Introduction
The leadership function of an organization has the power to determine the success level of the organization based on the commitment of the leader in achieving the goals set by the stakeholders. The character traits of the leaders are reflected in the organization, and the performance of the company is influenced by the interplay between the skills possessed by the leader and the available resources. When Jeffrey Skilling took over the leadership position at Enron, he inherited a company that had great potential for exponential growth, but he brought it down with his poor decision-making skills. This paper looks at some of the elements of organizational leadership with a close focus on the case of Enron.
Defining and communicating the vision of an organization
The vision of an organization is defined by the stakeholders, and it is communicated to the members of the organization by the leader. The leader is charged with the responsibility of deciding the best course of action for the company on a short-term and long-term basis. This responsibility means that the leader of an organization has a direct impact on the objectives set by the organization, and the strategy used to reach the goals (Mitchell, Agle & Wood 1997). The case of Enron is a good example of a company that was misled by its leader. Skilling made good progress in his initial period as the chief executive of the company, but he later made poor decisions that brought down the company. His vision for the company was not clear for him and the other members of the company, but everyone followed him, hoping that he had a plan to achieve stakeholders’ goals (Deakin & Konzelmann 2004). The key stakeholders involved in the process of developing Enron’s strategic purposes were the members of the executive and management functions, as well as the shareholders of the company. These included Skilling and his board of governors. The stakeholders must evaluate the goals set by the organization to determine their viability in terms of their appropriateness (Johnson et al. 2014). The stakeholders of Enron placed their trust in Skilling, and they failed to control his strategies appropriately.
Aims of governance in evaluating organizational objectives
The role of the governance in an organization is to ensure that the objectives communicated by the leadership function are parallel with the expectations of the stakeholders. The governance at Enron was crucial in determining the strategy assumed by the leadership to attain growth for the company. The role should have been executed in a better way because Skilling was not focusing on the goals of the stakeholders. The stakeholders could have alleviated some of the issues faced by the company by taking a stand to use ethical ways to attain growth for the company. Most of the members of the management function were aware of the unethical decisions that Skilling was making, but they did not bother to stop him (Deakin & Konzelmann 2004).
Conclusion
Enron’s case is a good example of the failure of the management and leadership function in executing an appropriate business plan. The company’s board of executives failed to monitor the strategy of the leader, and his inappropriate decision-making processes led the company to bankruptcy. The governance function of an organization should take an active role in ensuring that the objectives of the company are set to drive the company to success.
List of References
Deakin, S & Konzelmann, S 2004, ‘Learning from Enron’, Corporate Governance: An International Review, vol. 12, no. 2, pp. 134-142.
Johnson, G, Whittington, R, Scholes, K, Argwin, D & Regner, P 2014, Exploring strategy text & cases, 10th edn, Pearson, Harlow, England.
Mitchell, RK, Agle, BR & Wood, DJ 1997, ‘Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts’, Academy of Management Review, vol. 22, no. 4, pp. 853-886.