Enron's Story of Corporate Crime: Organizational Culture, Beliefs, Motives, and Incentives

Corporate Crime comes in many different forms. Each organization that participates in this type of activity goes about it unique ways. The place where similarities may begin to arise is in the beliefs, motives, incentives and organizational culture surrounding the individuals involved. At Enron, we are not looking at just a few bad guys; their situation entailed an intricate system of deviance from the top management down to the market traders and in other places throughout the company.

The early days of organizational deviance began in an infantile manner. Ken Lay, a CEO with visions of making an immense profit in a new and innovative company overlooking a couple employees with dangerous trading habits ended with the punishment of those employees. A new wave began when a need to repeat the profits they were making emerged with the hiring of another top executive with his own means of reaching that end. My analysis will begin with the organizational culture in which the Enron employees worked because I believe herein lays the small roots that led to an attitude in which the type of deviant behavior involved in this case was acceptable.

Organizational Culture

Jeff Skilling was a major player in setting the expectations high at Enron and made it clear that his type of people were extreme risk takers and thrill seekers. In enforcing these values, Skilling implemented a firing system based on employee evaluations, only the best and the brightest survived this test. In addition to this, he was also known for engaging in dangerous activities which encouraged taking risks to another level. Both inside and outside of the company walls, these activities seemed to define how willing a man was to leave his comfort zone behind and put his manliness on display.

There was also a strong feeling that permeated Enron, that failure was not an option. Success was ranked from the top down based on an employee's ability to produce profit for the company, or how well they were able to disguise the ongoing deviance that had been flourishing steadily since the beginning. The push was to put Enron at the top of the trading game, by whatever means necessary and all involved employees were expected to do their part to make that goal attainable. This atmosphere fostered the attitudes and beliefs that made organizational deviance at Enron a stark reality.

Beliefs

Individuals at Enron who were involved in one way or another with the ongoing fraud to produce profits developed their own beliefs about the tasks they were performing. Largely encouraged by the top company executives, dishonesty became a suitable and even productive way to achieve company goals. To them, the dishonest acts were not deviant, but normal and necessary to do their jobs. At the level that Enron was committing its crime, there were so many prominent individuals and companies involved that it would have been hard for an involved employee to say that what they were doing was wrong.

When this type of belief penetrates an organization as massive as Enron, the deviant activities are actually the norm, and those that go against the grain are the ones considered to be acting abnormally. The rules in this type of situation are different, and are accepted as such by all those concerned. Ken Lay and Jeff Skilling, presumably the most prominent role models available to employees at all levels, instilled in these individuals the most important belief that pushing for higher profits (or at least seemingly higher profits) was the main priority and any means necessary would be acceptable in their eyes to turn out those numbers was alright.

Motives

With the organizational culture in place, beliefs and values in line, the stage is set for individuals to take the crime into their hands and make it their own. Pride, arrogance, intolerance and greed were noted as fatal flaws at Enron, but I would suggest that these motives should be studied closer to find their true nature in the people involved. Enron was made up of an elaborate web of individuals, each with a different history and personality. There seems to have been a strong need among those involved to be the best, the most productive, and the most popular.

Self identification with the company was also a recurring theme, especially for those involved at the highest levels of the organization. Furthermore, depression, lack of self confidence, and the need to prove something provoked many employees from the inside out to engage themselves in the ever more complicated scheme to put Enron on top. These motives played an important part in keeping persons caught up in the scandal that eventually lost them their jobs, but that's not to say that there weren't outside incentives to further facilitate involvement as well.

Incentives

In more than a couple cases of corporate crime, the fear (real or perceived) of losing ones job can be a major incentive to keep them involved. For those located in the upper positions of the Enron hierarchy, incentives such as profit and identification as leaders of a great organization may have been big contributors to their continued involvement with the scam. On the flip side of that coin, fear of public humiliation and judicial punishment was more than likely a factor just as important as profit.

Another aspect of outside incentive is actually initiated as a motive, and that is the deep identification of many employees with the organization mentioned previously. If Enron dominated the industry, its employees felt a taste of that power. Perhaps they perceived the outside as respecting them immensely for the work they put in at their particular level of the game. Authority and recognition may have been just enough to move these former 'nerds' into ambitious employees looking for a piece of the Enron pie, as small, large, or misshapen as it might have been.

After a thorough examination of the organizational culture, beliefs, motives and incentives of the Enron employees involved in the con that eventually ended the company, I strongly believe that these factors facilitated widespread organizational deviance. From top to bottom, inside and out of the Enron walls, the extensive network of players involved were interconnected in a web of creative schemes and scams that was both desired and encouraged by the guys at the very top. That is not to say however, that the case of Enron's corporate crime was committed by a few bad guys, the entire company and all of its partners shared a fusion of responsibility at the individual level.