The Power of People: Who’s in Control?

In Andrew Pettigrew’s Handbook of Strategy and Management, chapter 11 titled, Top Management, Company Directors and Corporate Control, lays out the various influences that key stakeholders have within a corporation. In this viewpoint, these stakeholders include internal executives, managers, low-level employees, and the external stakeholders of a corporation, including analysts, critics, and investors. To begin, the chapter ask several questions, summed up to define: How much influence does Corporate Governance have on the resulting success or failure of a company and who actually provides the direction for this outcome?

A handful of individuals make the defining decisions, whether to launch a new product, enter a promising region, or resist a tender offer. It is they who set the rules and fix the procedures that come to constitute the impersonal bureaucracy.

Whether it is analysts, investors, college students, or anyone in-between, the majority of people researching a company and its core business dealings will look into the corporation’s top dogs. The CEO, the Board of Directors, Top Management, all are given the specific task of deciding what direction the company should be heading. They ensure that a wrong turn is never made. This fact is pretty well known. Looking on the internet today, most publicly traded corporations will include a tab or page including a brief description of the Top Dogs of the company and the visions that they have as to where the company is headed.

For large corporations, the CEO is the vision and the face of the company. When one thinks of Berkshire Hathaway, Warren Buffet comes to mind; Bill Gates is the face of Microsoft; Steve Jobs is Apple. But in what ways do these men influence a company. At times, The Smartest Guys in the Room portrays Ken Lay as nothing more than a statue, a public icon of what Enron wanted investors to see Enron as.

A host of studies have subsequently confirmed what many executives already appreciated – a better predictor of a company’s performance than the chief executive’s capability is the quality of the team that now runs the show.

Though the CEO is the supposed leader of the corporation, the more hands-on, closer employee relationships of top executives and managers of the company are the real visionaries. In Enron, men like Andy Fastow, Jeff Skilling, Rebecca Mark, Rick Causey, Greg Whalley, and Tim Belden, were just a few of the top executives who ran the day to day corporation with many of their own ideologies put in place. As The Smartest Guys in the Room explained, employees were working for several different executives, often times with bosses not knowing a good portion of what each employee was actually doing. So who was in charge here?

The chapter describes managers as either “all-powerful” or “all but powerful”. At Enron, what influence did the Risk Assessment and Control (RAC) division have at Enron? It seemed that they did not have any. The executives of RAC even described themselves as simply pawns used to reassure investors that Enron was a safe investment. So it seems that there is a large, but distinctive difference in corporate executives and their ability to influence the direction of a corporation.

In my paper, I will analyze how individual power and goals of key stakeholders will influence the outcome of a corporation.

One Response

  1. Some interesting questions raised here, I would like to see how you answered these in your paper. I studied Thompson’s Levels model for my paper and studied how it relates to the role played by the Dominant Coalition. Thompson argues that while the Dominant Coalition plays an important role in setting the direction for organizations, in large organizations, there is an inner circle within the coalition which holds the real power. If such an inner circle fails to form or fails to find common goals, the survival of the organization becomes difficult – hence, Enron.

    Good post.

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