Teams are used to serve a variety of functions for organizations. According to Levi (2007), teams are comprised of people working together on a common project for which they all are accountable. They are usually part of a larger organization and the members of the team have specific knowledge, skills, and abilities about the task at hand. A successful team from the team members’ point of view is one in which the team members focus on the internal operations, the contributions of the team members and how well they all work together.

A successful team, from managements’ point of view, is the impact of the team on the organization; their focus is on the end result not the way the team interacts with one another. (Levi, 2007) This paper will discuss the Enron Scandal. The major players of the Enron Corporation made a successful team that through greed and arrogance bankrupted the entire company, making them one of the worst teams in history.

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The Team The key members of the Enron scandal team were: Kenneth Lay who was the chairman and Chief Executive Officer. He founded Enron in 1985 when Houston Natural Gas merged with InterNorth in Omaha, Nebraska. Jeffrey Skilling, who was the President, Chief Executive Officer and Chief Operating Officer. Andrew Fastow, Chief Financial Officer, Richard A. Causey, Chief Accounting Officer. Michael Kopper, who was Andrew Fastow's top aide. Sherron Watkins, vice president. Rex T. Shelby, a former vice president of engineering operations for Enron Broadband Services. Ben Glisan, treasurer.

Timothy Despain, assistant treasurer, David Delainey, head of Enron's trading and money-losing retail energy units. Paula Rieker, No. 2 executive in investor relations and later corporate secretary. Christopher Calger, an executive in Enron's trading business. Mark Koenig, head of investor relations. Kenneth Rice, broadband unit Chief Executive Officer. Kevin Hannon, Chief Operating Officer for the broadband unit. Lea Fastow, assistant treasurer and wife of Andrew Fastow. Larry Lawyer, finance executive. Timothy Belden, top trader. Jeffrey Richter, trader and John Forney, trader. (Greer, Lawton, & Tonge, 2003)

These were almost all of the people involved in the Enron scandal that eventually led to the bankruptcy of Enron. Before the company came crashing down, it was a high-flying corporation, generating cash and new business at every turn. Originally a gas pipeline company, it metamorphosed into the world's largest trader in gas, electricity, water, and a variety of post-modern commodities such as paper and bandwidth. The company built power plants and operated gas lines.

Enron also traded, the company bought and sold gas and electricity futures, weather futures, and Internet bandwidth. Enron annual revenues went from about $9 billion in 1995 to over $100 billion in 2000 (Li, 2010). The team that ran Enron and made it the Seventh largest company on the Fortune 500 list in the US in 2000 and it placed sixth in the largest energy company in the world in 2000, is also the team that caused the company to file a chapter 11 bankruptcy. (Yuhao, 2010)

The Scandal Enron's fall can partially be attributed to its continued hunger for expansion into new areas. It strove to become the world's largest trading market for every sort of commodity, and it over extended itself. Many of the markets it established did not work, such as when Enron Broadband Services, a subsidiary of Enron, planned to partner with Blockbuster to sell movie-on-demand services, including 500 titles, on its broadband network. However, Enron could not get the technology right to do so, therefore the deal failed. (Holmes, 2001) Ultimately, the greatest contributors to the demise of Enron were its corrupt practices. Its massive cash flow came from false accounting.

The company would sell a subsidiary that was losing money to another company, a shell company which Enron set up, owned and financed. That way, the losses were erased from Enron's balance sheet, and in their place was a 'cash inflow' from the shell company Enron had created. The balance sheets never indicated that Enron had lent this money to the shell company in the first place, that it was repaying itself and counting the repayment as income. (Yuhao, 2010) Once, Skilling joined Enron he changed the “norms regarding free flow of information, shared leadership, and cross-boundary collaboration,” (Duarte, 2006) in other words he changed the organizational culture of Enron. He started the practice of Mark-to-market accounting, which requires that once a long-term contract was signed, income was estimated as the present value of net future cash flows.

Due to the large discrepancies of attempting to match profits and cash, investors were typically given false or misleading reports. While using the method, of mark-to-market accounting income from projects could be recorded which increased financial earnings. However, in future years, the profits could not be included, so new and additional income had to be included from more projects to develop additional growth to appease investors. (Premeaux, 2009)

On August 14th, 2001 Jeffrey Skilling resigned, and by October of 2001 Enron was forced to disclose that, its bookkeeping had been falsified, its soaring profits were suddenly wiped out by losses and charges it had failed to record properly. Investors began to have second thoughts about Enron, whose stock, having reached a high of 90 dollars a share at one point, plummeted. However, it turned out that many Enron executives had sold tens of millions of dollars of their stock while the public went on buying shares in the company, assured by these same executives that all was well.

To make it worse, Enron executives had authorized a change in the company's pension plan that froze workers' retirement funds in Enron stock as the price nose-dived. While executives sold their stock, the workers woke up to find that their pension plan was worthless. The employees lost 1.2 billion dollars in retirement funds, and retirees lost 2 billion in pension funds, while Enron executives cashed in 116 million dollars in stock. Due to the greed and arrogance on the Enron team 20,000 employees lost their jobs and medical insurance. (McLean, & Elkind, 2003) Successful team to the Naked Eye

According to Levi, the Enron team fell under the category of management teams; they were composed of management that worked together to plan, develop policy, and coordinate activities for the organization. “A successful team completes its task, maintains good social relations, and promotes its members’ personal and professional development” (Levi, 2007). By that definition the team made up of Enron executives and some staff was actually a successful team, they were highly skilled and intelligent.

Though, bad hedging, bad trading, bad assets, and mainly false accounting are the reasons for Enron’s demise, the company was not a market failure, according to Susan Lee, a member of the Journal's editorial board. “Having discovered a new product - namely trading in energy derivatives in such a manner as to allow producers and users to offset risk - which proved highly popular and profitable, Enron found its margins being squeezed as the marketplace for energy derivatives trading became gradually more congested” (Wall Street Journal (US Edition), 2001). Due to the need to be the best at everything Enron’s “senior executives believed that Enron had to be the best at everything it did and that they had to protect their reputation and their compensation as the most successful executives in the U.S.” (Li, 2007).

Enron’s executives made the company billions of dollars, they but through their greed and arrogance they lost it all. The management team was more interested in appearances than good corporate governance. Enron's management team made poor decisions, had a lack of fiduciary control, they had exorbitant pay packages, and a complete lack of ethics. They simply ignored the conventional play book of other companies and used unconventional methods to make enormous amounts of money, not concerning themselves with the repercussions of their actions, (Premeaux, 2009) therefore, making Enron seem like a highly successful company run buy a highly successful team. What makes Enron the Worst Team Ever Jeffrey Skilling, who was the President, Chief Executive Officer and Chief Operating Officer, had a massive presence within Enron. He set the organizational and cultural norms.

He made Enron highly competitive and insisted on having the best employees. He promoted the traders that made the most money and proved to be the brightest. He would fire up to 500 employees annually, if they were not producing up to his standards. According to Noe, there are many different approaches to measuring performance including ranking employees, and directly measuring the results of work performance. Skilling came up with a system that became known as “rank and yank,” Enron's employees annually ranked their fellow employees on a 1 (best) to 5 (worst) scale. Each of the company's divisions was randomly made to give the lowest ranking to one-fifth of its employees. These employees were then fired. This system pitted employees against each other and created bad morale.

The Enron executives decided to play with fire and in the end they got burned. They were able to get away with the taking enormous risks, because they were able to keep their shareholders in the dark. They did this by exploiting accounting loopholes for subsidiaries that are available to most publicly traded companies. Enron was legally able to conceal massive debts because rules require a full accounting of a subsidiary’s balance sheet only when the parent company owns more than half of it. Though not illegal, it was highly immoral. When Enron finally did acknowledge it had improperly kept some activity off its books, they came out with corrected statements, which reduced net income by $96 million for 1997, $113 million for 1998, $250 million for 1999 and $132 million for 2000. (Greer, Lawton, & Tonge, 2003)


In the end 20,000 of Enron’s employees lost their jobs and medical insurance, and their 401ks that were tied into Enron stock which had become worthless. It was greed and arrogance that brought Enron to the top, and eventually to its downfall. Ultimately, engaging in unethical behavior is what makes Enron the worst team ever.