FW: PRC Process

-----Original Message-----
From: =09Humphrey, Gene =20
Sent:=09Wednesday, September 26, 2001 4:07 PM
To:=09Lay, Kenneth; Whalley, Greg; Frevert, Mark
Subject:=09PRC Process

=09=09=09=09

=09I have long thought that the PRC Process needs to be changed in order to=
better provide the appropriate feedback and motivation as well as rewards =
that a good review process should. I hope you will consider my thoughts ca=
refully since I have had active involvement in the process from its incepti=
on and believe that I can offer some advice that should be considered. =20

=09It appears that the results of the process have become too demoralizing =
to the employee being reviewed. Even those that do well are suspicious of =
the process and don't particularly like it. It causes a great deal of stre=
ss on employees and creates an atmosphere of cynicism among the people that=
should be supportive of it. There is a belief that the process is arbitra=
ry and that no one gets a fair hearing based on their performance but rathe=
r the results are skewed by the negotiating skills and argumentative succes=
s of any particular reviewer. The biggest single complaint seems to be the=
fact that an employee can be told after one review period that they are ex=
cellent and six months later be told they are only satisfactory or worse. =
While the employee's performance may have suffered during that period of ti=
me, the message that they hear is not necessarily that their performance ha=
s declined but rather that they as an individual are not valued and are not=
as good as they were six months earlier. We are mixing the message betwee=
n the worth of the individual and the results of their performance. The fo=
llowing is my recommendation to improve on this system:

=09SEPARATE THE PERFORMANCE CATEGORIES INTO THREE MAJOR CATEGORIES =20

=09
=091. Employee Skill, Competency and Character - This category measures a=
persons inherent skill, talent, intelligence and commitments to Enron's va=
lues. This determinant should not change drastically between each review p=
eriod since it measures whats inside a person and that should only change s=
lowly or with the development of new skills or the hiring of new and better=
qualified employees. In this category a person could be told whether they=
are excellent or superior or average and know that they have an opportunit=
y to improve on that ranking through their own effort while also realizing =
that we are continually trying to raise the bar with new hires. This parti=
cular performance measurement is also a measure of the success of our hirin=
g and training program.

=092. Employee Performance - This a measure of how well an employee is per=
forming the tasks of any particular job. This measure could fluctuate much=
more than the first since each person's performance can vary greatly over =
time based on many different circumstances. This measure would also distin=
guish those employees who may not be considered to have the best skills or =
greatest intelligence but who through sheer hard work and determination are=
outstanding performers. It should also help identify those who are under =
performing and not living up to their potential as measured by the first ca=
tegory. This category also measures our skill as managers and leaders of p=
eople since it is often the managers job to motivate people to perform abov=
e and beyond their own capability.

=093. Results - This is a measure of the financial performance and result =
of the effort of any individual employee. I believe this criteria is most =
suited to the commercial employees and should be the major determining fact=
or (but not the only on) in annual bonus payments. This should be closely =
correlated to the Job Performance criteria but it may not always be since s=
ome people may be working on a long term project which has a payback at som=
e future date or in the other extreme someone could have lucked out by bein=
g in the right place at the right time and gaining the benefit from it with=
out the appropriate effort.

=09In addition to these three categories I would also reduce the Job Descri=
ptions that are included in the PRC process. I think it is a waste of time=
to include clerks, assistants, accounting personnel and other non manager=
commercial support people in the process. Very little is gained by them o=
r by management and a tremendous amount of stress and ill will is created. =
I would also reduce the amount of time spent on the PRC at mid year and on=
ly focus on the first two performance categories at that time. I would als=
o change the time when the PRC review is done since now it happens in the s=
ummer when many people are trying to scheduled vacations and at year end wh=
en there is so much other business activity going on. I think a March, Sep=
tember schedule would work much better.

=09There are probably many other ideas to improve the PRC process and I am =
sure that you are working on them. Please give my ideas some thought and s=
ee if they don't merit some consideration.