Table of Contents
An organizational analysis refers to a process through which the systems, functionality, and the capacity of an organization undergo assessment to increase organizational performance and output (Knights & Willmott, 2011). The aim of analyzing and organization is to understand the organization’s structure and technology, as well as behavioral relationships of employees and other stakeholders. Organizational analysis is extremely significant because it will lead to the restructuring of the organization when internal or external forces have brought about an opportunity or problem (Knights & Willmott, 2011). Some pressures such as environment shifts, leadership changes, technology changes, and organizational growth may call for the use of organizational analysis (Weinbach & Taylor, 2011). Some organizations such as Enron Corporations collapsed despite its position in the United States as among the leading companies. This happened because of poor management or leadership of the organization. This discussion will consider poor leadership as a significant organizational challenge and its key elements.
According to Henry (2008), leadership is doubtlessly among the ubiquitous possible stressors various organizations across the globe. Even though, most stressors are common to a particular workplace, nearly every organization has a leader who takes care of any problem that arises in due course of its business. It is apparent that leadership theorists consider leadership as a process and not as a role (Weinbach & Taylor, 2011). The focus of poor leadership is on those individuals who take advantage of their position in an organization and achieve coercive power and legitimate reward. Such individuals can display poor leadership in a number of ways, which can be easy or hard to recognize. There are two possibilities of poor leadership in any given organization across the world, namely abusive, punitive, or aggressive leaders, and leaders who do not have appropriate skills manage organizations (Henry, 2008). It is necessary to know that both possibilities of poor leadership can result in a number of problems in an organization, including employee stress and misappropriation of business finances. Abusive leadership and passive leadership constitute poor leadership in the contemporary organizations (Kinder, Hughes, & Cooper, 2008).
Abusive leadership happens when individuals engage in punitive or aggressive behaviors as a way of leading their employees (Weinbach & Taylor, 2011). These behaviors often vary widely between leaders humiliating their workers by ridiculing, name-calling, and yelling to terrorize employees, withholding information from the employees, or by threatening workers with pay cuts and job loss. Many people refer to such leadership behaviors as workplace harassment, bullying, emotional abuse, and workplace aggression. Research has shown that the events of coworker violence, which include leader-follower violence, are minimal even though abusive leadership includes the application of physical violence (Weinbach & Taylor, 2011). Events of physical violence are also rare among the employees themselves. Most leaders exhibit behaviors that have a close relationship with nonphysical aggression frequently in their organizations. According to Henry (2008), managers account for 20 percent of aggressive behaviors while members of the public are responsible for about 38 percent of aggressive behavior.
Therefore, it is necessary to understand that both abusive leadership and insufficient leadership skills may result in employee stress as well as misappropriation of funds in the organization, which may lead to insignificant development of the organization or financial, social, and cultural collapse of the organization (Weinbach & Taylor, 2011). Passive leadership refers to organizational leadership in which leaders do not have sufficient leadership skills for the organization to run smoothly. Therefore, passive leadership comprises of various elements such as the management-by-exception and laissez-faire styles of leadership, which are apparent in the transformational leadership theory. Leaders who depend on the management-by-exception style fail to make appropriate decisions to make ameliorate organizational applications until they experience problems or until organizational problems are extremely serious to all for actions (Knights & Willmott, 2011). Leaders who depend on the laissez-faire style tend to avoid decision-making as well as the responsibilities that have a closed association with their position (Weinbach & Taylor, 2011). Such leaders do not have the ability to maximize the returns of the current business because they lower employee morale, misappropriate funds, and fail to attract clients.
Researchers have gathered many data, which are significant in supporting the strength of transformational leadership behaviors (Weinbach & Taylor, 2011). It has become evident that transformational leaders address organizational issues in an effective manner. Such leaders display a number of characteristics as they interact with employees, namely inspirational motivation, idealized influence, individualized consideration, and intellectual stimulation (Henry, 2008). Through the four characteristics, these leaders affect many significant organizational outcomes in a positive manner. It is apparent that transformational leadership style has a direct and positive association with the dedication of workers to the organization, reduced role stress, trusting the leader, and job satisfaction (Kinder, Hughes, & Cooper, 2008). Transformational leadership also has a close association with higher performance and success in field studies as well as laboratory studies (Salter, 2008).
The presence of transformational leadership in an organization can also increase performance outcomes like the organizational citizenship, financial performance at the level of groups, project performance, and employee performance (Weinbach & Taylor, 2011). Contrary to transformational leadership, people consider passive leadership as an ineffective leadership in the organization, which has a high likelihood of influencing organizational performance in a negative manner (Henry, 2008). For instance, passive leadership has a negative relationship with the performance of a business unit, and laissez-faire leadership as the leadership style of the lowest degree. Perhaps most significant, there are empirical and conceptual grounds, which make it easy to make a suggestion that passive leadership is different from transformational leadership and has negative outcomes exceeding those that lack of leadership skills constitute (Henry, 2008).
The Collapse of Enron Due to Poor Leadership
Enron Corporation has been among the largest organizations in the United States. This is a renowned organization because it has been providing energy for industrial and domestic use, commodities, and Internet services. Enron Corporation provided large quantities of electricity and natural gas, delivered services like bandwidth Internet connection, as well as financial and risk management services to clients across the globe (Henry, 2008). Enron Corporation started in 1985 in Houston, Texas as a natural gas supplier. However, the corporation quickly developed in the field of delivering energy and started to act as a broker in energy future contracts (Henry, 2008). Enron Corporation started to provide electricity 1994, and it entered the energy market of Europe in 1995. This corporation continued to employ many individuals from different countries across the world until the total number of employees was about 30,000 individuals globally. Dubious accounting techniques and methods provided Enron Corporation with a possibility to be the seventh largest company in the United States (Henry, 2008). Many people expected this corporation to be the dominant provider of commodities and services because it established power, communications, and weather securities. Enron generated a substantial amount of money because it pioneered promotion and marketing of communications bandwidth and power services, and risk management services such as exotic and innovative items (Salter, 2008). However, Enron Corporation turned out to be a renowned corporate failure, and as one of the corporations in which criminal offences, such as institutionalized and well-planned corporate fraud can take place (Henry, 2008).
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It is apparent from history that the collapse of Enron Corporation is among the most shocking and infamous incidents in the financial world and people felt its repercussions across the world. Before Enron Corporation collapsed in 2001, it had been among the United States leading organizations and people considered it as among the top ten admired organizations and most friendly workplaces (Salter, 2008). People recognized and classified the corporation's board as among the largest organizations in the United States. This organization used to earn revenue of about $139 billion, assets of about $62 billion, and it employed many people from about twenty countries across the world (Henry, 2008).
Internally, Enron Corporation had decentralized decision-making structure and financial control, which potentially made it hard to get clear and consistent view on the operations and activities of the corporation (Henry, 2008). It has been clear that the problem was because of poor leadership performance as all of the corporation’s departments experienced the ruining ethical principles and values. Managers and executives bear a significant responsibility for deteriorated corporate culture, organizational transparence, and clear accountability. If the operations management committed itself to work efficiently, and if it attained possibility to perform in such a manner, there could be an opportunity to escape the tragedy (Henry, 2008).
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Implications of Poor Leadership in the Collapse of Enron Corporation
The Enron Corporation had a department fulfilled a number of functions, namely notifying utilities and setting up of accounts, agency agreement from customer, verifying the format of invoices, setting up invoice data transfer, testing algorithms of invoices and file transfer to clients, determining clients’ reporting requirements (Henry, 2008). It is evident that the functions of this department are limited and fail to achieve the managerial purposes of the department. Various management departments perform the same functions as the operations management department. These management departments include commodity management, operations facility management, energy assets management, capital management, and financial operations. However, most of functions that these departments perform, lack systematic vision, integration, responsibility, creative aspect and control, and they are exclusively executive. In addition to the limited range of functions that the operations management department of Enron Corporation performs, another significant point regards the quality of the departments’ performance as well as entire atmosphere and corporate culture created in the corporation (Salter, 2008). Therefore, operations management department’s functions include creating integrity, ethic values, clear accountability, and competence within the organization. The management department of Enron Corporation failed to follow these tasks, which led to the collapse of the organization.
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On a careful analysis of all internal processes in Enron Corporation, it is apparent that, in spite of the popular belief, the issue of poor leadership devastated Enron, its employees and shareholders in a significant manner. Many people have considered poor leadership as the most serious cause of Enron Corporation’s collapse. According to Henry (2008), the collapse of the corporation was not only the consequence of accounting, but was also because of poor management of resources. The managerial team failed to understand whether it was possible for the business model to support itself and where they obtained their revenue. Corporate performance management is crucial because it covers a broader scope than mere tracking of performance levels of customer service center (Henry, 2008).
Therefore, it is apparent that the downfall of Enron Corporation resulted from a number of related issues, and most of the issues have a close relationship with poor performance and operations management functioning. Internal organization of Enron Corporation contains many shortcomings owing to the fact that the corporation appears to be extremely strong with a clear hierarchy and powerful management (Henry, 2008). Thus, Enron Corporation’s operations management department evidently failed to further positive control corporate environment as well as failed to contribute to shaping ethical value, philosophy of management, integrity, and accountability of the corporation. Policies of the corporation were misleading and did not comply with the company’s initial values of. Harsh and strict performance evaluation system and hierarchy debased the original ethical base and values of the company, such as integrity, respect, excellence, and communication (Henry, 2008).
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Organizational Changes that can Alleviate Poor Leadership
After the managerial team has identified the problems that the organization is experiencing, it is necessary to design and implement appropriate changes to ensure that the organization continues to run efficiently. For instance, the leadership style and skills in organizations such as Enron Corporation should be appropriate so that to revert the position of the organization (Henry, 2008). It is necessary for the organizational teams in any organization to avoid abusive, punitive, or aggressive style of leading employees and other stakeholders. Such a style of leadership can discourage employees from performing to their best, hence reducing the output of the organization. The behaviors of leaders who display poor leadership tend to bring about workplace harassment, bullying, emotional abuse, and workplace aggression (Weinbach & Taylor, 2011).
Leaders in many organizations do not have enough skills regarding their field of organizational leadership or management. In Enron Corporation, the managerial team failed to achieve its goals because it lacked appropriate leadership skills (Salter, 2008). Managers and executives in Enron Corporation failed to take their responsibilities to ameliorate the deteriorated corporate culture, encourage organizational transparence, and ensure that there is clear accountability (Salter, 2008). If the operations management committed itself to work efficiently, and if it attained possibility to perform in such a manner, there could be an opportunity to escape the tragedy (Henry, 2008). Therefore, the managers in Enron Corporation would do according to the expectations of the organization if they had acquired enough leadership skills. For leaders to acquire appropriate leadership skills, an organization should encourage leaders to brainstorm. Brainstorming will allow leaders to share skills by contributing ideas in an active manner. The weaker managers can benefit from other managers who have experience (Knights & Willmott, 2011). Another significant change that can result in the alleviation of poor leadership in large organizations includes allowing managers to attend seminars. It is necessary for managers to attend seminars, especially those seniors that have a close association with becoming a principled leader. This will enable most of the leaders to improve their leadership skills (Knights & Willmott, 2011).Conclusion
Therefore, it is true that organizational analysis is crucial because it will enable the managerial team to understand the organization’s structure and technology as well as behavioral relationships of employees and other stakeholders (Weinbach & Taylor, 2011). This will lead to the restructuring of the organization when internal or external forces have brought about an opportunity or problem (Knights & Willmott, 2011). Thus, an organization will run efficiently when the managerial team fixes problems once they occur. However, some organizations experience poor leadership because the leaders do not have sufficient leadership skills, or are abusive, punitive, or aggressive. An example of such organizations includes Enron Corporation, which is famous both because it has been among the largest companies. Enron Corporation is also famous because of a large collapse that it went through (Salter, 2008). Organizations should ensure that managers acquire enough leadership skills by encouraging them to brainstorm as well as attend relevant seminar (Knights & Willmott, 2011). Therefore, it is the responsibility of an organization to ensure that leaders are fit for executing their organizational tasks.