Cultic Studies Review, Vol. 5, No. 1, 2006, Page 64
or ship out. Those in the top category were referred to as ―water walkers‖ (Swartz and
Watkins, 2003). Those in the bottom category were given until their next review to improve.
In practice, however, with another 15 percent category emerging within six months
sufficient improvement was almost impossible, and they tended to leave quickly.
Furthermore, those in categories 2 and 3 were also now in a position where they too faced
the strong possibility of being ―yanked‖ within the next year. A cutthroat culture was
created. The overall, and distinctly cultic, impact is well summarised by Fusaro and Miller
(2003, p.52):
It is clear that Enron‘s management regarded kindness as a show of
weakness. The same rigors that Enron faced in the marketplace were
brought into the company in a way that destroyed morale and internal
cohesion. In the process of trying to quickly and efficiently separate from the
company those employees who were not carrying their weight, Enron created
an environment where employees were afraid to express their opinions or to
question unethical and potentially illegal business practices. Because the
rank-and-yank system was both arbitrary and subjective, it was easily used
by managers to reward blind loyalty and quash brewing dissent.
Ultimately, cults thrive on internal aggression. The punitive internal atmosphere reminds
members of the fate that awaits them should they dissent, or deliver performance below the
high goals set for them by the group‘s leaders. In addition, by keeping members fearful of
each other, their attention is further diverted from the behaviour of the group‘s leaders.
Within Enron, it appears that the tyrannization personified by the rank and yank system
unleashed what has been described, in other contexts, as the ―identification-with-the-
aggressor syndrome‖ (Kets de Vries, 2001). This postulates that, in order to feel safer,
those at the receiving end of aggression assume an aggressive posture themselves. They
move from being threatened to being threatening. The catch is that ―all they accomplish is
to become aggressors themselves, thus increasing the total organizational aggression‖ (Kets
de Vries, 2001, p.81). Intense criticism aimed at individuals stresses the imagined
weaknesses of the person at the receiving end rather than, for example, difficulties with the
wider organisation. The rank and yank system therefore pitted employees against each
other. It was clearly in every individual‘s interest that someone other than themselves
received a poor rating. This created a strong incentive to provide poor evaluations for others
while simultaneously seeking positive evaluations for oneself. Backroom deals, shifting
alliances and broken promises were the norm. It also provided an incentive to conformity,
and a disincentive to the articulation of dissenting voice. But there was no escaping the
relentless logic of the bottom line. Whatever they did, 15% of all employees would find
themselves in the lowest category twice a year, where they faced the daunting prospect of
being yanked.
Clearly, the switch from affirmation to punishment within Enron meant that employees
regularly received mixed messages. On the one hand, they were the cleverest and best in
the world – a form of positive reinforcement, or love bombing, that it would be hard to
better. On the other, they could be branded as ―losers‖ (a favourite term of abuse, for those
who fell at the PRC hurdle), and fired at any time. Consistent with general cultic norms, the
overall effect was disorientation, an erosion of one‘s confidence in one‘s own perceptions
and, most crucially, a further compliance with the group‘s leaders that strengthened
conformist behaviour in general. Thus, mixed messages within cults are a standard means
of projecting ―the illusion of choice‖ (Lalich, 2004, p.190), while actually intensifying control
by the group‘s leaders. Such messages also constrain topics of discussion, further
reinforcing conformist behaviours. As Werther (2003, p.569) expressed it, the ambiguities
and inconsistencies of mixed messages became undiscussable within Enron. But the
prevailing culture rendered ―the undiscussability of the undiscussable also undiscussable.‖

Cultic Studies Review, Vol. 5, No. 1, 2006, Page 65
There were no forums where employees could communicate about such concerns, beyond
whatever informal grapevines managed to survive in such a hostile climate.
Thus, within Enron, it was clear to all that dissent would not be tolerated. Anyone who
queried accountancy practices was likely, at best, to be reassigned or lose a bonus (Cohan,
2002). A 1995 survey of employees found that many were uncomfortable about voicing
their feelings and ―telling it like it is at Enron‖ (Swartz and Watkins, 2003, p.76). Cruver
(2003, p.176) quotes a former senior‘s manager‘s summary of the internal culture: ―There
was an unwritten rule… a rule of ‗no bad news.‘ If I came to them with bad news, it would
only hurt my career.‖ The example of Sherron Watkins illustrates the mindset. Watkins was
a senior employee who worked with Enron‘s Chief Financial Officer, Andy Fastow. When she
realised that the company‘s losses would become apparent sometime in 2003 or 2004, she
drew her concerns to the attention of Ken Lay, who had stepped back into the role of CEO.
Support was not forthcoming from other senior executives, who evidently feared that to
acknowledge the problems would damage their careers at Enron. Lay‘s own response
suggests these fears were well founded. Within days of meeting with Watkins, he contacted
the organization‘s lawyers to inquire if grounds could be found for firing her (Watkins,
2003a.b.). It should be noted that the intrinsically modest act of approaching the CEO to
voice concerns is amongst the most notable acts of resistance currently on record within
Enron. It is also notable that its impact was negligible. Enron‘s collapse was precipitated
when it was compelled to knock $1.2billion off shareholder equity, rather than because of a
widespread refusal to go along with its fraudulent practices or destructive culture by middle
managers and employees.
2. A Company of “Believers”?
In 1997, employees were interviewed about their attitudes, and, perhaps inevitably, a
―vision‖ was adopted in response (Swartz and Watkins, 2003)1. The process and its outcome
illustrate particularly well the extent of a common but totalistic culture within the
organisation and a widespread over-reliance on the supposedly superior insights of the
organisation‘s leaders. The advertising agency charged with developing the new vision
concluded that Enron was a company of ―believers.‖ In particular, employees had intense
faith in Ken Lay and Jeff Skilling. They were also convinced that Enron employees (often
dubbed ―Enronians‖) were the best and the brightest in the world, and they believed they
were doing good by opening new markets and creating new products and services. As a
result, an advertising campaign was launched, around a concept called ―What We Believe.‖
Those beliefs included ―the wisdom of open markets‖ and ―being a laboratory for
innovation.‖ A new Vision and Values team was created, which declared that ―Everything we
do is about change,‖ It added: ―Change is a goal. Change a habit. Change a mind.‖ From an
outside perspective, the slogans may appear rather vacuous, as indeed are those of more
well known and non-corporate cults. However, this may also be their strength. Slogans
bereft of real content often enable people to read into them whatever meanings they wish,
and thus ensures a much wider buy in. A video was also produced, for company wide
dissemination, in which Lay proclaimed that his main objective was ―to create an
environment where our employees can come in here and realize their potential.‖ He did not
specify whether this ambition extended only to those who survived the appraisal system. As
Swartz and Watkins (2003, p.103) observed: ―The whole campaign was not unlike a
religious tract from a New Age megachurch, but instead of directing disciples to God, Enron
hopes its congregation would be inspired to join its mission to make itself The World‘s
Leading Energy Company.‖
1 The following discussion of Enron‘s 1997 revisioning is taken from the account of Swartz and Watkins (2003). All
quotations used here can be found in their original form in their text, on pages 103-105.