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Lessons Learned From Enron

By F. John Reh

We all get complacent sometimes. We have comfort zones. We do the things we enjoy, that feel good, that come easily. That’s why many people surround themselves with people who agree with them, think like them, and support them. The CEO of a large company does not have that luxury.

In return for the outlandish compensation being heaped on them by the shareholders, the CEO must immerse himself or herself in the uncomfortable, the unfamiliar, the different opinion. Only in that way can they keep the company strong and growing. Only then can they earn what they are being paid. Only then can they, and their shareholders, avoid a debacle like Enron.

There are many lessons that can be learned from the collapse of Enron. Any organization has an obligation to all of its stakeholders, not just its shareholders, and those obligations were not met in this case. Executives at Enron made decisions that were wrong. Some of their decisions may have involved illegal activities. Many people also are beginning to question the professional conduct of auditors Arthur Andersen. Did their interest in preserving their income cloud their judgment? We will leave those discussions for others and focus instead on the key management failure – curbing dissent.

It starts at the top
It is the leader’s job to provide the vision for the group. A good executive must have a dream and the ability to get the company to support that dream. But it is not enough to merely have the dream. The leader must also provide the framework by which the people in the organization can help achieve the dream. This is called company culture.

When your company culture allows people to challenge ideas, suggestions, and plans, you create an organization of thinking, committed people capable of producing the kind of innovation and productivity required to succeed today. However, if your company culture does not allowed dissent, if people who suggest alternatives are castigated for not being “team players”, you produce an environment of fear, stagnation, and antipathy. Not allowing appropriate dissent will kill your company.

Discuss and debate – up to a point
You’re smart manager. You encourage your people to challenge you and suggest alternatives. But are you a good subordinate? Do you challenge your boss? Or do you sit back and protect your job by agreeing with everything the boss suggests? Such agreeing won’t protect your job, as Enron’s employees have learned.

Every manager has a boss. It is our responsibility to our bosses to be honest with them, to tell them what we really think, even if we disagree. Especially if we disagree. You, and everyone of your peers, need to discuss issues openly, frankly, and with the best interests of your area clearly visible. You need to give the boss as much information and as many options as possible. Don’t be afraid to fight hard for what you believe to be right. Be professional about it, but be candid too.

However, once the boss has made a decision, the discussion and arguing and dissent must stop. Once the decision has been made you have an obligation to support your boss in that decision. You expect it of your people; you should do no less.

Disagree without being disagreeable
You think your position is right. You want what is best for your people. You want things done in the way that works best for your department. So you argue your points strongly. That’s good, but don’t overdo it. You won’t win every battle. After all, your boss is looking after the best interest of his or her entire organization, not just your part of it. Recognize the aspects of negotiation involved. Remember you will be working with these people again in the future. For those reasons it’s important that you “disagree without being disagreeable”.

Dr. Suzette Elgin, an expert in psycholinguistics, wrote the definitive book, “How to Disagree Without Being Disagreeable: Getting Your Point Across With the Gentle Art of Verbal Self-Defense”. The next time you have to give someone a bad performance evaluation or a co-worker verbally attacks you in a meeting you will wish you had read this book of practical, real-life techniques.

There are many other resources on the Internet. Here are two more:

  • Fast Company calls this their Starter Kit on Managing Disagreements.
    Using Mark Twain humor and common sense, they suggest ways to deal with the most common types of disagreeable people.
  • Disagreeing Without Being Disagreeable
    Professional trainers Anne Baber and Lynne Waymon, writing for “The Industrial Physicist”, recommend these conflict-solving steps to help you “become as proficient at resolving people problems as you are at finding technical solutions.”

Challenging the status quo has to be a top priority in any organization. Accepting the status quo leads to stagnation. Stagnation will kill any organization.

Being a yes-man is damaging to the individual, not just the company. The classic movie “The Man in the Gray Flannel Suit” chronicles the stress Gregory Peck’s character endures by agreeing with everything his boss says just to keep a job he really doesn’t even want. If you find yourself in an organization that does not encourage dissent, move on to one that does.

The Internet Search Engine Google has “never settle for the best” as one of their goals and puts that at the top of their corporate information page. Their performance recently, in a very tough market, is testimony to the value of that plan.

Manage This Issue
Foster a culture in your company where differing opinions are encouraged. Avoid the temptation to surround yourself with individuals who are so similar to you that they can’t offer a different perspective. Don’t surround yourself with people who are so afraid that they won’t dissent. Reward creativity and original thought in your decision-making process. Hang on to those people who have mastered the art of disagreeing without being disagreeable. Maybe then you can avoid being blindsided by events such as Enron has encountered.

If you have any questions or comments about this article, or if there is an issue you would like us to address, please post them on our Management Forum to share with the entire group.

 About the Author

John Reh is a senior business executive whose broad management experience encompasses managing projects up to $125 million and business units including up to 200-plus people.

A published author, most recently as a contributing author to Business: The Ultimate Resource, John has set aside time throughout his career to mentor newer managers, often women and minorities, in the art and science of management: a skill that can be taught and learned.

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