Hr Crisis Management: An Enron Case Study
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1. The collapse of Enron has cast revealing light not just on the corruption of business leaders, auditors and politicians but on the appearance of deregulated capitalism as it has emerged from the stock-market bubble. It has highlighted, too, the vulnerability of the broad layers whose pensions are tied up in the savings routine so ingrained in the economy. This failure has affected not only Enrons employees but tens of millions of holders of 401(k) and defined-benefit retirement schemes.
Enrons demise was significant not just because of its size (other concerns failing at the same time, such as K-Mart or LTV Steel, had more employees and pensioners) but because it had represented the cutting-edge of corporate strategy, living proof that financialization and deregulation were the wave of the future. Enron was far more interested in maximizing trading opportunities than producing electricity. Its momentum came not from productive investment or innovation but from financial engineering.
Following the companys collapse, Enron has become a by-word for corporate irresponsibility. The financial misrepresentation that covered-up the giant black hole at the heart of the companys finances have fuelled interest in how such corporations can be identified and held to account.
The firm projected itself as a highly profitable, growing company – an image that quickly turned out to be an elaborate mistruth. Enrons statements about profits were shown to be untrue, with massive debts concealed so that they didnt show up in the companys accounts.
Not only that, but the company was seen to have been extraordinarily active in political lobbying – with large numbers of legislators close to the company in one way or another. This fact had not been enough to save it, but raised questions about how appropriate such closeness between a corporate and the political system actually is.
The question on many lips concerned just how the situation could have evaded detection for so long. The firms accountants, Andersons, were involved in the shredding of documents relating to Enrons accounts – a fact which suggests a significant degree of complicity.
In the wake of the demise of Enron, corporate governance has come to the forefront of economic discussion. The fall of Enron was a direct result of failed corporate governance and consequently has led to a complete reevaluation of corporate governance practice in the United States.
2. Many of the problems that occur in a organization are the direct result of people failing to communicate. Faulty communication causes the most problems. It leads to confusion and can cause a good plan to fail. Communication is the exchange and flow of information and ideas from one person to another. It involves a sender transmitting an idea to a receiver. Effective communication occurs only if the receiver understands the exact information or idea that the sender intended to transmit.
Studying the communication process is important because you coach, coordinate, counsel, evaluate, and supervise through this process. It is the chain of understanding that integrates the members of an organization from top to bottom, bottom to top, and side-to-side.
3. In Coopers Communication Strategy it was a priority to retain key employees who were necessary to the corporations successful restructuring. “You have to make sure your intellectual capital feels safe and sound, so they can come into work each day and make sure theyre still interested in the game. You cant have things in a state of flux day in and day out, so the KERPs (key employee retention program) helped us move forward and ensure we had some level of stability in the business,” Cooper says. The biggest challenge was morale given that the majority of corporate positions were eliminated (from 9,000 employees to 1,000). Cooper and others understood that while people were there they had to try and make it as decent, open and as nice an environment as possible.
4. Every