This morning I ran a six mile loop thinking about the Enron PRC, which just goes to show you how much damage a bad childhood can do to a person well into adulthood. Anyway, as I was booking it through Tanglewood, I had an idea that seemed so brilliant: naysayers denounce Enron bonuses because they weren’t based on performance, but that is laughable on its face because the same people scream about the PRC and how mean it was that Enron ranked people based on their performance. So there was a little haziness there in the thinking among the non-Enroneze.
I was quite pleased with myself having discovered this. I sent Big an email explaining my brilliant discovery; I was practically Cortez arriving on an unknown shore, lost and enraptured. Big’s response was that I was over thinking it. He then wrote a sharp retort to the issue of the PRC that I thought was eloquent, succinct, and made me want to make out with him on the sofa:
Enron had a rigorous employee evaluation system. Everyone at Enron was involved — each person was required to get feedback from lots of people — each boss received input on each employee from multiple sources. People were ranked in the evaluation sessions — this required lots of discussion and sometimes debate.
Like any system, Enron’s system could be gamed, and I have no doubt that some people did it some times. But if you compare Enron’s PRC system against the nebulous systems in most companies, then it is hard to argue that Enron’s was not better overall.
People don’t liked to be ranked against others. It was like “being graded on the curve” in which you force people to fall into a distribution. Not everyone is in the top 10% — some are in the bottom 10% compared to their peers. People can choose to resent that system, but it was well known how the system operated, so that everyone knew the rules. Can people say this about most companies?
Doesn’t really address my brilliance in finding the contradiction of the non-Enroneze, but I thought it was profound, and even beautiful, nonetheless.