The Business of Enron
The Enron Corporation was created in 1985; its founder Ken Lay, had a PHD in economics, and assumed the position of the CEO then founded the board of directors as the Chairman. The company was based out of Houston, Texas and its main focus was the purchase and selling of energy, specifically electrical power. Ken Lay hired a gentleman named Jeff Skilling to be his Co CEO; he also became the president of the Enron board of directors. Skilling was a very intelligent man who got his PHD at the acclaimed Harvard; he was very driven to be the best in his field wielding huge amounts of power and crossing many boundaries of ethical portion. As the company grew, Skilling hired a man named Andrew Fastow. Fastow was quick at demonstrating his many talents as far as accounting and the fact that he was willing to cross many ethical lines as well, winning the trust of Jeff Skilling quickly then being promoted to CFO of Enron. Fastow would manipulate the financial statements, under the authorization of Lay and Skilling, to create a sense that Enron was making/showing profits that would enhance and grow the financial wealth of himself and all the other senior executives when, in all reality, it was sustaining huge losses and headed for financial demise. At Enron’s end, it was the largest bankruptcy in United States history; it was shockingly unexpected, causing much turmoil in the financial world. Enron went bankrupt due to many reason, some of them consisted of their accounting practices, the company’s ethics and values, and the lax corporate governance that was in place at the time. Enron was considered the “7th largest company in 2001” with stocks worth more than $90 per share. So how did this admirable company take an unexpected turn for the worst and file for chapter 11 bankruptcy on December 2, 2001?
Enron make up consisted of a few executives that were extremely driven by power and greed. Skilling thoughts of motivation were to reward the employees by giving out bonuses of varying sizes to those who made the company money. He built this internal ranking system, “rank and yank”, where the employees would rate the other employees on a scale of 1 to 5; if someone had a rating of 5, the average time/life span that they would have working for Enron was only about 6 month. The closer you where to 1 the closer you got to Skilling and the other executives being offered the most rewards. The company had an employee turn over that was not unheard of but still quite high at 15% every year. Skilling was brutal; he would not allow employees to work at Enron who were not driven to create profits at any cost for the company.
What was Jeff Skilling really like underneath it all, hard to know but there are many accounts of various aspects of his character. The most common of the thoughts were that he was a nerdy character when he was younger and with all the power and money that he got from Enron he used it to create a new persona becoming powerful, demanding respect and achieving his goals. Skilling believed he knew a lot about humans, he once stated that, “money was the only thing that motivated people”. In hindsight, Skilling was clearly poisoned by the power and greed of the company becoming fully engulfed in the toxic environment. He was the idea man; behind the concept of buying and selling power, generating the companies gold mine then manipulating it to maintain the façade that was required throughout the lifetime of the Enron Corporation . Skilling was noted as “liking guys with spikes,” risk takers that weren’t afraid of going as far as they could to create a profitable company. He was also known for his own gambling, he had built a group of traders that would gamble money on whether the price of energy would go up and now; Ken Lay had been aware of this activity but did not stop it, and he just let it go until it went into the extreme category. After a time they were informed that these “roug traders” had gambled