1 239 514 3081 mail@icsamail.com

Charismatic Leadership and Corporate Cultism at Enron

Cultic Studies Review, 5(1), 2006, 87-124

Charismatic Leadership and Corporate Cultism at Enron: The Elimination of Dissent, the Promotion of Conformity and Organizational Collapse

Dennis Tourish and Naheed Vatcha

Abstract

Enron stands out as one of the most spectacular failures in business history. Thus far, most attention has been focused on its accountancy practices. This paper, by contrast, explores its internal culture and the leadership practices of its top people. These included a particular emphasis on charismatic leadership, particularly in the persons of Kenneth Lay and Jeffrey Skilling; the promotion of a compelling vision by these leaders, of a totalistic nature; individual consideration, expressed in a recruitment system designed to activate a process analogous to conversion; and the promotion of a culture characterized by conformity and the penalizing of dissent. Drawing on the vast archive of material now available on Enron, and in particular on the best known accounts of former employees, the paper discusses to what extent Enron can be usefully regarded as an example of a corporate cult. Finally, the discussion is located in the context of emerging trends in business and leadership practice, and considers the extent to which what happened in Enron is suggestive of a growing business phenomenon.
On the eve of its bankruptcy in 2001, Enron declared its intention to become the world’s leading company. At that stage, by some measures of turnover, it was the seventh largest company in the US (Gordon, 2002) and was at one point valued at $70 billion by the stock exchange (Steiger, 2002). Thus, the scale of its ambition had some credibility. But its demise may instead ensure that its fate is to become the most analysed case study of failure in business history. Myriad analyses have now been published, outlining its trading practices (Steiger, 2002), exploring the implications for the communication aspects of business ethics (May and Zorn, 2003) and ethics more generally (Peppas, 2003), its likely impact on business education (Dean, 2003), the challenges posed for the accounting profession (e.g. Semple, 2002; Copeland, 2003; Holt and Eccles, 2003; Tinker, 2003), implications for the role of non-executive directors (Peaker, 2003) and the role more generally of corporate governance (Vinten, 2002; Weidenbaum, 2002). Trust in visionary leaders is among the most immediate casualties of the Enron debacle (Kendall, 2002). More widely, it has resulted in a crisis of confidence in corporations (Jenkins, 2003).

This paper does not recapitulate the now familiar story of its meteoric rise and spectacular fall. Rather, it addresses a major gap that remains in the literature. In particular, while it has been noted that the Enron scandal highlights “a recurring communication dysfunction within the organizational structure of the corporation itself” (Cohan, 2002, p.276), relatively little attention has been focused on what the culture of the organisation demonstrates about the dark side of charismatic leadership. Thus, although The Economist suggested in June 2000 that Enron could be viewed as “some sort of evangelical cult” (Sherman, 2002, p.25), the idea has not been systematically explored in the academic literature. This paper therefore discusses the nature of cults and cultic leadership, and explores the extent to which the role of Enron’s leaders was consistent or otherwise with the characteristics identified. Finally, the discussion is located in the context of the changing roles of CEOs more generally, and the extent to which what can be defined as corporate cultism is becoming a more common characteristic of organisational life.

This paper draws on the academic literature on the cultic phenomenon, which has, however, rarely been applied to the corporate world. Information on Enron is derived from the vast archive of material now published on the organisation – in particular, on the key accounts of former employees, as exemplified by Cruver (2003), Swartz and Watkins (2003) and Watkins (2003a.b.). Other accounts have proliferated in the mass media and business press, and are broadly consistent with the sources highlighted in this analysis. Organisations can be viewed as narrative spaces, in which stories and accounts are employed by all participants to facilitate the process of sensemaking (Gabriel, 2004). It is therefore useful to examine the narrative structures developed by former Enron employees, to ascertain both their understanding of what facts matter most and identify the most pertinent interpretations they attach to those facts. As Gabriel (2000) has also pointed out, narratives are constructed with the aid of a number of interpretative devices or poetic tropes that are concerned with attribution – e.g. the attribution of responsibility, blame and credit, the attribution of causal connections and the attribution of agency. Thus, the accounts of organisational actors cannot be read simply to discover an invariable and unyielding objective truth about organisations, but rather to explore their meaning for the actors involved. However, in line with interpretivist approaches to organisational discourse, interpretations of texts, stories and narratives are also informed by such factors as “the interpreter’s own frame of reference” (Heracleous, 2004, p.176). In this case, the paper applies a conceptual framework drawn from the general literature on both cultic organisations and transformational leadership, and analyses the narrative constructs of others to ascertain to what extent their accounts of facts, intention and agency can be better understood from within that particular analytic framework.

Thus, the approach adopted involves the close study of a number of texts which have had a particularly strong impact on the debate about Enron. For example, Sherry Watkins, who is generally regarded as the main whistleblower that brought Enron’s problems to public attention, has been honoured by the US Academy of Management for her contribution, been interviewed in the Academy of Management Executive and published in the Californian Management Review. Her accounts are strikingly consistent with those of Cruver, also used here as a key source of information about the organisation’s internal culture. Other data are drawn at various points from the general academic literature on the topic. Many researchers have critiqued aspects of Enron’s management system, such as its “rank and yank” appraisal mechanism, but in general have neglected to consider the extent to which the practices they describe could be better informed by the general literature on charismatic leadership and cultism. However, their data is also utilised in the present argument. Enron is too complex a story to avail of one single explanation for its rise and fall. With that caveat, this paper highlights an important but still under explored aspect of the Enron saga, and one that has wider implications for the role of leadership in most business organisations.


Charismatic Leadership and Cults

A widely used definition characterizes cults as:

a group or movement exhibiting great or excessive devotion to some person, idea or thing, and employing unethical manipulative or coercive techniques of persuasion and control… designed to advance the goals of the group’s leaders, to the actual or possible detriment of members, their families or the community. (AFF, 1986, p.119-120)
Typically, cults have a shared commitment to a charismatic leader and uphold a transcendent ideology, the nature of which varies dramatically from group to group but which is as likely to be secular in nature as it is religious (Lalich, 2004). A cult’s leader therefore possesses enormous authority in the eyes of his or her followers. Having invested many of their hopes for a better life in the leader, followers are intrinsically motivated to look positively on the leader’s words and actions. The resulting high commitment of members is usually expressed in Stakhonivite work norms which mean that the group environment virtually monopolises their time. Members also replace their pre-existing beliefs and values with those of the group, lose confidence in their own perceptions in favour of those of the group’s leaders, and experience social punishments such as shunning by other members if they deviate from carefully prescribed norms (Langone, 1995; Singer, 1987). Conformity is critical. The outcome is an environment dominated by what has been described as “bounded choice” (Lalich, 2004) – i.e. one in which the expression of only a limited and tightly regulated repertoire of beliefs, behaviours and emotions is permissible.

Overall, the following key ingredients of cultic dynamics, which mirror the defining traits of transformational leadership, have been identified in the literature (Tourish and Pinnington, 2002):

  1. Charismatic leadership (which may reflect some innate qualities on the part of the leader, but may just as easily be a socially engineered construct in the minds of the followers, and thus constitute an attributional phenomenon); 
  2. A compelling vision/ Intellectual stimulation (the vision being of a transcendent or totalistic character, capable of imbuing the individual’s relationship to the organization with a sense of higher purpose. Meanwhile, intellectual stimulation is aimed at motivating followers to intensify their efforts in support of the vision, compellingly articulated by the group’s leaders); 
  3. Individual consideration (or a feeling that the followers’ interests are being attended to, and perhaps that they are in some way important to the charismatic leader, leading to a process of recruitment/initiation, conversion and indoctrination); 
  4. Promotion of a common culture (a set of norms which specify particular attitudes and forms of behaviour deemed to be appropriate. Within cults, these also minimize the expression of dissent, other than within carefully controlled limits, and hence produce a punitive internal environment). 

Each of these is now considered in-depth, and the extent to which they were at play within the Enron organization is explored. The dominant traits of cults are also outlined in Exhibit One, alongside a summary of Enron’s internal cultural dynamics that operate in parallel to them.

1. Charismatic Leadership, Dissent, and Leadership Privileges

Leaders often possess and dramatically communicate “a vision” for their organization. A vision has been defined as a mental image that a leader evokes to portray an idealized future state (Conger, 1989). Equipped with a compelling vision, charismatic leaders can have a “profound and extraordinary effects on followers” (House and Baetz, 1979, p.339). Clearly, these effects may be individually benign and/ or socially useful. But they may also be individually harmful and/ or socially destructive. It is therefore not surprising that charismatic leadership has been described as a recurrent dynamic in all manner of cults, including doomsday cults in the 1950s (Festinger, 1957), the infamous Jonestown cult of the 1970s (Layton, 1999), the suicidal Heavens Gate cult in California during the 1990s (Lalich, 2004), and in the homicidal Aum cult in Japan (Lifton, 1999). Leaders in each of these groups articulated a compelling “vision” that motivated their followers to display extraordinary levels of commitment and adopt behaviours, values and attitudes at odds with most people’s sense of normalcy, and which in many cases proved terminal.

Given its potency, the importance of “vision” has been increasingly stressed in the business world, in a growing volume of largely uncritical practitioner and academic literature (e.g. Collins, 2001). The intention is that followers should become highly committed to the leader’s mission, make significant personal sacrifices in the interests of the mission, and perform beyond the call of duty (Shamir et al., 1993). These theories highlight such effects as emotional attachment to the leader on the part of followers, greater emotional and motivational arousal, increased follower commitment to the mission articulated by the leader, and enhanced confidence in the leader. Leaders therefore often build their charismatic reputation around the energetic communication of a vision, designed to solicit ever higher levels of compliance from followers (e.g. Biggart, 1989).

But the risks are considerable. In particular, Maccoby (2000) suggests that many charismatic leaders are narcissists. They have a strong need for power, high self-confidence and strong convictions (De Vries et al., 1999). However, whatever their virtues, narcissists tend to be overly sensitive to criticism, can be poor listeners, lack empathy, have a distaste for mentoring and display an intense desire to compete (Maccoby, 2000). In addition, Conger (1990, p.50) has argued that charismatic leaders may find themselves prone to:

  • Exaggerated self-descriptions.
  • Exaggerated claims for the vision.
  • A technique of fulfilling stereotypes and images of uniqueness to manipulate audiences.
  • A habit of gaining commitment by restricting negative information and maximizing positive information.
  • Use of anecdotes to distract attention away from negative statistical information.
  • Creation of an illusion of control through affirming information and attributing negative outcomes to external causes.

The consequences include the elimination of dissent (and therefore the promotion of a homogenous and insular group mentality, conducive to cultic norms); the accumulation of power at the center; a failure to sufficiently consider alternative courses of action, when they appear to conflict with a centrally ordained and inspirational vision; and a growing belief on the part of the leader that, other evidence notwithstanding, he or she is indispensable to the organization’s success. Despite their attraction for many leaders, there is a high risk that such approaches ultimately invite failure. Grint (2000, p.420) has pointed out that the most successful leaders are liable to be those with the least compliant followers, “for when leaders err – and they always do – the leader with compliant followers will fail.” Thus, debate and dissent are indispensable for effective decision making. However, such notions run counter to many of the norms of much leadership practice and theory – and are rarely to be found in cults. It remains to consider how they fared within Enron.

The Case of Enron

There is ample evidence that Enron’s leadership aimed atcreating an aura of charisma around themselves, and that in consequence theyevinced each of the major defects identified by Conger (1990). The followingquotation from a Fortune magazinearticle published in April 2000 is typical of how Enron leaders saw andprojected themselves:

“Imagine a country-club dinner dance, with a bunch of oldfogies and their wives shuffling around half-heartedly to the not-so-stirringsounds of Guy Lombardo and his All-TuxedoOrchestra. Suddenly young Elvis comes crashing through the skylight, completewith gold-lame suit, shiny guitar, and gyrating hips… In the staid world ofregulated utilities and energy companies, Enron Corp. is that gate-crashingElvis” (quoted in Sherman,2002, p.23).

Consistent with their image in the business press, Enron’sleaders engaged in ever more dramatic forms of self promotion. It may be astretch to imagine Kenneth Lay, a middle aged businessman, as a latter dayElvis. Nevertheless, he was also described by Fortune magazine as a “revolutionary”. Jeffrey Skilling was equallyadept at promoting a charismatic self image. Consistent with a company widedramaturgical predilection for Star Wars analogies, Cruver (2003. p.10)recounts that he was known internally as Darth Vader, “a master of the energyuniverse who had the ability to control people’s minds. He was at the peak ofhis strength, and he intimidated everyone. He had been lured over to the DarkSide from McKinsey & Company in 1990”. He dressed for the part at companygatherings, referred to his traders as “Storm Troopers” and decorated his homein a style sympathetic to the Darth Vader image (Schwartz, 2002). Skilling wasalso sometimes known as “The Prince,” after Machiavelli. New recruits wereinstructed to read The Prince from beginning to end, or be eaten alive (Boje etal, 2004). Dramatic nomenclatures were not uncommon. Another senior executive, Rebecca Mark,became known as “Mark the Shark”, withall its attendant overtones of predatory aggression and greater competitivepower (Frey, 2002).

This tone appears to be typical of the unusually charismaticand extremely powerful image which Lay and Skilling, in particular, attemptedto promulgate at every opportunity. It was clearly part of an intense dramaturgicaleffort designed to project an unusually alluring spectacle, and therebyconvince people that they belonged to a cause far greater than merely beingpart of a business or working for a living. Hagiographic accounts of theiraccomplishments were correspondingly widespread, including in an influentialbook by Hamel (2000), entitled appropriately enough “Leading the Revolution”.Faculty at the prestigious Harvard Business Schoolproduced eleven case studies into Enron, uniformly lauding its “successes” andcommending its business model to others.

Within cults, leaders tend to live in extraordinary wealth –a disparity which is used to reinforce the impression that the people concernedhave extraordinary abilities, insight and charisma. Opulence certainly characterisedthe lifestyle enjoyed by Enron’s top executives. For example, Kenneth Layhad Enron pay $7.1 million for a penthouse apartment, which he and his wifeconverted into a Venetian palace with dark woods, deep velvets, periodstatuary, and a vaulted brick ceiling in the kitchen (Swartz and Watkins,2003). The implication was that others could some day hope to obtain similarprivileges for themselves – providing they embraced the value system and visionarticulated by the leaders, emulated their behaviours and suppressed whatevercritical internal voices occasionally threatened to surface.

It thus became a further means of enforcing conformity withthe vision of the charismatic leader, and obtaining enthusiastic demonstrationsof support for whatever the general direction of the organisation wasproclaimed to be.

2. Compelling Vision—Intellectual Stimulation

Typically, cults are organized around what has been defined as a “totalistic” (that is, all embracing) vision of a new world order, way of being or form of organisation. The group’s leaders suggest that their vision is capable of transforming an otherwise impure reality. It constitutes an inspirational new paradigm. Converts, dazzled by the spectacle, develop a mood of absolute conviction. This immunizes them against doubt. No evidence is ever judged sufficient to falsify the belief system in question. Such moods have been defined as “ideological totalism” (Lifton, 1961). The messianic leader of the organization seeks ever more enthusiastic expressions of agreement from the organization’s members. Dissent is resistance to be overcome, rather than useful feedback. Plausibility is often simply a question of uncontested belief. Hence, consistent with the principle of consensual validation (in which the spectacle of many agreeing to a position irrationally convinces each person that it must be accurate), the absence of feedback loops reinforces belief in the sacred vision of the leader.

Thus, a corporate vision whose truth is held to be self evident, which is complex in both form and function, whose tenets cannot be questioned, and whose acceptance is assumed to be indispensable for the organization’s salvation has the potential to provide considerable intellectual stimulation, and unleash passionate forms of ideological totalism.

The Case of Enron

Enron’s vision was secular in nature, but within that framework became all encompassing. In essence, it promised people heaven on earth. If the company were to achieve its goals, unimagined wealth and happiness would be the lot of those fortunate enough to be employees at the time. This frequently led to hubris. The company’s annual report for 2000 typified the tone of fantasy increasingly emanating from those at the top:

We believe wholesale gas and power in North America, Europe and Japan will grow from a $660 billion market to a $1.7 trillion market over the next several years. Retail energy services in the United States and Europe have the potential to grow from $180 billion to $765 billion in the not-so-distant future. Broadband’s prospective global growth is huge – it should increase from just $17 billion today to $1.4 trillion within five years. Taken together, these markets present a £3.9 trillion opportunity for Enron, and we have just scratched the surface.” (cited by Cruver, 2003, p.45)
Around this time, Enron draped a huge banner at its entrance, proclaiming its latest vision – “FROM THE WORLD’S LEADING ENERGY COMPANY – TO THE WORLD’S LEADING COMPANY.” Such hyperbole was a normal part of Enron’s discourse. Craig and Amernic (2004) have highlighted numerous examples of its presence in letters to shareholders, which as they point out also made use of the language of war, sport and extremism, to reinforce the potency of what was a compelling and totalistic vision of the most dramatic kind. Extraordinary goals, set by the leaders, encourage group members to regard their group as being particularly special and engender a sense of privilege and uniqueness among those who belong (Lalich, 2004), as do images of the organisation being at war with everyone else.

The wealth that could be made within Enron further encouraged feelings among employees that they faced a much more exalted destiny than that of people who worked for other companies. For those who achieved their goals, huge bonuses were available – to such an extent that Houston’s luxury car dealers habitually visited Enron to exhibit their products every bonus period (Prentice, 2003). Largesse was also extended to employees’ families. The prevailing philosophy, as Cruver (1003, p.191) summarised it, was that “If you were smart enough and tough enough to work at Enron, you deserved to live like last year’s Oscar winner.” The consistent message to employees was that they were the brightest and the best, that they were greatly favoured by being selected to work at Enron, and that they were now charged with an evangelical mission of transforming how business conducted itself in the world. All accounts describe it as an intensely stimulating environment – to the point where many wondered how they could ever bear to work anywhere else again (e.g. Cruver, 2003). For those who bought into such messages, it followed that extraordinary, and almost cultic, levels of commitment were required.

Thus, work regimes of up to eighty hours a week were regarded as normal. Employees sacrificed their today in the hope of a better tomorrow. But, given the demands, “Skilling hired people who were very young, because very young people did not insist on coming in at nine or leaving at five, or on keeping things as they had always been, or, for that matter, on questioning authority once they had signed on with him” (Swartz and Watkins, 2003, p.58). As with other organisations which could be regarded as cults, a totalistic vision may offer plentiful intellectual stimulation. But such visions also imply high levels of social control. As Lalich (2004, p.18) observed: “In identifying with the group, members find meaning and purpose and a sense of belonging. This is experienced as a type of personal freedom and self-fulfilment. Yet that freedom is predicated on a decrease in personal autonomy, manifested in continuous acts of ever-increasing self-renunciation.” Those affected experience a diminished capacity for critical reflection. Specifically, in the context of Enron, Swartz and Watkins (2003, p.58) comment as follows on the widely held belief that hard work now might buy a liberated future: “That the single-minded pursuit of money might be self-limiting in other, psychic ways was not really considered.” The problem is that unbounded commitment to career development encourages people to “treat all organizational, social and even personal relations as instrumental to career progress” (Collinson, 2003, p.537). In essence, their sense of who and what they are becomes indistinguishable from the corporate environment and the priorities decreed by its leaders – a personality transformation, it should be noted, that is greatly valued by cult gurus of all persuasions. It is also a mindset which is increasingly promoted by corporate leaders, and one that leaves those who adopt it much more liable to escalate their commitment beyond any point of rationality.

3. Individual Consideration, “Love Bombing,” and the Process of Conversion

Recruitment is clearly vital for cults, since the expansion of their influence requires a growing army of enthusiastic disciples. The problem is that the prospective recruit’s resistance is likely to be at its highest immediately before they join. They have yet to buy into the belief system or invest much energy in pursuit of the group’s goals, and they still have plentiful other choices. The challenge is to recruit and initiate people into the group, engage a process of conversion and then reinforce it with indoctrination. How is this accomplished, and to what extent did similar practices prevail at Enron?

Recruitment/Initiation

Cults usually recruit people through a two-pronged process characterised by intense and emotionally draining recruitment rituals on the one hand, and what has been described as “love bombing” (Hassan, 1988) on the other. In terms of rituals, a process is engaged that may stretch over several days, which exposes the would-be recruit to powerful messages from the leader, which requires them to express ever greater levels of support for the leader’s insights, and which may involve the person adopting behaviours that might otherwise seem irksome and certainly strange. The process has been described as a roller-coaster, with potential recruits soaring to emotional highs and then experiencing mood collapses which, in total, leave them ever more vulnerable to the messages of its leaders (Tourish and Wohlforth, 2000). Research into group dynamics has long established that when we endure particular initiation rituals or experience discomfort to join, we are then more inclined to exaggerate the benefits of group membership and to intensify our sense of commitment as a means of establishing that we belong to the group (Aronson and Mills, 1959). Emotionally debilitating recruitment rituals, assuming that the potential recruit has some intrinsic motivation for looking positively on the group, are likely to have precisely this effect.

However, pressure alone does not suffice. Love bombing is also crucial, with the implied promise that that if the recruit merely accedes to the high demands of the group they will receive the beneficent regard of the leader and other members of the organisation. Thus, cult leaders make great ceremony of showing individual consideration for their members – at least, immediately before and after they join. Prospective recruits are showered with attention, which expands to affection and then often grows into a simulation of love. This is the courtship phase of the recruitment ritual. The leader wishes to seduce the new recruit into the organization’s embrace, gradually habituating them to its rituals and belief systems. Individual consideration overcomes moods of resistance, by blurring distinctions between personal relationships, theoretical constructs and bizarre behaviours. Nor is most people’s receptiveness to such tactics at all surprising. As an early researcher into interpersonal attraction and influence expressed it (Jones, 1990, p.178):

There is little secret or surprise in the contention that we like people who agree with us, who say nice things about us, who seem to possess such positive attributes as warmth, understanding, and compassion, and who would ‘go out of their way’ to do things for us.
The problem is exacerbated by status differentials. Normally, a person of lesser status attaches more importance to being liked by those of higher status than the other way round (Rosenfeld et al., 1995). Within cults, and certainly within most corporations, status differentials between leaders and followers are both manifest and growing. For example, in 1991, “the standard big-company CEO in the US earned 140 times the pay of the average worker; the multiple is now nearer 500 times” (Haigh, 2003, p.5). Individual consideration from such figures – the message that the new recruit is positively valued and very much wanted – increases the person’s tendency to affiliate, conform and engage in yet further behaviours consistent with well established group norms.
Conversion

When someone responds to intense individual consideration from higher status leaders, and is desperate to affiliate with them, the outcome of their shift in attitudes can be regarded as conversion. It occurs when a person experiences fundamental changes of knowledge and beliefs, values and standards, emotional attachments and needs, and of everyday conduct (Lewin, 1948; Lalich, 2004). New dress codes, behaviours, beliefs and modes of being are embraced. Each reinforces the other. A new dress code is likely to encourage the adoption of behaviours normally associated with the dress code; novel behaviours strengthen the attitudes that underpin them; the overall effect is, frequently, what outside observers come to see as a fundamental personality transformation, or new mode of being, on the part of the person concerned.

Indoctrination

The convert mentality is then reinforced within the cultic environment by a process of indoctrination. Indoctrination occurs through the one way transmission of intense messages from leaders to followers that require ever greater levels of devotion to the group ideal, and which are designed to instil into the recruit a feeling that being accepted into the group is a particular privilege that makes him or her a member of a special elite. Thus, recruitment/ initiation, conversion and indoctrination are all vital stages in the cultic experience, and are sustained through the impression of individual consideration by the group’s leaders. The question is: to what extent were they prevalent within Enron, and to what extent do they characterise the wider corporate environment?

The Case of Enron
Recruitment/Initiation

Recruitment at Enron was a particularly gruelling procedure. Fusaro and Miller (2002, p.49) reported that job candidates “…had to demonstrate that they could maintain high levels of work intensity over an extended period of time. Some have compared the work environment and high employee intensity at Enron to that of a top law firm, which is typically filled with brilliant young associates willing to do whatever it takes to make partner.” It was clear that those selected would be required to devote most of their waking hours to their new life as Enron employees. In this regard, as has already been highlighted, Enron certainly delivered on expectations. After the initial interview, they then attended a second interview on one of three to five “Super Saturdays” that were held at Enron’s Houston office. Candidates were interviewed for 50 minutes by eight different interviewers in succession with one 10-minute break – an emotionally intense experience for all. Initially, prospective employees staged a dramatic performance designed to convince the recruiter that they view the company’s vision with the mindset of True Believers, even if they felt doubts – a normal aspect of impression management during selection interviews. However, performance has hazards. As Goffman (1959, p.28) stressed, “…one finds that the performer can be fully taken in by his own act; he can be sincerely convinced that the impression of reality which he stages is the real reality.” The further emulation of organisational rituals heightens the effect. For example, Kunda (1992) demonstrated, in an ethnographic study of a hi-tech American corporation, how such rituals are developed by leaders to inculcate the “right beliefs”. Employees then play along with them, rather than reveal what might be described as a “bad attitude.” But this renders them liable to internalise the values behind the rituals – even if they have initially resisted them. In essence, like a Method actor over preparing a part, the person internalises a role to such an extent that they become indistinguishable from their performance. Within Enron, there was intense pressure to participate in a whole variety of rituals – including those associated with ostentatious consumption – and which had precisely these effects.
Conversion

It is thus likely that, within Enron, the dramaturgically focused selection process and subsequent induction into a high performance work environment initiated a process analogous to cultic conversion, in which prospective employees

  • needed overwhelming levels of intrinsic motivation to persevere
  • found themselves exposed to a high demand environment, in which it was made clear that those selected would be required to display further levels of inordinate commitment
  • were exposed to the notion that membership of the Enron team represented a particular privilege, but also imposed unusually high obligations
  • were presented with the “vision” proclaimed by Enron’s leaders, and required to frequently express their solidarity with a dominant and centrally ordained corporate philosophy.

All this was reinforced by various versions of love bombing – once the person was selected, and agreed to join, the organisation. As many have noted, Enronians were frequently told, and came to believe, that they were the brightest and best employees in the world. They were certainly well rewarded, and were the eager recipients of a great deal of company largesse. For example, many had access to company credit cards, on which they were encouraged to charge their prostitution expenses (Fusaro and Miller, 2003). Providing they performed to a high standard, they could count on an unlimited benevolent attitude from Enron’s leaders.

Indoctrination

What can be viewed as indoctrination, flowing from the organisation’s leaders, then became a normal part of life throughout the employee’s Enron career. The further one ascended the hierarchy, the more one was exposed to it. A typical example can be found in the company’s 1999 management conference, as described by Swartz and Watkins (2003, p.7). They reported that the then CEO, Jeffrey Skilling, turned the event into “a grim tutorial on “growing earnings” or, in layman’s terms, boosting profits… the Hyatt’s ballroom felt like a reeducation camp, as every speaker stressed the new corporate dogma, which was that Enron’s hard assets could no longer be depended on to keep the stock price rising at Skilling’s desired rate of 20 percent a year…. Enron’s mandate was to become more nimble, more flexible, more innovative – or else. The speakers… had droned on about that mission for hours. Most of that day, Skilling prowled the perimeter of the ballroom, making sure that his acolytes were, in his words, ‘getting it’“.

In this, and other accounts of Enron, communication emerges as essentially one way – from the organisation’s top leaders, to those at the bottom. Its purpose was to reinforce the demanding goals set by Enron’s leaders. Corrective feedback was not sought. In fact, it was stifled. The purpose was simply to transmit a new corporate code, and ensure its rapid implementation. People were expected to escalate their commitment, and transform their attitudes to be ever more consistent with the needs of the organisation’s leaders. The dynamic is similar to that of many non-corporate cults, as documented in a growing case study literature into the area (e.g. Hassan, 1988; Tourish, 1998; Stein; 2002).

4.  Promoting a Common Culture

Much of the most influential management literature in thelast two decades, inspired by the work of Peters andWaterman (1982), sold the notion of what amounts to a monolithic organisationalculture, to be determined exclusively by senior managers, as the key to overallsuccess. The importance of this resides in the notion that organizationalcultures consist of cognitive systems explaining how people think, reason andmake decisions (Pettigrew, 1979; 1990). If cultures can therefore be controlledby those at the top, the overall impact on people is likely to be enormous. Insuch schemas, the views of non-managerial employees, women and/or minoritiesare unlikely to be considered (Martin,1992).

It has rarely been pointed out that the most intenseorganisational cultures (invariably determined by those at the top, withminimal input from below), are to be found within cults. In particular, suchorganisations promote all embracing cultures, decreed by the leader. These arebuilt around totalistic world views, with which everyone is supposed to agree.The ideal state is one of monoculturism, in which difference from the vision ofthe leader is banished to the margins of the group’s tightly policed norms.Total conformity along these lines leads to the disabling and well documentedphenomenon of groupthink, an infection which thrives particularly well in theoverheated atmosphere of cults (Wexler and Fraser, 1995). This is particularlyrelevant to the study of modern business organisations. As a growing volume ofliterature testifies, workplace surveillance systems increasingly seek toproduce conformist (i.e. compliant and pliant) individuals in the workplace.Thus, corporate culture initiatives (Kunda, 1992), performance assessmentsystems (Townley, 1994), teamworking (Barker, 1993) and information gatheringsystems (Zuboff, 1988) have all been explored from this perspective.  It has been argued that such approaches seekto regulate, discipline and control employee subject selves, while camouflagingsuch intentions in the more benign rhetoric of family values and empowerment (Martin, 1999).

Within systems characterized by surveillance, and in whichstrident demands for intense commitment becomes the norm, the demand for purityis central. This is expressed with particular sharpness within cults, where “…theexperiential world is sharply divided into the pure and the impure, into theabsolutely good and the absolutely evil” (Lifton, 1961, p.423). Dissent isdemonized, rendering it all the more unappealing, since people quickly graspthat to associate with dissenters is to volunteer for a Salem style witch-hunt. They are constantlyinformed that the group’s vision offers a superior insight to any otherperspective on offer. Dress codes, language, and styles of interaction are allhighly regulated (Tobias and Lalich, 1994), reinforcing the monochromeenvironment that has come to define the members’ social world. Typically, theculture is one of impassioned belief, incessant action to achieve the group’sgoals, veneration of the leader’s vision and a constraining series of groupnorms designed to quell dissent. Within cults, the dominant culture is likelyto be totalistic, punitive, self-aggrandizing and all embracing in itsmessianic scope (Tourish and Pinnington, 2002). Culture, in such contexts,becomes another form of social control (Willmott, 1993; 2003).

A further paradox within cults is that individualconsideration shifts from being positive to critical in nature. As a voluminousliterature testifies (e.g. Tourish, 1998), once the recruit has been “wonover”, and made an intense commitment, the group seeks to ensure the furtherembrace of its norms, by a relentless process of criticism and attack.Individual consideration of a positive kind (Dr Jekyll)alternates with its alter ego (Mr. Hyde). Relentless criticismgradually erodes people’s confidence in their own perceptions (Tourish andWohlforth, 2000), creating a form of learned helplessness (Seligman, 1975).“Love” – always dependent on the unconditional expression of enthusiasm for thegoals of the group’s leaders – alternates with abuse, in a disorienting cyclethat leaves recipients feeling fearful and powerless. Context is crucial.Having made an initial commitment, possibly of a dramatic kind, recruits aremotivated to engage in further behaviours consistent with the commitmentoriginally made – the principle of commitment and consistency (Cialdini, 2001).When this blends with learned helplessness, it reinforces even further people’salready strong inclination to over-identify with the norms that have beendecreed by the group’s leaders. The leaders, meanwhile, have adorned themselvesin the garb of omniscience and infallibility. Paradoxically, and providing ithas come after a period of love bombing, criticism from such sources reinforcesthe person’s attachment to the group’s belief system and their sense of loyaltyto its leaders.

Moreover, abuse generates multiple insecurities, furtherstrengthening leadership power. Whatever its precise content, insecurityreinforces “the construction of workplace selves and the reproduction oforganizational power relations” (Collinson, 2003, p.530). In particular, itseems likely that when people are insecure about their self-identity and theirstatus the nominal freedom of their position (after all, they retain the choiceto leave) will be experienced as a form of existential angst, intensifyingtheir sense of vulnerability. It has long been known that people have an innatetendency to conform to authority and power under a variety of conditions(Milgram, 1974). If they are rendered fearful in the manner described here, andwhen the most modest expression of dissent attracts punitive attention fromthose above, it seems even more likely that people “might try to find shelterin the perceived security of being told what to do and what to think, viewingthis as a less threatening alternative to the responsibility of makingdecisions and choices for themselves” (Collinson, 2003, p.531). When the groupenvironment assumes that all change must start at the top, the leader knowsbest, the leader must have a compelling vision and that one unifying culture isa precondition of effectiveness, inherently cult like dynamics of the kinddescribed here may be unleashed. It is clear that many of these assumptions arenow standard features of the leadership culture in many corporateorganisations.

The Case of Enron

1. “Rank and Yank”, and the Elimination of Dissent

Side by side with largesse and ego stroking, a punitiveinternal culture was established, in which all that had been so painstakinglygained could be withdrawn at the whim of senior managers. As Fusaro and Miller(2003, p.51) remarked: “Despite all the effort that Enron expended in selectingthe right people to hire into the company, it was quick to fire them.” The moststriking illustration of this was in the organisation’s appraisal system, knownas “rank and yank”. An internal Performance Review Committee (PRC) ratedemployees twice a year (Gladwell, 2002). They were graded on a scale of 1 to 5,on ten separate criteria, and then divided into one of three groups – A’s, whowere to be challenged and given large rewards; B’s, who were to be encouragedand affirmed, and C’s, who were told to shape up or ship out. Those in the topcategory were referred to as “water walkers” (Swartz and Watkins, 2003). Thosein the bottom category were given until their next review to improve. Inpractice, however, with another 15 percent category emerging within six monthssufficient improvement was almost impossible, and they tended to leave quickly.Furthermore, those in categories 2 and 3 were also now in a position where theytoo faced the strong possibility of being “yanked” within the next year. Acutthroat culture was created. The overall, and distinctly cultic, impact iswell summarised by Fusaro and Miller (2003, p.52):

It is clear that Enron’s management regarded kindness as ashow of weakness. The same rigors that Enron faced in the marketplace werebrought into the company in a way that destroyed morale and internal cohesion.In the process of trying to quickly and efficiently separate from the companythose employees who were not carrying their weight, Enron created anenvironment where employees were afraid to express their opinions or toquestion unethical and potentially illegal business practices. Because therank-and-yank system was both arbitrary and subjective, it was easily used bymanagers to reward blind loyalty and quash brewing dissent.

Ultimately, cults thrive on internal aggression. Thepunitive internal atmosphere reminds members of the fate that awaits themshould they dissent, or deliver performance below the high goals set for themby the group’s leaders. In addition, by keeping members fearful of each other,their attention is further diverted from the behaviour of the group’s leaders.Within Enron, it appears that the tyrannization personified by the rank andyank system unleashed what has been described, in other contexts, as the“identification-with-the-aggressor syndrome” (Kets de Vries, 2001). This postulatesthat, in order to feel safer, those at the receiving end of aggression assumean aggressive posture themselves. They move from being threatened to beingthreatening. The catch is that “all they accomplish is to become aggressorsthemselves, thus increasing the total organizational aggression” (Kets deVries, 2001, p.81). Intense criticism aimed at individuals stresses theimagined weaknesses of the person at the receiving end rather than, forexample, difficulties with the wider organisation. The rank and yank systemtherefore pitted employees against each other. It was clearly in everyindividual’s interest that someone other than themselves received a poorrating. This created a strong incentive to provide poor evaluations for otherswhile simultaneously seeking positive evaluations for oneself. Backroom deals,shifting alliances and broken promises were the norm. It also provided anincentive to conformity, and a disincentive to the articulation of dissentingvoice. But there was no escaping the relentless logic of the bottom line.Whatever they did, 15% of all employees would find themselves in the lowestcategory twice a year, where they faced the daunting prospect of being yanked.

Clearly, the switch from affirmation to punishment withinEnron meant that employees regularly received mixed messages. On the one hand,they were the cleverest and best in the world – a form of positivereinforcement, or love bombing, that it would be hard to better. On the other,they could be branded as “losers” (a favourite term of abuse, for those whofell at the PRC hurdle), and fired at any time. Consistent with general culticnorms, the overall effect was disorientation, an erosion of one’s confidence inone’s own perceptions and, most crucially, a further compliance with thegroup’s leaders that strengthened conformist behaviour in general. Thus, mixedmessages within cults are a standard means of projecting “the illusion ofchoice” (Lalich, 2004, p.190), while actually intensifying control by thegroup’s leaders. Such messages also constrain topics of discussion, furtherreinforcing conformist behaviours. As Werther (2003, p.569) expressed it, theambiguities and inconsistencies of mixed messages became undiscussable withinEnron. But the prevailing culture rendered “the undiscussability of theundiscussable also undiscussable.” There were no forums where employees couldcommunicate about such concerns, beyond whatever informal grapevines managed tosurvive in such a hostile climate.

Thus, within Enron, it was clear to all that dissent wouldnot be tolerated. Anyone who queried accountancy practices was likely, at best,to be reassigned or lose a bonus (Cohan, 2002). A 1995 survey of employeesfound that many were uncomfortable about voicing their feelings and “telling itlike it is at Enron” (Swartz and Watkins, 2003, p.76). Cruver (2003, p.176)quotes a former senior’s manager’s summary of the internal culture: “There wasan unwritten rule… a rule of ‘no bad news.’ If I came to them with bad news, itwould only hurt my career.” The example of Sherron Watkins illustrates themindset. Watkins was a senior employee who worked with Enron’s Chief FinancialOfficer, Andy Fastow. When she realised that the company’s losses would becomeapparent sometime in 2003 or 2004, she drew her concerns to the attention ofKen Lay, who had stepped back into the role of CEO. Support was not forthcomingfrom other senior executives, who evidently feared that to acknowledge theproblems would damage their careers at Enron. Lay’s own response suggests thesefears were well founded. Within days of meeting with Watkins, he contacted theorganization’s lawyers to inquire if grounds could be found for firing her(Watkins, 2003a.b.). It should be noted that the intrinsically modest act ofapproaching the CEO to voice concerns is amongst the most notable acts ofresistance currently on record within Enron. It is also notable that its impactwas negligible. Enron’s collapse was precipitated when it was compelled toknock $1.2billion off shareholder equity, rather than because of a widespreadrefusal to go along with its fraudulent practices or destructive culture bymiddle managers and employees.

2.  A Company of “Believers”?

In 1997, employees were interviewed about their attitudes,and, perhaps inevitably, a “vision” was adopted in response (Swartz and Watkins, 2003).The process and its outcome illustrate particularly well the extent of a commonbut totalistic culture within the organisation and a widespread over-relianceon the supposedly superior insights of the organisation’s leaders. Theadvertising agency charged with developing the new vision concluded that Enronwas a company of “believers.” In particular, employees had intense faith in KenLay and Jeff Skilling. They were also convinced that Enron employees (oftendubbed “Enronians”) were the best and the brightest in the world, and theybelieved they were doing good by opening new markets and creating new productsand services. As a result, an advertising campaign was launched, around a conceptcalled “What We Believe.” Those beliefs included “the wisdom of open markets”and “being a laboratory for innovation.” A new Vision and Values team wascreated, which declared that “Everything we do is about change,” It added:“Change is a goal. Change a habit. Change a mind.” From an outside perspective,the slogans may appear rather vacuous, as indeed are those of more well knownand non-corporate cults. However, this may also be their strength. Slogansbereft of real content often enable people to read into them whatever meaningsthey wish, and thus ensures a much wider buy in. A video was also produced, forcompany wide dissemination, in which Lay proclaimed that his main objective was“to create an environment where our employees can come in here and realizetheir potential.” He did not specify whether this ambition extended only tothose who survived the appraisal system. As Swartz and Watkins (2003, p.103)observed: “The whole campaign was not unlike a religious tract from a New Agemegachurch, but instead of directing disciples to God, Enron hopes itscongregation would be inspired to join its mission to make itself The World’sLeading Energy Company.”

Cruver (2003, p.37) reinforces the impression of a corporateculture resembling that of cults. In describing the beginning of his Enroncareer, he observed: “The first thing I noticed about Enron traders is thatthey all looked very similar: A goatee was fairly common; otherwise theymaintained a clean-cut yet outdoorsy look; and if they didn’t wear some versionof a blue shirt every day, then it was like they weren’t on the team… I recallthe first time I showed up to work in a green button-down, only to realize Iwas completely surrounded by a dozenguys wearing the same blue shirt. Not just blue shirts – but the same blue shirt. I asked the group,“When did they hand those out?” I said it with a smile, but no one laughed.”Parallels between such a rigid corporate uniform and the uniform dress codefound in such cults as the Hare Krishnas are inescapable.

Language was crucial to the process. Again, the testimony ofSwartz and Watkins (2003, p.193) is typical. They describe language withinEnron as follows: “No one at Enron would ever “build consensus,” they would“come to shore,” as in “We have to come to shore on this,” or “Are you ready tocome to shore on this?” One week somebody used the word “metrics” to mean thenumbers in a deal, as in ‘We’ve got to massage the metrics!’ Pretty soon,everyone was using the term “metrics” and anyone who used the term “numbers” or“calculations” was a “loser,” the most popular Enron label of all.” Suchconstricted language, baffling to outsiders, is typical of totalisticenvironments (Lifton, 1961), and has been observed in a huge variety of cults.As Hardy and Phillips (2004, p.299) argue, power and discourse are mutuallyconstitutive: discourse can “shape the system that exists in a particularcontext by holding in place the categories and identities upon which it rests.”Control of language within Enron, in the manner described here, playedprecisely this function. It engineered a uniform definition of reality,consistent with a managerially sanctioned vision of the truth.  In turn, this established an increasinglyconformist culture, similar to those found within cults, and in which thepossibility of dissent and debate retreated ever further from the group’spractice.

3.  Deception, and the Control ofInformation

Typically, cult leaders have extraordinary authority,privileged access to information, and a hidden agenda of self aggrandisementthat is concealed behind more idealistic statements. The dominant culture ismaintained because ordinary followers are denied full information about theorganisation’s goals or practices, while a carefully contrived public displayof righteousness by the leaders prevents detailed scrutiny of actual behaviouras opposed to avowed intentions. Consistent with this dynamic, and with whathas been observed in a variety of cults, information emanating from the topwithin Enron was also distorted in nature. As Lalich (2004, p.235) noted, in acomprehensive comparison of two cults: “…the vast majority of members did notknow such things as where the money went or how overall strategic decisionswere made. Strict policies controlled and contained information.” Informationflow within Enron was indeed tightly regulated in this manner. The intendedeffect was to reinforce the authority of Enron’s leaders. People assumed thatat least the leaders knew what was happening, and that they had theirfollowers’ overall best interests at heart. Given what is known as the falseconsensus effect, which causes honest people to impute their honest motives toothers (Prentice, 2003), it is not surprising that Enron employees tended toassume that such people as Kenneth Lay were abiding by normal accountingprocedures. In reality, and again in practices that are consistent with thosewidely found in cults, “there was misrepresentation of hard data, that is,concealment of debt, lying about accounting results, as well as about thestream of earnings, and the distortion of the company’s future prospects”(Cohan, 2002, p.280).

A particularly ironic example of misinformation, deceptionand double standards within Enron can be found in its heavily promoted code ofethics, known as “RICE” – an acronym standing for Respect, Integrity,Communication and Excellence. A 64-booklet was produced, explaining the code indepth. Kenneth Lay issued a memo on the code in July 2000, barely eighteenmonths before Enron declared bankruptcy, in which he concluded that “We want tobe proud of Enron and to know it enjoys a reputation for fairness and honestyand that it is respected… Let’s keepthat reputation high” (quoted in Cruver, 2003, p.333 – emphasis in theoriginal text). As is now known, Enron’s leaders disregarded the code in theirdaily practice – to such an extent that, to take but one of many examples, a166-page report was published in 1999 entitled “The Enron Corporation:Corporate Complicity in Human Rights Violations”. It documented, amongst muchelse, how Enron executives paid local law enforcement officers to suppresslegitimate and peaceful opposition to its power plant near Mumbai in India(Human Rights Watch, 2002). The code of ethics was thus a dramaturgical device,whose theatrical display cultivated the illusion of noble ideals and generateda convincing spectacle of ethical practice for both the organisation’s internaland external audiences (Boje et al., 2004). It also helped douse whatever suspicions people may have been nurturingabout the behaviour of the organisation’s leaders.

The RICE code suggests that Enron was engaged essentially inthe production and trading of illusions. The dominant illusion, of course, wasone of high profitability. But the main spectacle was sustained, at a deepstructure level, by myriad other theatrical discourses. In this instance, theRICE code suggested that the organisation’s activities were underpinned by astrong ethical code. The cultivation of such a belief was intended tofacilitate intense belief, compliance, over-identification with the group’sgoals and leaders and heightened dedication to the pursuit of declared ideals.Accordingly, the presentation of an image at odds with a malignant reality is astandard leadership tactic in most documented cults. For example, the leader ofthe suicidal Jonestown cult in Guyanain the 1970s, Jim Jones, engaged in the dramaturgy of miraculous healing infront of large audiences, to generate the illusion of exceptional powers, whilesimultaneously informing his closest aides that he was the reincarnation ofLenin (Layton,1999). It is now clear that the architects of the Enron story also made ampleuse of drama, spectacle, and the projection of financial illusions in theirdaily practice.

4. Producing the “Appropriate” Individual

Overall, it appears that Enron inculcated a powerful set ofcultural norms in its employees. These specified acceptable business dress, howpeople talked to each other, and what values they were supposed to subscribeto. The culture attempted to regulate people’s identities – an increasinglycommon process, and one which has the effect of reinforcing organizationalcontrol, through producing individuals deemed appropriate by the ruling group(Alvesson and Willmott, 2002). It is a dynamic consistent with the role ofculture within cults, particular in terms of its role in defining a narrowrange of acceptable behaviours, attitudes and emotions.

Paradoxically, even from Enron’s own perspective, theultimate effect was dysfunctional – after all, the organisation expired. Thissuggests that though the methods analysed here may temporarily strengthenleadership control in small groups they are incompatible with long term growthand success. Thus, Enron maintained a façade of teamwork. But behind the façadelurked the ruthless self interest of its leaders – a self interest that othersthen felt compelled to emulate. As Swartz and Watkins (2003, p.192) noted:

There was so much infighting over who got financial creditfor a deal in the Performance Review Committee that the total amount creditedto individuals far exceeded the total companyincome for the year. Even so, everyone felt obliged to quibble over thesmallest points, because if you didn’t, you got a reputation as a chump.

Those deemed to be chumps were thought to be exhibiting apurely personal weakness, rather than demonstrating any systemic difficultieswith the organisation. Such a fate and set of labels again mirrors thosedirected against dissenters in all variety of cults. They had the effect ofreinforcing the power of Enron’s leaders. Other employees manoeuvred andconspired to avoid joining those in the category of “losers” or “chumps”. Mostcritically, with so much effort invested in face saving and self enhancement,the destructive practices of Enron’s leadership remained unchallenged, while adestructive corporate culture took deeper root.

Conclusion

This paper has argued that many of the dynamics found withinEnron resemble those of organisations generally regarded as cults. Inparticular, it has described the existence and the downsides of charismaticleadership, a compelling and totalistic vision, intellectual stimulation aimedat transforming employees’ goals while subordinating their ethical sense to theneeds of the corporation, individual consideration designed to shape behaviour,and the promotion of a common culture which was increasingly maintained bypunitive means.

The one exception is that, as the general literaturetestifies, cult members donate most of their money and possessions to theirchosen cause. They endure great hardship. Enronians, by contrast, were wellpaid, with the promise of much greater wealth to come. On the other hand, mostsaw their retirement savings wiped out in Enron’s collapse, lost everythingthey had invested in its shares and received nothing more than a $4000severance payment when it filed for bankruptcy, while top managers were paidexceptionally generous retention bonuses (Watkins, 2003b.). Overall, the organisationalculture strongly resembles that of many well known cults, as does the behaviourof Enron’s leaders.

There have been many attempts to portray the Enron scandalas a one off or at least rare occurrence. In particular, President Bush characterised it as theproduct of poor behaviour by a few “bad apples”, and therefore as anexceptional event (Conrad, 2003). Others have notedthat many business commentators have effectively used Enron as a “scapegoat”,standing as a surrogate for a wider corporate malaise that is hence denied(Hensmans, 2003). In even more optimistic vein, as Deakin and Konzelmann (2003)have critically observed, the exposure and then collapse of Enron has been usedby some to argue that we can be more confident in corporate America and its regulatory regimes.In line with the reasoning of the latter authors, our own position does notsupport such an optimistic interpretation of events.

In particular, recent years have witnessed an extraordinarygrowth in the power of CEOs, while the power of employees has declined(Mintzberg, 2004). But a corollary of great power is the anticipation ofmiraculous results. Such expectations are magnified in a context of socialdespair or helplessness (Gemmill and Oakley, 1992). Imperial CEOs, all too awareof the limited opportunity they are now afforded by the stock market to make adramatic difference, may be tempted to resort to the theatrical approachestypical of cult leaders, and which were certainly the norm at Enron. In theprocess, they encourage conformity and penalise dissent. Yet the evidenceindicates that effective leaders need to do the opposite, and in particularshould “encourage constructive dissent, rather than destructive consent”(Grint, 2005).  Enron suggests that manyif not most leaders have yet to grasp this point, with potentially catastrophicresults for their organisations.

Thus, more leaders are attempting to bind employees to thecorporate ideal, while curtailing forums for debate. They project an image ofcharismatic leadership, stress a compelling vision, depict their companies as asurrogate family and attempt to blur any perceived difference between theinterests of managers and non-managers (Biggart, 1989). As an example of wherethis may lead, there has been a growing interest in “Spiritual ManagementDevelopment” (Bell and Taylor, 2004). Within this paradigm, trainersattempt to release managers from “negative thoughts”, “fears” or “barriers”,which impede the development of a successful corporate culture (Heelas, 1992). Suchapproaches seek to re-engineer the most intimate beliefs of employees, so thatthey are aligned with whatever the leader deems is helpful to the corporateenterprise.  It makes it even less likelythat employees will ask awkward questions of their leaders, and so be capableof correcting their inevitable misjudgements. These may constitute fertileconditions for the emergence of other Enrons in the future.

There is little evidence, to date, that Enron’s employeeswere able to offer significant resistance, least of all resistance that waseffective. Rather, the evidence reviewed here indicates that a totalisticenvironment was created, in which the penalties for dissent were so severe andwell known, while the benefits of conformity appeared so munificent, thatcritical voice was almost wholly absent from the organisation’s internaldiscourse. Of more general significance, the increased primacy afforded toshareholder value, the growing power of CEOs and market pressure for speedyresults implies the further erosion of cultures that embrace discussion, debateand dissent.

The dangers are considerable. Once people over-alignthemselves with a company, and invest excessive faith in the wisdom of itsleaders, they are liable to lose their original sense of identity, tolerateethical lapses they would have previously deplored, find a new and possiblycorrosive value system taking root, and leave themselves vulnerable tomanipulation by the leaders of the organisation, and to whom they havemistakenly entrusted many of their vital interests. Human beings need tobelieve in something, are frequently naïve in where they choose to invest theirbelief and are vulnerable to dramaturgical spectacles designed to engage theirloyalty. Enron “traded” on the desire of many people to believe that everincreasing profits could be manufactured by means of accountancy conjuringtricks, by an organisation that was also serving a greater good – a secularmiracle. In that context, as we have argued above, it may bequeath a culturallegacy that other business leaders increasingly seek to emulate. The phenomenonof corporate cultism may thus become more widespread, and require much closerstudy, than it has merited to date.

References

Alvesson, M., and Willmott, H. (2002) Identity regulationas organizational control: Producing the appropriate individual, Journal of Management Studies, 39,619-644.

American Family Foundation (1986) Cultism: A conference forscholars and policy makers, Cultic Studies Journal, 3, 119-120.

Aronson, E., and Mills J. (1959) The effect of severity ofinitiation on liking for a group, Journalof Abnormal and Social Psychology, 59, 177-181.

Barker, J. (1993) Tightening the iron cage: Concertivecontrol in self-managing teams, AdministrativeScience Quarterly, 38, 408-437.

Bell, E., and Taylor, S. (2004) “Fromoutward bound to inward bound”: The prophetic voices and discursive practicesof spiritual management development, HumanRelations, 57, 439-466.

Biggart, N. (1989) Charismatic Capitalism: Direct SellingOrganizations in America, Chicago: University of Chicago Press.

Boje, D., Rosile, G., Durant, R., and Luhman, J. (2004)Enron spectacles: A critical dramaturgical analysis, Organization Studies, 25, 751-774.

Cialdini, R. (2001) Influence:Science and Practice (4th Edition), New York: Harper Collins.

Cohan, J. (2002) “I didn’t know” and “I was only doing myjob”: Has corporate governance careened out of control? A case study of Enron’sinformation myopia, Journal of BusinessEthics, 40, 275-299.

Collins, J. (2001) Good to Great: Why Some Companies Makethe Leap… and Others Don’t, London:Random House Business Books.

Collinson, D. (2003) Identities and insecurities: selves atwork, Organization, 10, 527-547.

Conger, J. (1990) The dark side of leadership, Organizational Dynamics, Autumn 1990,44-55.

Conger, J. (1989) The charismatic leader: behind themystique of exceptional leadership, San Francisco, CA:Jossey-Bass.

Conrad, C. (2003) Stemming the tide: Corporate discourseand agenda denial in the 2002 “corporate meltdown”, Organization, 10, 549-560.

Copeland, J. (2003) Post-Enron challenges for the auditingprofession: Accountability, VitalSpeeches of the Day, 9, 360-364.

Craig, R., and Amernic, J. (2004) Enron discourse: therhetoric of a resilient capitalism, CriticalPerspectives on Accounting, 15, 813-851.

Cruver, B. (2003) Enron:Anatomy of Greed, London:Arrow Books.

De Vries, R., Roe, R., and Thaillieu, T. (1999) On charismaand need for leadership, European Journalof Work and Organizational Psychology, 8, 109-126.

Deakin, S., and Konzelmann, S. (2003) After Enron: An ageof enlightenment? Organization, 10,583-587.

Dean, L. Richardson (2003) A challenge to change businesseducation, Mid-American Journal ofBusiness, 18, 1, 5-6.

Festinger, L. (1957) ATheory of Cognitive Dissonance, Evanston,Il.: Row and Peterson.

Frey, J. (2002) Water over the dam, The WashingtonPost, 17 April: CO1.

Fusaro, P., and Miller, R. (2002) What Went Wrong at Enron:Everyone’s Guide to the Largest Bankruptcy in U.S. History, Hoboken, NJ:Wiley.

Gabriel, Y. (2004) Narratives, stories and texts, In D.Grant, C. Hardy, C. Oswick and L. Putnam (Eds.) The Sage Handbook of Organizational Discourse, London: Sage,pp.61-77.

Gabriel, Y. (2000) Storytelling in Organisations: Stories,Fantasies, and Subjectivity, Oxford: Oxford UniversityPress.

Gemmill, G., and Oakley, J. (1992) Leadership: analienating social myth? Human Relations, 42,113-129.

Gladwell, M. (20th August, 2002) The talentmyth, The Times (T2), p.2-4.

Goffman, E. (1959) The Presentation of Self in EverydayLife, London:Penguin.

Gordon, J. (2002) When Enron means for the management andcontrol of the modern business corporation: Some initial reflections, The University of Chicago Law Review, 69,1233-1250.

Grint, K. (8th March, 2005) Public opinion: Keith Grint, The Times Online, URL:http://www.timesonline.co.uk/article/0,,8164-1514191,00.html, Accessed 12thJune 2005.

Grint, K. (2000, p.420) TheArts of Leadership, Oxford:Oxford University Press.

Haigh, G., (2003) Bad Company: The Cult of the CEO, Quarterly Essay, 10, 1-97.

Hamel, G. (2000) Leading The Revolution, Boston: Harvard Business SchoolPress.

Hardy, C., and Phillips, N. (2004) Discourse and power, InD. Grant, C. Hardy, C. Oswick and L. Putnam (Eds.) The Sage Handbook of Organizational Discourse, London: Sage,pp.299-316.

Hassan, S. (1988) CombatingCult Mind Control, Rochester:Park Press.

Heelas, P. (1992) The sacralisation of self and New Agecapitalism. In N. Abercrombie & A. Warde (Eds.) Social change in contemporaryBritain, Cambridge: Polity Press.

Hensmans, M. (2003) The territorialization of common sense,Organization, 10, 561-564.

Heracleous, L. (2004) Interpretivist approaches toorganisational discourse, In D. Grant, C. Hardy, C. Oswick and L. Putnam (Eds.)The Sage Handbook of OrganizationalDiscourse, London:Sage, pp.175-192.

Holt, A., and Eccles, T. (2003) Accounting practices in thepost-Enron era: The implications for financial statements in the propertyindustry, Briefings in Real EstateFinance, 2, 326-340.

House, R., and Baetz, M. (1979) Leadership: some empiricalgeneralizations and new research directions, In B. Staw (Ed.) Research in Organizational Behavior(Vol. 1, pp.341-423), Greenwich, CT: JAI Press.

Human Rights Watch (2002) Enron in India, 24 January, URL:http:www.hrw.org/reports/1999/enron/.

Jenkins, R. (2003) Crisis in confidence in CorporateAmerica, Mid-American Journal ofBusiness, 18, 5-7.

Jones, E. (1990) InterpersonalPerception, New York:WH Freeman.

Kendall, L (2002) TheEnron saga: Its historic meaning, VitalSpeeches of the Day, 68, 593-596.

Kets de Vries, M., (2001) The Leadership Mystique: An Owner’s Manual, London: Financial Times/ Prentice-Hall.

Kunda, G. (1992) Engineering Culture: Control andCommitment in a High-Tech Corporation, Philadelphia,PA: Temple University Press.

Lalich, J. (2004) BoundedChoice: True Believers and Charismatic Cults, Berkeley:University of California Press.

Langone, M.  (1995)Secular and religious critiques of cults: complementary visions, not irresolvableconflicts, Cultic Studies Journal, 12, 166-186.

Layton, D. (1999) SeductivePoison: A Jonestown Survivor’s Story of Life and Death in the Peoples Temple,London: AurumPress.

Lewin, K. (1948) ResolvingSocial Conflicts: Selected Papers on Group Dynamics, Washington, DC:American Psychological Association.

Lifton, R. (1961) Thought Reform And The Psychology OfTotalism: A Study Of “Brainwashing” In China,New York:Norton.

Lifton, R. (1999) Destroying the World to Save It: AumShinrikyo, Apocalyptic Violence, and the New Global Terrorism, New York: Holt.

Maccoby, M. (2000) Narcissistic leaders: the incrediblepros, the inevitable cons, HarvardBusiness Review, 78, 69-77.

Martin, J. (1999) “Come, Join our family”: Discipline andintegration in corporate organizational culture, Human Relations, 52, 155-178.

Martin, J. (1992) Culturesin Organizations: Three Perspectives, New York:Oxford University Press.

May, S., and Zorn, T. (2003) Forum: Communication andcorporate social responsibility – forum introduction, Management Communication Quarterly, 16, 594-597.

Milgram, S. (1974) Obedienceto authority: An experimental view, New York: Harper and Row.

Mintzberg, H. (2004) ManagersNot MBAs: London:Financial Times/ Prentice Hall.

Peaker, M. (2003) Who would be a non-executive director? Strategic Direction, 19, 42-43.

Peppas, S. (2003) Attitudes towards codes of ethics: Theeffects of corporate misconduct, ManagementResearch News, 26, 77-89.

Peters, T., and Waterman, R. (1982) In Search of Excellence, New York: Harper and Row.

Pettigrew, A. (1979) On studying organizational cultures, Administrative Science Quarterly, 24,570-581.

Pettigrew, A. (1990) Is corporate culture manageable? In D.Wilson, and R. Rosenfeld (Eds.), Managing Organizations, pp267-272.

Prentice, R. (2003) Enron: A brief behavioural autopsy, American Business Law Journal, 40,417-444.

Rosenfeld, P., Giacalione, R., and Riordan, C. (1995) Impression Management in Organizations, London: Routledge.

Salancik, G., and Meindl, J. (1984) Corporate attributionsas strategic illusions of management control, Administrative Science Quarterly, 29, 238-254.

Schwartz, J. (2002) Darth Vader. Machiavelli.  Skilling Sets Intense Pace, New York Times, 7 February, 1.

Seligman, M. (1975) Helplessness: On Depression,Development and Death, London:W.H. Freeman.

Semple, J. (2002) Accountants’ liability after Enron, FDCC Quarterly, 53, 85-98.

Shamir, B., House, R., and Arthur, M. (1993) Themotivational effects of charismatic leadership: a self-concept based theory, Organization Science, 4, 577-594.

Sherman, S. (2002) Enron: Uncovering the uncovered story, Columbia Journalism Review, 40, 22-28.

Singer, M. (1987) Group psychodynamics, in R. Berkow and M.Sharp (Eds.) The Merck Manual of Diagnosis and Therapy. Rahway,: Dohme Research Laboratories.

Singer, M. (with Lalich, J.) (1995) Cults in Our Midst: The Hidden Menace In Our Everyday Lives, SanFrancisco: Jossey-Bass.

Steiger, P. (Summer, 2002) Not every journalist “missed”the Enron story, Nieman Reports, 10-12.

Stein, A. (2002) Inside Out: A Memoir of Entering andBreaking Out of a Minneapolis Political Cult, St Cloud, Minnesota:  North Star Pr.

Swartz, M., and Watkins, S. (2003) Power Failure: The rise and fall of Enron, London: Aurum Press.

Tinker, T. (2003) Spectres of accounting: contradictions orconflicts of interest? Organization, 10,577-582.

Tobias, M., and Lalich, J. (1994) Captive Hearts, CaptiveMinds: Freedom and Recovery From Cults and Abusive Relationships, Alameda, CA:Hunter House.

Tourish, D. (1998) Ideological intransigence, democraticcentralism and cultism: a case study from the political left, Cultic Studies Journal, 15, 33-67.

Tourish, D., and Pinnington, A. (2002) Transformationalleadership, corporate cultism and the spirituality paradigm: An unholy trinityin the workplace? Human Relations, 55, 147-172.

Tourish, D., and Wohlforth, T. (2000) On the Edge: Political Cults of the Left and Right, New York: Sharpe.

Townley, B. (1994) Reframing Human Resource Management:Power, Ethics and the Subject at Work, London:Sage.

Vinten, G. (2002) The corporate governance lessons ofEnron, Corporate Governance, 2,16-19.

Watkins, S. (2003a.) Ethical conflicts at Enron: Moralresponsibility in corporate capitalism, CaliforniaManagement Review, 45, 6-19.

Watkins, S. (2003b.) Former Enron Vice-President SherronWatkins on the Enron collapse, Academy of Management Executive,17, 119-127.

Weidenbaum, M. (2002) Responding to the challenge:Corporate governance, Vital Speeches ofthe Day, 68, 597-602.

Werther, W. (2003) Enron: The forgotten middle, Organization, 10, 568-571.

Wexler M., and S. Fraser, S. (1995) “Expanding thegroupthink explanation to the study of contemporary cults,” Cultic Studies Journal, 12, 49-71.

Willmott, H. (2003) Renewing Strength: Corporate culturerevisited, M@anagement, 6, 73-87.

Willmott, H. (1993) Strength is ignorance; slavery isfreedom: managing culture in modern organizations, Journal of Management Studies, 30, 515-552.

Zuboff, S. (1988) Inthe Age of the Smart Machine, Oxford:Heinemann.

Acknowledgement

This article is reprinted with permission from Leadership, Vol. 1, pp. 455-480, SagePublications, 2005.  Copyright SagePublications, 2005.  The article’sEnglish spelling conventions have not been changed.

About the Authors

Dennis Tourish,Ph.D.,is a Professor of Communication at AberdeenBusiness School,in the Robert Gordon University.He has published widely on group influence and cultism, and is the co-author(with Tim Wohlforth) of On the Edge: Political Cults Right and Left. Healso researches and teaches interpersonal and organizational communication, haslectured on cults in a number of UKand Australian Universities, and has acted as an expertwitness on the subject for the British Medical Association. He is a member ofthe Editorial Advisory Board of Cultic Studies Review.  Forcorrespondence: Aberdeen Business School,Robert Gordon University,Kaim House, Garthdee Road, Aberdeen AB10 7QETelephone: 01224-263914 Fax: 01224-263870 E-mail: D.J.Tourish@rgu.ac.uk

Naheed Vatcha is a Ph.D student at Aberdeen Business School, specializing inthe study of upward communication in organizations. She has presentedconference papers and published papers on communication and cultic issues in anumber of forums.


The following discussion of Enron’s 1997 revisioning is taken from the accountof Swartz and Watkins (2003). All quotations usedhere can be found in their original form in their text, on pages 103-105.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

1 239 514 3081 mail@icsamail.com