Could HR have saved Enron?

While senior management directed the Enron ship, the firm’s collapse highlights the danger of HR-related missteps
By John Sullivan
|Canadian HR Reporter|Last Updated: 09/13/2004

Human resources professionals continually claim they are strategic and have business acumen. But almost universally, the response of HR professionals to the collapse of Enron has been silence. Why? What current business issue could have more strategic relevance than that one of the 10 biggest firms in the world declining into bankruptcy? Employees lost most, if not all, of their retirement funds, job security (and maybe their jobs) and possibly part of their employability due to the tainted reference of being associated with the Enron debacle.

While the actions of senior management led to Enron’s demise, HR failures, omissions and a narrow, tactical view of the HR role contributed to a catastrophic company failure.

Enron failed because of a pattern of unethical acts coupled with a series of deceptions that can only indicate that the culture and values of Enron had degenerated. A pattern of errors this broad could only result from management systems with serious flaws. Who is responsible for developing systems to build and maintain a company’s value and culture? Since there is no “values and culture department,” the answer lies with the only department with company-wide responsibility for developing systems to measure and reward behaviour, values and performance — HR.