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Enron Mail |
The following article appeared in today's Chronicle.
Jan. 25, 2001, 10:59PM Enron rating setup irks many workers By L.M. SIXEL TONGUES ARE WAGGING at Enron Corp., and it's not because of the bonuses they're expecting next month. Employees are irate about a new performance-review ranking system that pits them against each other. Under the system, nicknamed "rank and yank," employees will be put in one of five categories: 5 percent will be identified as "superior," 30 percent will be labeled "excellent," 30 percent will be called "strong," 20 percent will be labeled "satisfactory" and 15 percent will be called "needs improvement" or "issues." An insider said "needs improvement" means "you have one leg hanging out the window." And "issues" is Enron lingo for "you're gone." The rankings, whose names reportedly took Enron officials hours to come up with, are not based just on performance. Instead, they compare employee against employee. "It is possible, therefore, for someone to perform at the same or higher level compared to prior periods, yet receive a lower rating for the current period if other employees' performance raised the bar," according to a memo from Chief of Staff Steven Kean and Executive Vice President Cindy Olson that was distributed this month. While employees are competing against each other for ratings, they're also expected to be team players, according to the memo. `Horse-trading' of rank denied The problem, according to someone familiar with the new system, is the horse-trading that goes on when the rankings are divided up. Managers trade rankings like baseball cards, explained the insider, offering to downgrade one employee if they can get a better rating for another employee. An employee's ranking is more a function of the negotiating skills of the manager he is working for, the insider said. Olson, who's over human resources and community relations, said no horsetrading is going on. The rankings, due out this week, aren't set in stone, she said. Only 9 percent of employees were rated in the bottom category while 6 to 7 percent were labeled superior, she said. But Olson said she can see how employees might be worried about the prospect of bargaining. She speculated that one reason employees might worry is because it's a new system for about 60 percent of Enron's employees. In years past, only the wholesale energy services group was ranked this way. Some human resource managers expressed surprise that Enron, which is known for hiring superstars, apparently feels that it must get rid of so many employees -- or at least put them on notice that they're not doing well. It doesn't say much about the confidence of your recruiting system if you're getting rid of 10 to 15 percent of your work force each year, said a human resource manager in Houston who asked to remain anonymous. Some may not fit in Some people, as smart and talented as they are, just don't fit into Enron's culture, Olson said. It's a company that doesn't tell people what to do; you have to know what adds value, she said. Some folks just have a hard time in that environment. After thinking about it for a moment, Olson added that maybe Enron's recruiters aren't doing a good enough job weeding out the people who wouldn't do well in an entrepreneurial environment. Forced ranking systems were popular several years ago. But they fell out of favor, in part because they were seen as damaging employee motivation. Several years ago, Houston Lighting & Power put in a forced ranking system, dividing all employees into four groups, with "1" the top group and "4" the lowest. Employees were so angry with the system that some work crews had T-shirts printed: "Don't ask me -- I'm a 3." Olson said she doesn't see a problem with motivation. People like to know how they stand and will work hard to reach the top category, she said. But many of the employees -- at least the ones who rate above satisfactory -- won't know how they're rated. Managers don't have to reveal the ratings. And as for figuring out what it takes to be superior? You've got to reinvent your job, add new business lines or create something totally new. "Employees understand that when it's explained to them," Olson said. ------------------------------------------------------------------------------ -- To voice comments, telephone 713-220-2000 and dial in code 1002. Send e-mail to lm.sixel@chron.com. Return to top Click on banner for more information
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