The behaviors of individuals or groups of individual within an organization impact how the organization works effectively. It is the organizations leadership effectiveness, work design, and decision making that can lead to a business succeeding or failing. Being a leader of a large company such as Enron involves setting up goals and outcomes in which the management must follow honestly. Having organizational structure and control ensures things will run efficiently, a positive profit margin will occur, and performance is being monitored. Honest leadership and management of Enron is what was the demise of this company.
Enron as a business was set up by management to have the ability to move their currency which enabled them to hide their losses. "In an attempt to achieve further growth Enron pursued a diversification strategy"(Healy, 2003). The Board of directors was aware of the bad accounting practices and did nothing to stop it from happening. The more losses the company suffered the more deceptive the corporate officials had to be to cover up what was going on. In fact they covered up the negligence by shredding documents, destroying computer files, and deleting emails that would show any wrong doing. With Enron hiding their debt, it allowed them to appear to the investors to be more profitable then they actually were. The appearance of profitability drove the stock prices up, once the stock prices reach a high the executives that knew Enron was at a loss sold their stock while informing investors to hang on to theirs telling them it would continue to rise. The insider trading no one was aware of until one executive came forward with the scandal of what was going on behind closed doors.
Several factors enabled Enron executives to hide their losses, and appear to be a successful company. They created a complex business model, modified their balance sheets...