A Way of Looking at Things No. 23: Real Leaders Might Have Saved Enron

A Way of Looking at Things – No. 23

Real Leaders Might Have Saved Enron1

James R. Fisher, Jr., Ph.D.
© March 2002

Author of Corporate Sin: Leaderless Leadership & Dissonant Workers
TheDeltaGrpFL@cs.com

Enron Corporation, the seventh largest in the United States, failed in the last quarter of 2001. Its immolation sparked by slumping energy prices, and piles of debt, surprised everyone from regulators to investors to employees. Now, huge questions loom as to how widespread the damage will be, who is to blame, and what will be done about it.

This much is clear: Enron’s fatal flaw was management hubris, tacitly encouraged by board members, regulators, politicians, and stock analysts, many with financial ties to Enron who looked the other way as warning lights flashed.

When leadership is practiced as it is meant to be practiced, leadership never looks the other way, but always looks the problem in the face. Leadership is about cultural reformation and how to best leverage resources and assets for competitive advantage. Senior leaders are responsible to turn enlightenment into action, and see that commitment is not limited to rhetoric. The focus is always on the efficacy and wellness of the organization, knowing that individual behavior is influenced by the culture and systems in place. Individuals behave as they are programmed to behave. An organization always gets the workers it deserves. It is no accident that worker collusion, sabotage, passivity, and violence occur in some organizations and not in others.

When morale, job satisfaction, and management approval are low, HR often devises a “money and love” campaign. The company newspaper profiles employees of the month; involvement groups are created, along with special events, an open-door policy, a bonus plan, and suggestion program. Such HR interventions are usually reduced to cosmetic effects, as they change nothing.

Motivation, job satisfaction, morale, and loyalty are found in the job itself, or they are not found at all. Workers thrive on meaningful work, on a sense of achievement, and recognition for the work done, along with a sense of responsibility commensurate with authority, and a chance to grow in the job. All fringe benefits in the world won’t boost performance. It is the health of the worker’s spirit that is critical to performance, and this cannot be bought or bribed into agreement. It must be earned.

Leaders must weigh the health of the organization before taking corrective action. You cannot one day treat workers as necessary evils and the next as assets, and expect enthusiastic compliance. In many cases employees are programmed in learned helplessness and nonresponsibility. It takes diligence, patience, and persistence to override this fatal flaw.

Ergo, a process of reprogramming must be created to first ease anxiety and earn trust one-step at a time. Typically, HR bandages wounds with programs, campaigns, public relations, training and seminars. Training seldom translates into either timely problem solving or decision-making. HR is more concerned with membership development – company loyalty, employee morale, adaptation to policies and procedures – in the interest of establishing order and control.

The structure and function of work determine processes, and these systemic processes dictate organizational behavior. Creating the appropriate culture makes the whole more and different from the sum of its parts. An institution tends to take on the character of its leadership. If the leaders are attuned to social forces and social change, there is hope of creating a high performance system. Many negative influences are mired in tradition and corporate history. For example, if the culture believes that position power is sacrosanct; that wisdom resides in management decision-making; that obedience, politeness, punctuality, and loyalty are inviolable; that appraisal is a feasible tool to measure performance; and that professional workers can be summarily subsumed, leaders cannot expect high performance.

Change will occur naturally over time once workers and managers change themselves. Order comes from within. To establish order takes more than good intentions and positive attitudes. Order requires a radical change in mentality, a structural change in the way workers and managers view the world.

Obviously, not all individuals want the freedom to innovate and to self-actualize. Becoming sensitive to individual values, beliefs, and expectations is a first step in adopting an enlightened approach to managing people.

Corporate paternalism – doing more for workers, giving them more social security, economic welfare, greater recreational non-work related outlets, and looking after them better – has neither produced happier and healthier workers nor more secure and progressive businesses. The needs of employer and employee can only be realized by giving workers the responsibility and dignity warranted mature adults, and desisting in treating them as dependent obedient children. Only when creature comforts are earned do they hold meaning.

Unionism has also failed to give workers citizenship. The effectiveness of unions lies largely in their concentration on economic issues at the expense of workers’ control of what they do. The basic nature of unionism is a negative strategy. Unions are designed to protect workers against management rather than to develop a common ground with them. This negativism handicaps unions in moving toward social integration by sponsoring jurisdictional strikes, not permitting equal opportunity, and penalizing efficiency and progress.

Monotony and insecurity are not anathema to job satisfaction although most workers cannot bear up well to extremes of either. Most workers require some routine to remain sane. The more creative the workers or the more responsibility they are willing to assume the less monotony they need.

The upsurge of autonomous units is driven by cultural integration. Each unit may be a separate business, but its goal is the success of the whole business. Workers need responsible participation in their own jobs and in those units that concern them directly. The autonomous, self-managed community is not a social panacea, but establishes a community within and between units that can relate to the corporate center.

This much is obvious: 1) the management function cannot be seen separate from the worker function; 2) the hierarchical structure of management must disappear; and 3) the perceptual difference in vision and work between levels of management must fade away. Otherwise, the right hand won’t ever know what the left hand is doing, which might have been the case with Enron.

Every successful enterprise has a collective spirit sponsored by individual motivation. To realize this spirit and its collective engagement requires that both leaders and followers grow up.

Leadership is lifting people’s vision to higher sights than creature comforts. Leadership is raising people’s performance to higher standards of expectation. The leader’s role is to leverage intellectual capital to achieve competitive advantage. Leadership’s failure can be traced to the misapplication of this intellectual capital, which actually dominates the processes that control the financial outcomes.

Senior leaders at Enron failed to stop the runaway train. Many people inside Enron sensed trouble long before it occurred, but didn’t want to become the messenger who got shot. Enron was not short of brilliant people who had many good ideas on possible remedies. But there was no forum with the theme, “Together we can find the answers.”

The financial loss, human carnage, and psychological fallout of the Enron debacle will scar the lives of people for years to come. With the exercise of real leadership, it need never have happened.

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