Enron Corporation: Committees and Downfall

Enron Corporation was known for its innovative approach to business practices, which included reimagining traditional corporate structures such as board committees. Understanding how these committees functioned is crucial to grasping both their role within the corporation and the issues they faced during Enron’s downfall. There were several types of committee at the heart of Enron operations, including the Audit Committee, Finance & Investment Committee, Executive Compensation Committee, Strategy, Technology & Public Policy Committee, and Human Resources Management Committee.

The Audit Committee, responsible for oversight of financial reporting and external audits, was particularly important given Enron's accounting scandals. This committee had two primary functions: to review and report on the findings from internal control reviews; and to prepare reports on the adequacy of the company's disclosure controls and procedures. However, this committee failed to fulfill its responsibilities effectively due to conflicts of interest between members, allowing questionable transactions to pass through unchecked.

Another key committee at Enron was the Finance & Investment Committee. Prior to Enron's demise, this body was composed of only one member who controlled all investment decisions. In theory, it existed to oversee risk management by approving deals with third parties. But again, flaws led to problems - the chairman of this committee approved deals without proper investigation because he knew less about certain investments compared to his staff members.

Additionally, there was also a compensation committee referred to as the Executive Compensation Committee. It met annually and made recommendations regarding executive pay based upon a peer group analysis. Despite concerns raised about excessive remuneration for executives, this committee did not bring any revolutionary changes to wage schemes, instead maintaining status quo.

The Strategy, Technology & Public Policy Committee was tasked with approving new projects before launching them into production. Problems here stemmed largely from insufficient scrutiny given to project proposals submitted to this committee, leading many projects to lack thorough evaluation prior to approval. Finally, the last main committee listed above - the Human Resources Management Committee – focused primarily on recruiting and retaining employees. While it functioned relatively well, the human resources department itself suffered when many Enron employees lost confidence in senior managers following revelations of fraudulent activity.

In summary, Enron's use of committees was far from perfect. Members often held too much power individually, making it difficult for anyone else involved to raise red flags or dissenting opinions. Furthermore, some committees had overlapping roles, creating more opportunities for confusion rather than clarity. These structural weaknesses contributed greatly to the ultimate collapse of what once appeared a successful and innovative energy giant.