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What Can Long-Term Care Learn From Enron?

Published March 30, 2009 1:01 PM by Brian Garavaglia

Today, most people are familiar with the story of Enron. A company that was once looked at as one of the exemplary companies in the United States became a buzzword for corruption and mismanagement.  Although the problems that came to eventually destroy Enron were monumental, as mentioned it was once viewed as an exemplary company. What happened at Enron is a lesson for those in business and this lesson is transferrable to the health care sector as well. 

Enron as mentioned was once viewed as an exemplary company, which was growing and had sound leadership driving its corporate culture. Under Richard Kinder, the president of the company, the company flourished, and a corporate culture of trust was established. Kinder was viewed as a person that was quite meticulous and held others accountable for their behavior and for their roles in the company. Although strict, he did build a culture of trust that many felt comfortable with. They understood their roles and their expectations and although Kinder drew a line in the sand, establishing his area and what his expectations where for others, many felt that he did so without equivocation. 

With the movement of Richard Kinder out of the company and Jeffrey Skilling into the role of Chief Executive, things started to change. Skilling had a Machiavellian temperament for control and an unbridled hubris. Skilling introduced evaluation systems that would be made available to others in the company.  He also created an environment that found frequent turnover, fostering hegemony and fear throughout the corporate environment. This left many looking over their shoulder wondering if they would be the next person to be cut from the workforce. The environment that had previously been based on a level of trust and stability was now being replaced by a culture of paranoia based on Skilling's capricious and fear-inducing tactics. 

Skilling appeared to feel that introducing fear and fostering a sense of insecurity among the workforce culture was a positive management strategy. As the new culture and management style became set in place at Enron, it was almost inevitable that the organizational features that Skilling put into play would led to the formerly successful company to witness a destabilization of their cultural environment. We now know that it did and the stability and trust that was established by Kinder was destroyed by Skilling within a very short period of time. This for sure in not the only problems that Enron faced, which ultimately led to their demise, but the establishment of a "social Darwinism," with a cutthroat mentality and a lack of care for those in their work culture was significantly related to the downward spiral of this company.     

So what type of lesson does this hold for those in long-term care? The lesson is significant. In a health care environment, the importance of trust and collaboration is very important. Prior to Skilling's arrival at Enron there was a feeling of consistency and trust. The company flourished under leadership that encouraged a firm management style that emphasized a collaborative and trusting team approach. People were viewed as resources that needed to be tapped. However, when the culture moved to a dog-eat-dog environment, trust waned, collaboration waned and the workers came to view themselves as disposable cogs that occupied positions on a day-to-day basis. How often do we witness this type of style within long-term care? 

Think of how often we feel that we need to manage in secrecy, behind closed doors. For sure, there is need for this type of management. But all too often this type of management comes to dominate the administrator or other manager's styles, providing for a less than transparent environment. Workers come to feel that the culture is veiled in secrecy, with workers becoming paranoid about what is being discussed behind those closed doors. This in turn often erodes feelings of trust that are needed for a sound and efficient work environment. Furthermore, a level of hypocrisy often results where managers state they have an open door policy, yet spend most of their days is clandestine discussions or meetings. Workers pick up on these subtle clues that are provided by those in authority.

As we witnessed with Enron, when trust started to erode and when capricious policies were set, the breakdown of trust as well as the breakdown in the cultural environment as being a stable and predictable place eventually led to the downfall of the company. Workers became anxious about their jobs and they also became weary of working in such a strenuous and draining environment. The social Darwinist philosophy of "survival of the fittest," promoted distrust and continuously made workers view others in askance. Moreover, it ultimately led to workers viewing themselves as disposable commodities without any attention being paid to the person's self-worth. All too frequently we provide little attention to developing an environment or organizational culture based on trust. As those at Enron did, letting their profit and loss be the all determining factor that a worker's worth was measured by, many in long-term care fail to nurture the important factors of trust, stability, and security in the organizational environment.

Health care is a business, and long-term care is no exception. Yet, failing to recognize the importance of our human capital, those people that we depend on to carry out the important duties found in long-term care on a daily basis, is critical. If we fail to build a culture based on trust and respect, and fail to recognize that these needs are paramount for those that we manage, we too could face the same type of problems as an Enron. Therefore, rather than look at a company such as Enron and say it could not happen to us, we need to learn and understand how we can obviate such problems from occurring in the environments that we oversee and manage. History does not need to repeat itself if we can learn the lessons that it teaches us.                             




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About this Blog

    Brian Garavaglia, PhD
    Occupation: Long-term care administrator
    Setting: Sterling Heights, Mich.
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