The Enron Corporation was the seventh-largest business organization by 2001 and employed over 21,000 people in 40 countries with gross revenues of over $100 billion. Enron was “an exceedingly successful global financial powerhouse from very simple beginnings.”65 By the end of 2001, the organization was suddenly insolvent and filed for bankruptcy after the company admitted to inflating reports of earnings. Following investigations, the Federal Energy Regulatory Commission conducted investigations and released the email records of 158 employees from the company over a period of 3.5 years to help the public understand what happened in what is now considered “one of the United States’ most disastrous business failures.”66 The email communications analyzed by researchers found Enron executives’ communication networks “lit up” with activity. As interpersonal communication became more intense and spread through the networks, formal chains of command previously in place were ignored. Executives deferred to others in the emails, resulting in “groupthink” (explained in Chapter 10). For example, employees of equal rank deferred to their peers to preserve their status by protecting themselves from being seen as “overstepping one’s place.....

Discussion Questions

1. Explain how the grapevine had both negative and positive effects in this case.

2. Discuss this case in terms of the characteristics of groupthink from Chapter 10 (group rationalization, direct pressure, suppression, and illusion of unanimity). What role do you think communication plays in the emergence of groupthink?

3. Provide some guidelines that organizations can implement to address the process of negative communication through the grapevine.