Places I Don’t See Hierarchies: 1) Enron…

Our discussion in the beginning of class today about hierarchies in companies really made me question whether or not you can even apply the concept to Enron. I know that there are different types of hierarchies, but I looked up the definition just to see if I could apply it to Enron even in the broadest sense. One of the definitions I found states that a hierarchy is “any system of persons or things ranked one above another.” Sounds broad enough…seems like you should be able to apply it to almost any company that has more than one level in its ranking system. It is my understanding that the term hierarchy implies that there is a clear authoritative structure, where the roles of individuals are at least stated, if not followed through. I can’t seem to apply this anywhere in Enron.

Ken Lay was apparently the “head guy,” yet his non-confrontational nature pretty much trampled any opportunity he would have had to exercise authority. And what about Jeff Skilling supposedly being ranked higher than Rebecca Mark? Double whammy – he’s her “superior” AND she’s a woman (we all know what that meant to a company like Enron), yet she was still able to tromp his desires when it came to fulfilling the over-riding sentiment of the company: greed.
What really got me thinking about this was the chapter about the traders. Another system that I find hard to label as a legitimate hierarchy: one that you’ve created on your own. The book describes how the traders feelings of superiority within the system came from “the sense that they were creating a new industry from scratch” and later from the mission of the markets being “overshadowed by the money it was so easy to make.” According to the book and all of the evidence provided, this is what made the traders believe they were above the rest. In my opinion, this is nothing more than sheer arrogance, and arrogance alone does not warrant a title of superiority. Sure, the traders were smart for their ability to manipulate the markets, but that doesn’t mean that they had earned any sort of leadership or authoritative role. I am just so perplexed as to what went wrong in the brains of these individuals that gave them such a false sense of security about their actions.
One answer to my question might be that they were just a product of the environment they had entered into. You could argue that Enron sought after individuals whom they thought would fit into the predetermined environment, or you could say that they looked for blanks slate that they would sculpt to fit the mold once they were in. It also says a lot that no one was really able to put the traders in their place. What kind of hierarchy is that? One where the executives don’t even have control over who they view as the little machines to execute their own brilliancies? I just can’t seem to apply the term hierarchy (as I understand it) to any part of Enron without following the idea with “yea, but…”
I guess what I’m left wondering is if there really are any non-corrupt hierarchies anymore, and if so, where are they? And are they formed deliberately, or do they usually evolve naturally? If it’s true that there are several types of hierarchies, which ones are the most fool-proof and which ones are a recipe for disaster? I personally am finding it difficult to think of ones that have consistently followed up on their original intentions, but maybe it’s unrealistic to assume that humans can mechanically fulfill a particular role without any allowance for wiggle room.

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4 Responses

  1. Holly, great questions! I have also wondered why hierarchies don’t always seem to work. But there are definitely those that do work out there. I think the difference is when a hierarchy is introduced solely for the purpose of meeting some standard or environmental expectation (not internal environment) that the company does not believe in.

    I think the US Government has a hierarchy that is a good example, and seems to work very well. If you look at the Tata example I gave in an earlier post, you will see that a hierarchy exists there too, but has a level of flexibility built into it, and it is functioning well.

  2. One question to ask (and I echo nadir’s comments about the depth of your questions) is hierarchies organized along what dimension? If it is order following, than yes, Enron seemed to lack one. But there are status hierarchies too in which people are organized along a continuum form high to low status. Does that apply at Enron? And if so, what is the source of legitimacy in status hierarchies?

  3. […] Original Theory: Holly’s Places I Don’t See Hierarchies: 1) Enron… , Leah’s The Enron […]

  4. Very interesting questions, Holly. I think hierarchies are always in place on paper, but the point of many organizations is to have employees attempt to rise through the system. Many employees start off doing the coffee runs (aka the interns) and end up with the big job titles. My point is that if companies promote on the basis of hard work and results, it seems inevitable to have some “evolution in hierarchies.”

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