culture
The company culture of individualism, innovation and unrestrained pursuit of profits eroded the ethical behaviour of many Enron employees. The risk-taking culture of Enron and bonus incentives encouraged staff to manipulate profits estimates. Unethical practices were encouraged and were rife throughout much of the organisation. An employee’s appraisal scheme, the Performance Review Committee (known locally as `rank and yank’) resulted in promotions and bonuses for the top employees and dismissal for the bottom ones. Each year 15-20% of the employees with the lowest performance were fired and replaced by new employees. One commentator says, `the main factor that discouraged questioning of Enron’s business practices was a ruthless and reckless culture that lavished rewards on those who played the game, while persecuting those who raised objections’. The Performance Review Committee controlled employees and forced them into line. Appraisal was supposed to be based upon how well employees had delivered the core values; in reality appraisal was based upon how much paper profit the employee had generated. By all accounts Enron was an exciting place to work and it undermines those who argue that the macho `greed is good’ culture did not survive the late 1980s and early 1990s.
The end
It was the biggest and most complex bankruptcy case in US history and had a devastating effect on thousands of employees and investors. It also led to the dissolution of accountancy firm Arthur Andersen, one of the largest in the world, after employees were found to have destroyed documents relating to the auditing of Enron finances. Anderson was serving as the independent auditor whilst at the same time charging Enron millions of dollars in consultancy fees.
1. Adapted from Tonge, A, Greer, L & Lawton, A (2003) ‘The Enron story: you can fool some of the people some of the time….’, Business Ethics: A European Review, vol. 12, no. 1, pp4-22 Yukl, G (2013) Leadership in Organizations 8th . ed. Pearson, Harlow, Essex.,
Questions
1. How can what happened at Enron be explained by some of the theories of leadership that you have looked at?
2. In what ways does leadership influence culture?
3. What can be done to reduce the type of unethical behaviour demonstrated in this case? What are your recommendations?
Further Reading

Levine, DP (2005) The corrupt organization, Human Relations 58 (6): 723-740

http://ezproxy.federation.edu.au/login?url=http://dx.doi.org/10.1177/0018726705057160

Luthans, F., Avolio, B.J., Avey, J.B. and Norman, N. (2007) Positive Psychological Capital: Measure and Relationship with Performance and Satisfaction. Personnel Psychology. 60: 3; 541-573.
http://ezproxy.federation.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=pbh&AN=26438454&site=ehost-live&scope=site

Sims, RR and Brinkmann, J. (2003) Enron Ethics (Or: Culture Matters More than Codes, Journal of Business Ethics 45; 243-256
http://ezproxy.federation.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=10348316&site=ehost-live&scope=site

Tourish, D and Vatcha, N (2005) Charismatic Leadership and Corporate Cultism at Enron: The Elimination of Dissent, the Promotion of Conformity and Organizational Collapse, Leadership 1 (4): 455-480
http://ezproxy.federation.edu.au/login?url=http://dx.doi.org/10.1177/1742715005057671

Zandstra, G (2002) Enron, board governance and moral failings, Corporate Governance: The International Journal of business in society 2 (2): 16-19
http://ezproxy.federation.edu.au/login?url=http://dx.doi.org/10.1108/14720700210430333
note please follow the instructions and the requirement for this assignment.
And please specially for the word count last time one of my assignment didn’t had the required word count. I don’t need and title page details like name, class, university name and any of headers and futters. You can get information from this book “Padilla, A. (2013). Leadership: Leaders, Followers, and Environments. Wiley.” This is mandate book for this course please use this for referencing purpose and further reading references list would be helpful for you.
Please write down executive summary for 150 words to sum up all case study.

BUMGT5970 Leadership Assignment 2

HD Guidelines

Assignment 2 involves a case study analysis in the answering of three questions. Case studies are designed to utilise theory in the analysis of a particular example, in this case Enron.

Comprehension

Enron is both a simple and a complex case to follow; simple in that it clearly has to do with general problems of leadership, rewards, culture, unethical behaviour and so on. Complex insofar as unravelling the financial dealings is difficult. I do not expect to see too much discussion of the financial complexities but would expect to see the location of the case within the wider context of corporate culture within the USA and the key issues for Enron (225 words)

Analysis and problem diagnosis

You will need to demonstrate that you can apply theories of leadership to help you analyse the particular problems that faced Enron. What are cause and effect, what are the most important issues and could they have been avoided? AS the whole point of case analysis is the application of theory to practice I shall be looking at how well you apply the different theories as an explanation of what happened. You also might wish to consider the extent to which leadership was the problem and not some other factor (450 words approximately)

Theory and practice

You will need to demonstrate that the case study can help understand the theory that looks at the relationship between leadership and culture specifically. Thus you will need a definition of culture and an analysis in general terms of the relationship between theory and culture. Does leadership shape culture or vice versa? How easy/difficult is it to shift culture particular if it is part of prevailing social and cultural norms? (450 words approximately).

Recommendations

What can we learn from the Enron case and what recommendation can you make for the role of leadership in curbing unethical behaviour? Thus a key part of any case analysis are the recommendations. I would expect to see recommendations that address the dimensions of suitability, feasibility and acceptability. Are your recommendations suitable for a case such as Enron? Are they feasible in terms of not imposing too big a burden on a company such that it becomes over-regulated? Are they acceptable to key stakeholders including the public eg the public in various countries would probably like to see some curbs on executive rewards, particularly in the banking industry? Other stakeholders eg governments, seem much more reticent. (450 words approximately).

Further Reading

Levine, DP (2005) The corrupt organization, Human Relations 58 (6): 723-740

http://ezproxy.federation.edu.au/login?url=http://dx.doi.org/10.1177/0018726705057160

Luthans, F., Avolio, B.J., Avey, J.B. and Norman, N. (2007) Positive Psychological Capital: Measure and Relationship with Performance and Satisfaction. Personnel Psychology. 60: 3; 541-573.

http://ezproxy.federation.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=pbh&AN=26438454&site=ehost-live&scope=site

Sims, RR and Brinkmann, J. (2003) Enron Ethics (Or: Culture Matters More than Codes, Journal of Business Ethics 45; 243-256

http://ezproxy.federation.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=10348316&site=ehost-live&scope=site

Tourish, D and Vatcha, N (2005) Charismatic Leadership and Corporate Cultism at Enron: The Elimination of Dissent, the Promotion of Conformity and Organizational Collapse, Leadership 1 (4): 455-480

http://ezproxy.federation.edu.au/login?url=http://dx.doi.org/10.1177/1742715005057671

Zandstra, G (2002) Enron, board governance and moral failings, Corporate Governance: The International Journal of business in society 2 (2): 16-19

http://ezproxy.federation.edu.au/login?url=http://dx.doi.org/10.1108/14720700210430333

CASE STUDY ANALYSIS

What is a case study?

A case study is a vehicle for learning about organisational and management issues. It provides a simulated organisational situation through which theoretical concepts and approaches can be applied and their feasibility and suitability assessed, thereby providing greater insights into organisational and management issues. The case study approach seeks to identify issues, analyse problems, and develop solutions to these problems and to assess implementation challenges arising from these solutions. The case study method is based 0n real life practical problems and, as such, seeks to make the issues come alive for the students.

Case studies vary considerably in length, in the amount of information contained, in the number of issues raised and in the ways they are taught. Sometimes the problem for analysis is clear and sometimes it has to be dug out of a wealth of, often conflicting, information. A case study rarely contains all the information one would like. However, managers are rarely in a position to make decisions with complete information. Managers make assumptions where information is incomplete, but taking care to justify those assumptions.

Case studies rarely have right or wrong answers; answers may be more or less appropriate depending upon the strength of the supporting arguments and the use that is made of the available information. Sometimes that information is in the form of financial data, data about customers, or in the form of opinions expressed by different stakeholders. The student needs to assess the validity of the different kinds of information and the weight to be given to it. All of this can, of course, be very frustrating, but managing involves making decisions with limited information, limited time and limited resources.

Skills developed by case study method

Case analysis promotes the discussion of organisational problems and as such is problem-oriented, rather than concerned with the acquisition of knowledge. The case study is concerned with practice: what are the problems of the organisation and how can these be solved? Theory can provide a framework against which solutions can be tested. Case studies may be designed to develop:

Comprehension: students need to grasp the detail of the case, often in a limited space of time, and to differentiate between relevant and irrelevant information
Analysis: students need to break the case study into its constituent parts and examine the relationship between them
Problem diagnosis; often it is unclear what the problem is and why, for example, an organisation is not performing as well as expected
Problem solution; case studies often require the generation and evaluation of different options. A key question is often ‘what would happen if X did this?’
Application of theory; often a case involves the application of general managerial concepts or theory to a specific example
Use of quantitative tools; a case may allow the application of quantitative data so that students can understand how data can be used
Presentation skills; an important part of a case study may be the presentation of findings either orally or in the form of a written report. A key management skill is communication and the suitability, feasibility and acceptability of solutions offered
Inter-group communication; it is very rare that managers work in isolation and most managers work in teams for at least part of their time. The case study method can help develop skills required for working in groups. A good case will generate discussion, allow the students to form opinions and provide the material to defend those opinions. During discussions new insights are likely to emerge.
How to analyse cases

It is important that, in the first instance, students should read the case and understand some of the issues. It may be appropriate to read the case quickly to arrive at an overview and then to analyse the different dimensions. Where group work is involved, this could be done in subgroups where each subgroup examines a particular issue before reporting back to the main group. Typically cases might be broken down into issues covering finance, external environment, structure, people, and processes and so on. It is important, however, that in subdividing the case students do not lose sight of the overall picture.

The case will raise a number of problems that need addressing and students will need to identify major and minor problems and prioritise their importance. Alternative solutions may be generated and evaluated. Typically, cases require a decision and an implementation plan involving short-term, medium-term and longer-term solutions. Solutions will be tested against the context of the case, the appropriateness of the organizational structures and processes, and the challenge of the wider environment. A case is there to simulate real life and, most importantly provide a learning opportunity for students.

Source: Lawton, A and D. McKevitt (eds) (1996) ‘Case Studies in Public Services Management’ Blackwell, Oxford pp2-4

Needs to follow

Assignment 2 involves a case study analysis in the answering of three questions. Case studies are designed to utilise theory in the analysis of a particular example, in this case Enron.

Comprehension

Enron is both a simple and a complex case to follow; simple in that it clearly has to do with general problems of leadership, rewards, culture, unethical behaviour and so on. Complex insofar as unravelling the financial dealings is difficult. I do not expect to see too much discussion of the financial complexities but would expect to see the location of the case within the wider context of corporate culture within the USA and the key issues for Enron (225 words)

Analysis and problem diagnosis

You will need to demonstrate that you can apply theories of leadership to help you analyse the particular problems that faced Enron. What are cause and effect, what are the most important issues and could they have been avoided? AS the whole point of case analysis is the application of theory to practice I shall be looking at how well you apply the different theories as an explanation of what happened. You also might wish to consider the extent to which leadership was the problem and not some other factor (450 words approximately)

Theory and practice

You will need to demonstrate that the case study can help understand the theory that looks at the relationship between leadership and culture specifically. Thus you will need a definition of culture and an analysis in general terms of the relationship between theory and culture. Does leadership shape culture or vice versa? How easy/difficult is it to shift culture particular if it is part of prevailing social and cultural norms? (450 words approximately).

Recommendations

What can we learn from the Enron case and what recommendation can you make for the role of leadership in curbing unethical behaviour? Thus a key part of any case analysis are the recommendations. I would expect to see recommendations that address the dimensions of suitability, feasibility and acceptability. Are your recommendations suitable for a case such as Enron? Are they feasible in terms of not imposing too big a burden on a company such that it becomes over-regulated? Are they acceptable to key stakeholders including the public eg the public in various countries would probably like to see some curbs on executive rewards, particularly in the banking industry. Other stakeholders eg governments, seem much more reticent. (450 words approximately).

Presentation

How well is it written, how is it structured and how convincing are the arguments

I expect clear and coherent arguments.
I expect grammar, spelling, punctuation etc to be correct.
I am also looking for a logical structure.
References should be correctly used both in the text and presented in an appropriate manner at the back. Either use the Harvard system or APA.
There is no set format for this but I would expect to see the use of sub-headings to delineate the different questions asked.

Case study

The Enron Story1

The Background US company Enron was formed in 1986 from the merger of natural gas pipeline companies Houston Natural Gas and Internorth, and in the following 15 years diversified to provide products and services related to natural gas, electricity and communications. Early in 2001the company employed around 22,000 staff. Ken Lay was Chairman of the Board and Jeff Skilling was CEO.

Enron failed when the market lost confidence in it following major profit and asset write-downs in the third quarter of 2001. This caused loans to become due as stock market collateral collapsed making new borrowings impossible. Enron suffered the usual fate of a failed business; it simply ran out of cash. However, the lost confidence was not the cause of the collapse but merely its latest symptom. Enron failed because in the words of one commentator it was the proverbial `Emperor’s New Clothes’. The assets and expected earnings which underpinned its meteoric rise into the Fortune top ten were largely illusory, while the tangled web of related companies and financial deals hid a huge burden of debt. Its aggressive accounting practice and market power ensured that the secret was safe, at least in the short term. In 1997 the company reported operating results of $515m and profits of $105m as a result of non-recurring charges of $410m that `allow us to clear the decks for future growth’ [Enron press release 20 January 1998]. From this point to summer 2001 the published financial results were spectacular, with the company meeting or exceeding rising earnings targets in 20 successive quarters. Operating results were $698m in 1998, $957m in 1999 and $1.266bn in 2000, the last full year reported. With the help of their accountants and lawyers, top executives created subsidiaries that looked like partnerships and made it possible to sell assets and create false earnings. Offshore entities were used to avoid taxes, inflate assets and profits and hide losses. Conflict of interest rules were relaxed to allow executives to benefit personally from questionable ventures that in most cases were a drain on company funds.

One example of unethical practices was the transfer of energy out of California to create blackouts thus raising the price of electricity. Then the energy was transferred back to California and sold at higher prices, generating billions of dollars in extra profits.

Key Individuals Jeff Skilling, Enron’s Chief Executive is quoted as saying that his priority as Chief Executive Officer (CEO) was `to keep the stock price up’. In an interview on 28 March 2001 with FRONTLINE about the California power crisis Jeff Skilling said, `We are the good guys. We are on the side of the angels’. His interviewer asked him, `A general comment that I’ve heard about Enron, and to a certain extent about you [is] that you’re very, very smart, very, aggressive. You’ll lay out your argument, “The rules in California are terrible”, but then once you see what the rules are, you guys push those rules to the edge in an effort to make a buck’. Skilling replied, `That’s probably fair, yes. Once you set the rules to a marketplace, we adhere to the rules. If that’s what you’re saying, that’s what we do.’ Interviewer, `But you know what I mean you play the game hard. You take it right down to the . . .’. Skilling, `We adhere to the rules. If they set up the rules, we adhere to them. It’s like the tax code. No one expects you to pay more taxes than you owe. And so you’re expected to interpret the rules and conduct your business in that fashion . . .’. Jeff Skilling resigned in August 2001 for ‘personal reasons’ and was allowed to sell significant amounts of his own stock at a premium price. When Ken Lay took over as CEO he repeatedly emphasised the need to reinforce the message about the value of the company’s shares. He made appearances to investors and the public telling them that Enron was heading in the right direction, at the same time as top executives were rapidly selling their own shares. By August 15 the stock price was down to $15 but many trusted Ken Lay and continued to hold their stock and buy more of it. Four months later Enron filed for bankruptcy.

The Board of Directors

The Board of Directors is responsible to the shareholders for the company’s business. They should be the guardians of the ethical code and sufficiently in touch with the business to be effective. Enron’s board appear to have fallen short in many respects. They were not fully briefed on the extent of the partnerships, allegedly taking only fifteen minutes to review some of the more dubious transactions underlying the surge in earnings. Subsequently of the 17 Directors, 7 were sued for insider trading and 6 had a trading or sponsorship relationship with Enron thus raising questions of conflicts of interest.

Executives and senior management

It is generally considered that the key determinant of the ethical culture of an organisation is the example set by senior management. Enron is no exception. In principle Enron claimed to subscribe to a morally worthy set of values insofar as Respect, Integrity, Communication and Excellence are at the core of its Mission Statement. Respect is defined as `We treat others as we would like to be treated ourselves. We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness and arrogance don’t belong here.’

The Culture

The company culture of individualism, innovation and unrestrained pursuit of profits eroded the ethical behaviour of many Enron employees. The risk-taking culture of Enron and bonus incentives encouraged staff to manipulate profits estimates. Unethical practices were encouraged and were rife throughout much of the organisation. An employee’s appraisal scheme, the Performance Review Committee (known locally as `rank and yank’) resulted in promotions and bonuses for the top employees and dismissal for the bottom ones. Each year 15-20% of the employees with the lowest performance were fired and replaced by new employees. One commentator says, `the main factor that discouraged questioning of Enron’s business practices was a ruthless and reckless culture that lavished rewards on those who played the game, while persecuting those who raised objections’. The Performance Review Committee controlled employees and forced them into line. Appraisal was supposed to be based upon how well employees had delivered the core values; in reality appraisal was based upon how much paper profit the employee had generated. By all accounts Enron was an exciting place to work and it undermines those who argue that the macho `greed is good’ culture did not survive the late 1980s and early 1990s.

The end

It was the biggest and most complex bankruptcy case in US history and had a devastating effect on thousands of employees and investors. It also led to the dissolution of accountancy firm Arthur Andersen, one of the largest in the world, after employees were found to have destroyed documents relating to the auditing of Enron finances. Anderson was serving as the independent auditor whilst at the same time charging Enron millions of dollars in consultancy fees.

Adapted from Tonge, A, Greer, L & Lawton, A (2003) ‘The Enron story: you can fool some of the people some of the time….’, Business Ethics: A European Review, vol. 12, no. 1, pp4-22 Yukl, G (2013) Leadership in Organizations 8th . ed. Pearson, Harlow, Essex.,
Questions

How can what happened at Enron be explained by some of the theories of leadership that you have looked at?
In what ways does leadership influence culture?
What can be done to reduce the type of unethical behaviour demonstrated in this case? What are your recommendations?
Further Reading

Levine, DP (2005) The corrupt organization, Human Relations 58 (6): 723-740

http://ezproxy.federation.edu.au/login?url=http://dx.doi.org/10.1177/0018726705057160

Luthans, F., Avolio, B.J., Avey, J.B. and Norman, N. (2007) Positive Psychological Capital: Measure and Relationship with Performance and Satisfaction. Personnel Psychology. 60: 3; 541-573.

http://ezproxy.federation.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=pbh&AN=26438454&site=ehost-live&scope=site

Sims, RR and Brinkmann, J. (2003) Enron Ethics (Or: Culture Matters More than Codes, Journal of Business Ethics 45; 243-256

http://ezproxy.federation.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=10348316&site=ehost-live&scope=site

Tourish, D and Vatcha, N (2005) Charismatic Leadership and Corporate Cultism at Enron: The Elimination of Dissent, the Promotion of Conformity and Organizational Collapse, Leadership 1 (4): 455-480

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Zandstra, G (2002) Enron, board governance and moral failings, Corporate Governance: The International Journal of business in society 2 (2): 16-19

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note please follow the instructions and the requirement for this assignment.

And please specially for the word count last time one of my assignment didn’t had the required word count. I don’t need and title page details like name, class, university name and any of headers and futters. You can get information from this book “Padilla, A. (2013). Leadership: Leaders, Followers, and Environments. Wiley.” This is mandate book for this course please use this for referencing purpose and further reading references list would be helpful for you.

Please write down executive summary for 150 words to sum up all case study.

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