Last updated: May 23, 2019
Topic: BusinessEnergy
Sample donated:

Many people will argue over what they believe to be the main contributing factors to the largest corporate collapse in history that of the Texas based energy giant Enron. The consensus of authors, experts, reporters and basically anyone familiar with the story is that greed is ultimately responsible for the corporation’s demise. This is essentially true and self management theory explains why the Enron executive’s greed did not work out so well for them and the company.

Self management is a set of strategies such as self-reward, self-punishment and self-monitoring that a person uses to influence and improve his or her own behavior through identifying personal objectives and priorities and monitoring one’s own behavior and its consequences (Yukl, 2006). When an individual only uses a few of these strategies he is essentially setting himself up for failure because each strategy works as a sort of checks and balances of ones behavior.

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When self reward is the main focus of decision making without any regard to self punishment, ethics tend to be disregarded and the choices made, while resulting in beneficial outcomes for the executive, may not be the best for the corporation as a whole. This was true of the decisions made by Enron executives. To increase the value of their stock they used fraudulent accounting techniques allowing the company to be listed as the seventh largest in the United States (corporatenarc. com).

These scandalous behaviors ultimately resulted in the bankruptcy and investigation by the SEC that destroyed the company and left 22,000 employees without a job. In this situation the executives continued to focus on self reward strategies knowing their practices were less than legal and were not using self punishment strategies to counteract their behavior. According to self management theory leaders are successful when they are able to maintain a consistent balance of one’s own behavior.

They are able to identify their objectives, evaluate which are most important; an example in Enron’s case would have been the objective to make large amounts of money quickly versus the objective of creating a solid company with longevity and job security for their employees. In this case self management fell to the wayside and interest in preserving their income outweighed the other business objectives (management. about. com). There was a lack of monitoring one’s own behavior and its consequences when it came to the leaders of Enron, leaving out a major part of self management. In a large scale corporation such as Enron one person’s inability to self manage would not necessarily cause the collapse of the entire company however in this case it was the culmination of every executive in the company.

Jeff Skilling and Andrew Fastow were the main executives responsible for the accounting and other fraudulent activity Enron was involved in while the Chief Executive Officer Kenneth Lay basically sat by and watched, something he had been accused of in the past as well (NYTimes. om, 2006). This is an example of how lack of self management can be indirect at the executive level. As managers Skilling and Farstow allowed their misguided priorities to cloud their judgment, Kenneth Lay, the leader whose responsibility it is to motivate and set the example for all the employees allowed his lack of self managing to support the behaviors of his executives. At no point did this leader and his managers take into account the consequences their behaviors would eventually have on the company’s stakeholders, 22,000 employees and even themselves.