Power at the Top: How the Smartest Guys Took Control

In looking at the perspectives from Organizations and Organizing, I want to look more closely at Enron as a rational system.  Scott and Davis state that these are  “Structural arrangements within organizations are conceived as tools deliberately designed to achieve the efficient realization of ends or, from Weber’s perspective, the disciplined performance of participants” (pg. 56).  Goal specificity plays a large part in these types of organization just as it did at Enron.  The executives had a clear set of goals based almost completely on profit maximizing within the short term.  This company was striving to be at the top and stopped at nothing to increase the wealth of shareholders.  What Enron failed to do was react to the rest of the environment, all stakeholders involved.   This may have been accounted for if Enron had moved more toward an open or natural system perspective.  Company culture of Enron did not allow people to challenge the actions of the executives in order to innovate.  This was not done with Enron as it is stated about Enron,  “If you’re not with us, you’re against us.”

This attitude of Enron management played a large role in the effect of the company.  Hierarchy within the corporation led to a feeling of superiority for upper level management leading those, even outside of the company such as Arthur Anderson to feel as though they could not disagree with them.  Because of the formalized structure within their rational system, the power of the top executives was far greater than it should have been and allowed for others to contribute to their scheme without being fully aware of it.  Even the board did not ask questions.  Managerial power in hierarchy of the company of Enron was far too great.  The attitudes that they portrayed convinced others to jump on the bandwagon and listen to exactly what they were saying.  With another type of system being implemented, the management’s power could have been in check.

In The Smartest Guys in the Room it was stated that, “Certainly there were executives who worried about the company’s financial maneuvers, but the vast majority of people who worked for Enron simply assumed that the Global Finance team and Enron’s accountants at Arthur Andersen—not to mention the stock analysts and credit analysts—knew what they were doing and that there was nothing for them to worry about. Enron had obtained many of their goals and made a show of it by putting up pricey building and paying their executives top dollar.  Few people outside of the company knew to ask questions about the internal workings of Enron.  Overall, Enron needs to adapt a more open system within their company in which the flow of ideas and suggestions could be exchanged freely.  Similarly the attitudes adopted by upper level executives did not encourage the flow of ideas or look out for stakeholders along with shareholders.

In looking further into research about the hierarchy and rational systems implemented at Enron I used Web of Knowledge from the library research tools..  I looked for topics such as rational systems as well as stakeholder theory in order to find out about how these ideas could affect the role of Enron executives.  Looking at the different types of systems and hierarchies with in companies, I found keywords and looked them up on Google Scholar in order to find sources.  Similarly I typed these words into Lexis, JStor in order to find full scholarly articles with relevant information to get a broad range of information. I found some articles relevant to my research such as Hierarchy, Specialization, and Organizational Conflict and The normalization of corruption in organizations. Then, I used Bucknell’s Library in order to find hard copies of some useful books needed for my research such as one entitled Power and Organizations.

The research I am choosing to focus on involves the power of the executives at the top of the hierarchy along with the control that these executives are able to operate because of the system implemented within Enron.  By looking at these topics I believe I will be able to analyze the problems that the executives had with the amount of control of the company both internally and externally. I also looked at the bibliography in our book for class, Organizations and Organizing:  Rational, Natural, and Open System Perspectives in order to find references for the section of the book I was looking at on power, hierarchy and rational systems.  After compiling information and articles from several different sources, I also performed a cited reference search.  This search led me to find new articles as well as determine which of the articles I had already found would be the most useful based on the number of times other people have cited them.  I hope to continue research on these aspects of Enron so that I am able to relate the company’s problems with the concepts I have chosen from Organizations and Organizing.