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

1b. 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?

1c. Provide some guidelines that organizations can implement to address the process of negative communication through the grapevine in an organization.

RESEARCH IN ACTION Communication Networks and Ethics 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.62 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 e-mail 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.163 The e-mail 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 e-mails, resulting in "groupthink" (explained in Chapter 10). For example, peers of equal rank deferred to their peers to preserve their status by protecting themselves from being seen as overstepping one's place."64 p.315 Could anything have been done to prevent the Enron meltdown? Executives failed to (a) communicate appropriate values to create a moral climate, (b) maintain adequate communication to be informed regarding organizational operations, and (c) maintain openness to signs of problems.65 The lessons from Enron seem clear: Leaders must communicate their expectations for integrity for their followers as well as their peers. RESEARCH IN ACTION Communication Networks and Ethics 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.62 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 e-mail 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.163 The e-mail 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 e-mails, resulting in "groupthink" (explained in Chapter 10). For example, peers of equal rank deferred to their peers to preserve their status by protecting themselves from being seen as overstepping one's place."64 p.315 Could anything have been done to prevent the Enron meltdown? Executives failed to (a) communicate appropriate values to create a moral climate, (b) maintain adequate communication to be informed regarding organizational operations, and (c) maintain openness to signs of problems.65 The lessons from Enron seem clear: Leaders must communicate their expectations for integrity for their followers as well as their