Enron - Anderson Case

Week 4: Case Study

Arthur Andersen LLP was founded in 1913, by Arthur and his partner Clarence DeLany. The firm built a name for its self as being trust worthy and ethical. Andersen set standards for his employees to follow, however those standards were lost somewhere along the way. Values and ethics are the basis for the success of an organization.

In order to connect with others you must first connect with yourself (Maxwell, 2007). Even though Andersen exemplified a stellar character and integrity, he didn't seem to connect with his people very well. It seemed as though Andersen, like many of others leaders, wanted to succeed at any cost. He wasn't concerned with building relationships with his employees, or making sure that they were completing their jobs properly as long as the firm's revenue was growing. He didn't show he cared for his people, so they didn't want to follow him or help him lead. His job as a leader is to initiate connections with people, and he failed miserably at that (Maxwell, 2007).

The Law of Inner Circle says that the potential of a leader is determined by those closest to him (Maxwell, 2007). The article states that Andersen had a lot of inexperienced business consultants and untrained auditor and allowed them to work at client sites. Andersen collaborated with Sunbeam, Enron, and World Com to name a few. All of these companies were part of accounting scandals and ended up bankrupt, including Andersen. You have to be very careful of whom you have working for you and who you're doing business with. If Andersen would have paid more attention to the work of it's audit team it could have prevented some of the oversights from happening. The audit team had started straying away from acceptable accounting policies. As a leader you should never stop improving your inner circle (Maxwell, 2007).

Andersen did not practice the Law of Empowerment, instead of them building leaders up and providing them with security, they done exactly the opposite. Their employees were jumping ship and resigning. Every time it seemed like they were going to redeem themselves and reestablish there reputation, another scandal came along that they were part of. Andersen was convicted of obstructing justice, and persuading employees to destroy documents. Leading well is not about enriching yourself; it's about empowering others (Maxwell, 2007). Andersen's employees had no sense of security and were in fear of losing their jobs. The company's involvement in so many accounting fraud cases caused lots of employees their jobs, even though some of them weren't even a part of it. The law of Empowerment was none existent at Andersen.

The accounting scandals of these corporations affected lots of people nationwide. Lots of people ended up being unemployed, bankrupt, or even in prison. The bible says money is the