Chapter 01-Introduction1Chapter 01IntroductionEssay Questions1.Enron was clearly a company riddled with fraud and its conduct drove it to bankruptcy. Thetext argues that individual behavior was not the core of Enron's problems. What were theproblems with thiscorporation from an organizational architecture point of view?Answer:Enron delegated an extraordinary amount of decision rights to lower-levelemployees.At the same time, Enron lacked effective oversight and review of decisions madeby these employees.Second, performance was evaluated largely on near-term earningsgrowth and success in closing deals. Third, the company offered enormous compensation toits top performers, which encouraged excessive risk taking.Thecompany'sinternal riskmanagement groupwas in charge of performance evaluations, but the performance appraisalswithin the groupwere based in part on the recommendations of the individuals making thedeals.Preview Mode
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