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 / Second Quarter 2002 / Issue 27(originally published by Booz & Company)


Core Group Therapy

Core Groups can be as small as a founder/CEO and a few close associates, or they can extend to hundreds of people. They tend to be complex, ever-shifting, almost living entities, which is why insiders spend so much time and effort trying to figure them out. Ambitious junior managers who aspire to become part of the Core Group watch and emulate its actions closely. Senior people who have been around a long time are judged (and judge themselves) according to their closeness to the Core Group. Insurgents look for ways to infiltrate the Core Group. Indeed, industry upheavals are often targeted at changing the Core Group: Advertising’s creative revolution in the 1960s, for instance, lifted copywriters and art directors up from the status of hired hands into the Core Groups of Madison Avenue agencies.

The larger the Core Group, the more resources are needed to fulfill its perceived wants and needs. Thus, in many companies, there is a continual tension between the established Core Group and those who keenly wish to be part of it. And no wonder. If you’ve ever been in a Core Group, you know the heady feeling of having an entire organization constantly trying to guess your needs and wants and satisfy them, almost as if the company itself were infatuated with you. If you are in the Core Group and need work, the organization will find work for you. If you need money, it will boost your pay (as much as it can without endangering the wealth of other Core Group members). If your pay is already so high that you bridle at your taxes, it will manage your accounting and set you up with stock options. If you do not want people to think of you as arrogant, the Core Group will give you opportunities to act humble (and train you to express your humility authentically). The more you ask of your organization, the more it will do for you — up to its limits.

Core Groups are not inherently bad or dysfunctional. Every organization needs a Core Group; without one, there is no way to set immediate priorities. But Core Groups can also be self-indulgent and complacent, especially in times of stress. Enron appears to have had a fascinatingly deceptive Core Group. In its flush days, the company acted as if all employees were special; and the employees themselves, apparently, came to feel as if they were all part of the Core Group, with the entire organization making decisions on behalf of all its members. Reading early employee memoirs (in, for example, a series of letters published in the Houston Chronicle in December 2001), it’s clear that it wasn’t just stock options, but the feeling of being part of an extended Enron family, that kept people motivated to show up at 6:00 a.m. and leave at 7:00 p.m., day after day.

Then came the crash, and suddenly employees were stalled when they tried to sell their stock or confirm their severance packages; they were dismissed summarily, often without any explanation of their future; and while their pensions shrank to 5 percent or less of their former value, they learned that $55 million in last-minute bonuses had been divided among 500 key employees. Suddenly, it became clear exactly how small the Enron Core Group was.

“As a young child of 10 years of age, I witnessed the fall of Vietnam,” wrote one Enron employee to the Chronicle. “Last Monday, Dec. 2, 2001, those memories came flooding back. There were plenty of rumors and unofficial information, but not one word of communication from upper management. By around noon, we were all told to go home and evacuate the building immediately. We did not know what to do with our badge, our parking card, or if we were officially severed from the company. Security guards walked around the floors and watched people while they packed, as if they were potential thieves.” In other words, 10,000-odd employees had suddenly dropped from the Core Group to the ranks of the unemployed — or, worse, to a recognition of their own lowered status within Enron.

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