Monday, March 28, 2011

The "Toxic" Leaders of Enron

The leaders of Enron, though they may have started out innocently, were definitely “toxic” leaders. These leaders, especially Jeffrey Skilling and Ken Lay, created an environment that fostered “benign followers”—those who are afraid, for one reason or another, to challenge the leader—and further perpetuated the bad leadership of those in power. By switching the staff and firing employees often, the leaders instilled fear in their followers, and created a situation in which the workers were afraid to challenge them.
In her “Allure of Toxic Leaders”, Jean Lipman-Blumen states that in corporate leadership positions, “status and meaning become one” (141). Toxic leaders and their followers begin to equate their high status within the company with their lives having meaning. The company not only encompasses their careers, but starts to reassure leaders that they are good people. In Enron, specifically, the staff was constantly told that they were the cream of the crop, and eventually, this confidence caused them to become “toxic”.
In addition, the Enron leaders lost sight of their goal. Instead of focusing on their initial avenue of business, natural gas, Enron expanded to cover water, oil, and even broadband. The company overextended, and began to revolve more around the theoretical idea of a company like Enron and the supposed genius of the leaders than the actual products. The leaders created a culture of supposed excellence, focusing more on the fact that their company was run by the “best of the best”, and thus ignored the actual mission of the company. Because of their cultivation of “benign followers” and their over-investment in the “genius” of their employees, the heads of Enron were “toxic” leaders.

4 comments:

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  2. The peer review methods that the company used also ensured the most ruthless and moral hazard prone traders remained at the company. The people who were willing to fudge their numbers and engage in arbitrage and/or other dishonest practice didn't get fired. At Enron, toxic leaders certainly selected toxic followers.

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