Enron Scandal Power, Politics and Conflict

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Power, Politics and Conflict 4

The Enron scandal can be linked to the relationship between power,politics as well as conflict at the organization. Enron had developedinto a major market player, referred to as an innovative, fastdeveloping and perfectly managed business in America (Jickling,2003:1). As a result, Enron became a powerful organization that wasmainly associated with financial gain. This explains the ease atwhich the company was able to sell stocks and even access loans. Inaddition, due to its size, Enron was able to use its money as well asconnections to misrepresent government policies in manners that madeit possible to lie to consumers. As such, Enron was able tocontinuously pressure government officials to organize illegal deals,which in turn enhanced the conflict of interest between employees,other stock holders and the company’s executives. This means thatthe powerful nature of Enron enhanced its political influence, makingit possible for government officials that should have exposed thescandal, to cooperate with Enron’s executives in lying about theprofits.

HRM approaches might have been used to help workers in solving theconflict at Enron. Human resource management approaches are aimed atensuring that an organization is able to competently address thechallenges that it faces. In the case of Enron, the organizationfaced many issues mainly related to lack of financial transparency inbusiness decisions made. It is common for businesses to becomeunsuccessful in their investments, as was the case with Enron(Jickling, 2003: 2). However, Enron’s scandal was a result of poorHRM decisions evident in the reaction towards the challenges the firmencountered. HRM approaches could have been used as the guidingprinciple on how Enron reacts to the conflict. This is because, theorganization would have been in a better position to plan on how toaddress the challenge it was facing instead of resort to lying.

There are many HRM approaches adapted by organizations. Theapproaches that could have been implemented by Enron to change thecase’s outcome include promoting a healthy corporate culture andenhancing supervision on the operations of the executives. Thecorporate culture that was employed by Enron greatly influenced theorganization’s collapse. The culture was founded on the belief thatEnron ought to have been the best in all its business dealings. Thisresulted in unrealistic expectations and the lack of acceptance forfailure. As a result, even when the firm made investments that led tobusiness losses, the executives resorted to covering up their flawswith the objective of protecting Enron’s reputation. As such, thefirm was operating on an unhealthy corporate culture. By changingsuch a culture, it would have been possible to avoid the scandal. Theother HRM approach relating to enhanced supervision could have beeneffective in ensuring that Enron’s executives were transparent intheir actions. Aware that they could get away with their actions,management used money-making strategies that were not well-thought.In addition, instead of owning up to their mistakes, they reacted byhiding the unsuccessful business deals. Enhanced supervision ofmanagement’s actions could have ensured that executives were moreaccountable and held responsible for any business dealings, whichwould have in turn avoided the scandal.

In order to create a more ethical organization, the HRM approachesthat could be implemented include revising Enron’s code of conductand process integrity. The code of conduct guides an organization’soperations while the process integrity enhances moral awareness.


Jickling, M., 2003, The EnronCollapse: An Overview of Financial Issues, CongressionalResearch Service, The Library of Congress, CRS Report RS21134,Washington, DC,Available at: http://royce.house.gov/uploadedfiles/rs21135.pdf

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