Leadership is the ability to influence a group towards the achievement of a vision or set of goals. The source of this influence may be formal, such as that provided by managerial rank in the organizations. (Robbins and Judge, 2009).
Various researchers studied the company and reasons behind this downfall. While dubious accounting practices are said to be the reason for the failure, these practices were driven by the top leaders and hence bad leadership can be considered to be the reason for the organization’s failure. Kenneth Lay (Enron’s CEO and chairman) and Jeffrey Skilling (Enron’s CEO) were primarily responsible for driving Enron to its downfall as they were not ethically and morally responsible. These leaders were ruthless and engaged
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At the same time, he encouraged employees and investors to buy the stock. Lay was used Enron’s money, resources including private jets for his personal use. (Behr, 2004). Skilling was the main driver behind the inflated and over-estimated financial statements of the company. He pushed for adoption of the accounting concept of “mark-to-market” at Enron. This is said to be one of the major reasons of the collapse of Enron. Skilling, like Lay, also sold Enron shares based on inside information when an imminent collapse of the company became obvious to him.
The top leaders and senior executives were paid very high salaries when the company was going down. At the same time, the leaders engaged in every chance to make more money by took part in special entities and fake partnership.
Overall, the acts of Kenneth Lay and Jeffrey Skilling created a culture of fraud and cheating at Enron that permeated the entire organization and encouraged unethical behavior among the employees. The object of the two leaders was to make money for them. The collapse of Enron was primarily due to practices and fraud of these two