Enron: Posterchild for the Informal Organization

While it is true that all organizations have both a formal and informal aspect, Enron’s informal organization was the epitome of a situation where the informal aspect of the organization reigned supreme. Unlike how most organizations exist, with a balance between formalities and the social culture/power struggle, Enron’s day-to-day operations were dominated by back-of-the-napkin deals and shady business relations.  Moreover, the level of professionalism which was used during interactions of those at the top (and their interactions with everyone else at times, too) was greatly lacking.  After reading The Smartest Guys in the Room, I gained an incredible understanding for exactly how Enron operated dysfunctionaly on a formal level and that the informal nature of the business is really the only thing that held it together for so long.  It is also interesting to see how each executive interacts with each other based on their own dysfunctional character traits.

In my paper, I will develop these ideas based on a central theme of how exactly folks like Ken Lay, Andy Fastow, Jeff Skilling, and others interacted with each other on both a formal and informal level.  I was intrigued, for instance, to see how Skilling always thought he had the best ideas.  As such, he paid little attention and gave little respect in board room meetings.  This trait is exacerbated on the informal level, also.  The power that such a personality gave Skilling over people like his boss, Ken Lay, is incredible.

In order to find out more about the relationship development in the informal organization, I consulted Organizations and Organizing by Scott and Davis.  Joanne Martin said, “. . . the extent to which [human nature, human activity, and human relationships] these elements are “shared” or even coherent within a culture is likely to be highly contentious — there can be subcultures and even countercultures within the organization.”  This quote led me to the back where I found it referencing Martin’s 2002 book, Organizational Culture: Mapping the Terrain.  It has been cited 604 times, and seems like a good resource to further develop my ideas.  I will also consult a research librarian in my quest to more deeply understand the Enron debacle.  Since it is important to use sources other than W.I.G.W.A.M (Wikipedia, Internet, Google, without anything more), I will also look into JSTOR for similar books and journals in developing my ideas.


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