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Posted on June 14th, 2012, by

The development of the contemporary business is characterized by the increased impact of information and communication technologies on the performance of companies. At the same time, it is important to underline that modern information technologies and communication can influence not only the outcomes of the performance of an organization but they can affect the organizational culture and behavior of people working within the company. In this respect, it should be said that problems in the communication and effective implementation of information technologies that could facilitate the communication could lead to extremely negative, if not to say, disastrous effects on the company. Basically, it is possible to estimate that the effective implementation of the information technologies and creation of effective system of communication within the company, especially between its executives and the rest of the personnel, may be crucial factors of success or, on the contrary failure of the company.

To prove this fact, it is possible to refer to some examples of the ineffective use of information technologies and communication which led to the destructive effects. In this respect, the example of Enron seems to be particularly noteworthy.

First of all, it should be said that in the contemporary business environment information and communication technologies can play the role of the accelerator of the development of companies. To put it more precisely, the introduction of an effective system of communication within a company improves consistently the interaction between people working in the company. At the same time, the introduction of IT can facilitate the process of communication and open larger opportunities for communication. For instance, due to the use of IT and Internet it is possible to maintain a permanent contact between people working in the same country who probably work on one and the same project but are in different locations. In fact, they may be even in different countries, but due to modern IT and communications they can permanently take consultations and discuss problems they encounter in their work. In this regard, Enron has proved its inability to effectively implement modern IT and communication systems since the company has failed to establish the normal process of communication between executives of Enron and its employees. In such a way, it is possible to speak about the information and communication gap between top executives and the rest of the personnel of the company.

However, in order to better understand problem of Enron, it is necessary to analyze the situation in the Enron Company in order to correlate its problems in communication to the current research that will help define the role of communication in the problems of the Enron and identify the major mistakes made by its administration. It should be pointed out that the Enron was actually one of the national and world leaders in the energy industry.

Unexpectedly, the company had failed in 2001 and the bankruptcy of this multinational corporation was a great shock for stakeholders, specialists and the market at large. In this respect, it is necessary to analyze the major causes of the bankruptcy of the company and reveal the major problems in communication that existed within the Enron.

In this respect, it should be pointed out that the major cause of the bankruptcy of the company is traditionally defined as the financial frauds for which the administration of the company and its top executives were responsible.

However, this is rather the outcome rather than the original cause of the problems within the Enron. In actuality, the main problem of the company, along with the illegal actions of its executives, was the enormous gap in the communication that existed between the executives and the middle-managers and employees. In fact, the administration of the company, its executives simply distanced and separated their own interest and themselves from the rest of the company and employees were viewed just like tools for earning more money but not as members of the team. It is necessary to underline that the problems within the company was very serious and the problems in communication played probably not less significant role in the bankruptcy of the company than its financial problems. For instance, it should be said that the middle-managers of the company repeatedly informed the CEO of the Enron, Kenneth Lay about the situation within Enron and its current problems, namely they warned about the dramatic deterioration of the performance of the company (Swartz, 145).

However, Kenneth Lay totally ignored these warnings and concentrated on his personal interests and, what is more, he continued to persuade his partners, other companies, and even the personnel of the Enron that the situation is stable and the performance of the company is practically perfect. In such a way, it is obvious that there existed an enormous and unsurpassable gap between the administration and the rest of the company, because the CEO did not want to take into consideration the information he received from middle-managers. In other words, it is possible to speak about misinterpretation of the message received by the CEO or, to put it more precisely, about the existence of the barrier in communication when the original message was not only re-interpreted but rather totally changed by the receiver of the message and then delivered an absolutely different form to the public. To put it more precisely, the CEO received the warnings from middle-managers, reinterpreted this information in his own way, and then send the absolutely different message, that there are no problems in the Enron and that the company performs perfectly well, to the public, i.e. market, business partners, and the rest of the company, including the personnel, i.e. people who were working in the company and were not conscious of the fact that the company was heading for the bankruptcy. In fact, this information was intentionally hidden from employees by the executives. In such a way, there was not only the unwillingness of the CEO to adequately interpret and react on the message received from middle-managers, but the administration was also unwilling to communicate with its employees concerning the problems of the company. Basically, the strategy of communication of the administration of the company was based on the lie. The executives were just lying to the employees that the situation in the company was stable (Swartz, 172).

Such a situation is really unacceptable in the contemporary business environment since executives cannot hide information from its employees. In this respect, the use of modern IT and communication technologies could solve and even prevent the appearance of this problem. Basically, the introduction of the new IT and IS and new communication systems could provide employees of the company with an opportunity to analyze the current situation in the company using data they can collect and analyze using modern IT and communication. For instance, the creation of a new system of databases and the access to them at least a limited category of employees could prevent the crisis and frauds within Enron. It proves beyond a doubt that a qualified employees, who were not top executives of the company, but who could get access to the information about the current trends and the general situation in the company could reveal the huge difference between the declared position of the company as it was defined by its executives and the real situation in the company.

However, even been deprived of such IT and communications the employees could not be totally ignorant of the problems of the company where they worked and the striking difference between what they observed and what they were informed about from the part of executives engendered the distrust in relation to the administration of the company. The lack of truthful information also led to the growing tension in relationships between the administration and employees and conflicts within the company became more and more numerous. Eventually, the problems of the Enron resulted in the bankruptcy, but, lacking information about the real situation in the company, employees turned to be absolutely deceived by the executives who created an unsurpassable barrier in the process of communication in the result of which they gained all benefits from the company, while employees were left aside.

Consequently, it is possible to presuppose that the executives of Enron intentionally avoided the modernization of the information system and technologies of the company and they did not even attempt to develop a new, more effective system of communication with employees. Instead, they preferred to build the wall which created unsurpassable barriers in communication between employees and top executives.

In such a way, it is possible to speak about that the communication strategy applied in the Enron contradicted to basic theoretical principles of effective communication. For instance, from the social constructionist point of view the administration and employee did not share the actual information and therefore they could not construct the actual meaning that would reflect the real situation in the company. Instead, they created a false meaning there employees were deceived by the executives that resulted in the gaps in communication and deterioration of the organization behavior because of the growing distrust and tension in relations between employees and the administration.

Obviously, the problems in communication lead to the deterioration of the organization behavior because communication gaps lead to the tension in relationships between people working within an organization and conflicts caused by distrust and lack of truthful information. In such a situation, it is possible to recommend developing communication style that would meet the needs of the environment. This means the communication style of the administration and employees should be similar and not opposing. At the same time, communication should be fair and based on credible information exchange between the sender and the receiver. Also, it is important to eliminate possible barriers in the communication, such as biased and prejudiced attitude to information received from a particular source that implies that the communication should be open and information should shared freely between all people working within an organization. In this respect, it is important not to underestimate the role of IT because the use of modern IT can really facilitate the process of communication, make it interactive an, what is more important, the wider implementation of new IT makes employees more autonomous and, therefore, they are able to evaluate the information they receive in the context of the general development of the company. In other words, through the higher autonomy they naturally begin to think strategically as higher autonomy, which they get due to new IT and communications, implies not only larger opportunities but also larger responsibility. The latter will naturally force the executives of the company to give more information on the current situation in the company at large and the strategic development of Enron. As a result, employees will be more informed and, therefore more aware of the possible problems they may face in the company as well as they may also assess possible threats to the company at large and undertake actions to force the executives to change their policy and improve the situation within the company.

Thus, taking into account all above mentioned, it is possible to conclude that information and communication technologies play a very important role in the contemporary business and the effective management of information and communication technologies can improve consistently the performance of a company and minimize the risk of crisis within the company and deterioration of the organizational culture and behavior. The example of Enron discussed above perfectly illustrates negative effects of the inability of the company to apply effectively information and communication technologies.

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