Enron and the Former President

I found it almost humorous to hear that Ken Lay was a huge financial backer for Governor George W. Bush. Just the simple thought that Ken Lay drove his company into bankruptcy and George W. Bush drove the United states into a financial nightmare, it would have been so fitting it the two would have actually gone into office together, if you can even imagine, our financial crisis might be even worse then it is now knowing how Ken Lay operated Enron for all those years.

Enron in retrospect is the farthest thing from an organization, although I am sure Ken Lay had high hopes for what Enron could do for him in the long term, it failed to materialize. Again it is humorous to know that so many working within Enron came from the top MBA programs in this country, like Harvard and Kellogg, but they failed so miserably at the basic practices and thoughts of how organizations need to organize.

Looking at Fayol’s Administrative theory you can see that the simplest thought of coordination and specialization failed to happen at Enron, Ken Lay was suppose to be running a business and giving orders but instead it seemed like ten other individuals below him were also giving orders, and when Lay wanted to pass blame for a mistake he always had a higher power to point the finger out, so how is that running a company? Instead it seems that Lay was only had to increase his bank account and it never crossed his mind that people could get hurt in his path.

With the Enron story you can also look at the Hawthorne Effect in which they state that change is interesting, attention is gratifying, Lay and all of his senior administration was caught in the Hawthorne Effect, they did not care what was happening within their organization or what changes were being made, if they had the attention of anyone they were satisfied and it made them want to do more, it did not matter if it was the moral or legal thing to do, they had the attention and they did not want to loose it to anyone.

Enron practices can be seen in so many companies today, not to the extreme that Lay took them but once you are on the inside of a company and are in the executive staff, you begin to see that the CEO’s and COO’s and CFO’s are not in it for the little man they are really only there to make the big bucks, sell big, and get out, not many high executives seem to be in a business for the business.


3 Responses

  1. Politics aside…I think the underlying causes of the financial meltdown cannot by any means be completely blamed on Bush’s policies. He wasn’t single handedly responsible for driving this mess. Yes, deregulation of lending did have a hand in this mess, but that can be traced back to the early years of the Clinton administration and their policies to extend mortgages to more people (more easily) so that they could own homes. Even recently, Clinton has been quoted to say that he should have had tighter regulations on derivatives in the financial system. However, I do agree that Bush’s support and relationships with Enron employees is highly suspect and makes one want to uncover further the intimacies of campaign finance and businesses!

  2. I like ho you point back to Fayol and administrative theory. Even though it is “old” it still has something to say today.

    What would be the Enron answer to the need to administer well? They would ever have said, we don’t care what people do. Maybe something about values, or Risk Assessment?

  3. […] Using the way back machine to pull in Fayol, the award goes to Kristin’s “Enron and The Former President.” […]

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