In an effectively functioning organization, according to sociologist Robert Jackall (as cited in Cohan, 2002), power is concentrated at the top in the person of the chief executive officer (CEO) and is simultaneously decentralized; that is, responsibility for decisions and profits is pushed as far down the organizational line as possible. At Enron the information did not go down the ladder, or up. Information did not go to the management team or the board of directors. "The board of Enron...appears to be analogous to the seventeenth century monarch - holding absolute power in theory, but cut off from access to information and thereby manipulated by the ministers who are its nominal servants." The hierarchal structure of Enron prevented personnel from obtaining complete understanding required to make informed moral decisions and from actually knowing what part they played in the totality of the corporate strategy.
At every company a certain culture exists that is followed by the majority of the people. This culture goes hand-in-hand with the group process, or how the employees work or do not work together on decision making and reaching objectives. The process also stipulates how the leader and followers work in concert. At Enron, there was a group emphasis of shared negativism toward energy regulation and other forms of government control. Those who questioned the leaders' entrepreneurship and conflicts of interest...
Fighting someone in power when recognizing this will only bring defeat is not rational behavior for survival. Humans on a whole also follow their leaders with the expectations that these individuals know what is best for the organization. When Skilling took over the company, people saw him as a very strong figure who knew what he was doing and would lead them in the right direction. There is a tendency to accept what leaders do rather than question it. Otherwise a person would be too conflicted.
Unfortunately, it was recognized way too late that Enron epitomized omnipotent control. Despite the fact that innovation and creativity was encouraged, the underlying structure was a competitive culture run by breakdowns in internal communication, deception, fraud and personal arrogance.
References
Schwartz, J. (Feb. 4, 2002) as Enron Purged Its Ranks, Dissent Was Swept Away. New York Times. Journal of Business Ethics; Dordreeht; Oct 2002; John Alan Cohan
Cohan, J.A. (2002). 'I didn't know' and 'I was only doing my Job'; Has corporate governance careened out of control? A case study of enron's information myopia. Journal of Business Ethics
