In the new documentary, Enron: The Smartest Guys in the Room, Enron CEO Jeffery Skilling is portrayed as kind of “incandescently brilliant” cult leader espousing a bizarre Darwinist ideology.
Skilling’s favorite book is Richard Dawkins’ The Selfish Gene, which isn’t a bizarre book by any means, but Skilling took the ideas of Dawkins-style Darwinism to a new level by instituting a performance review policy at Enron that worked like a genetic algorithm for people. Every year, all employees were rated from 1 (best) to 5 (worst). The more money you made for the company, the better your rating. (Skilling was fond of saying that money was the only thing that motivated people). Skilling mandated that between 10 and 15 percent of the employees had to be rated as 5s. And to get a rating of 5 meant that you were fired. This review process was dubbed “rank and yank.”
It’s no surprise that this algorithm resulted in a corporate petri dish teeming with sociopaths who were taped in phone conversations laughing at the thought of stealing money from “grandma millies” who were hit with unafforably high utility bills, and urging on the California wildfires by chanting “burn baby, burn!.”
The movie convinced me beyond any doubt that Skilling and Lay are cold-blooded criminals who wiped out the life savings of countless people, deceived 20,000 employees, and ratcheted down the global econonmy, but I doubt they’ll ever go to prison. Even though the duo embarrassed and angered the politicians they placed into offce, such as George W. Bush, Lay and Skilling will live out their lives as buck-passing, finger-pointing, chaffeur-driven gazillionares. The only thing they regret is getting caught. Link
Reader comment: Brian Carnell says: “Many companies use rank and yank systems. One of the best-known advocates of it is GE’s Jack Welch. But it is also used at places like Sun which also uses set numerical quotas — 20% “superior” performers; 70% “Sun Standard”; and 10% “underperforming.”
See Time article for how it’s used at different places and its advantages and disadvantages.”
Reader comment: Bill Glover says: Enron didn’t invent Yank and Rank. Yank and Rank is actually bussiness-as-usual at many companies (including the one I work for) and has been for years. Jack Welch at GE came up with the practice and even uses it with his household staff. The link is USA Today interview.
Reader comment: Vince Daliessio says:
“Glad to see that the criminality of the Enron bunch will be on display
for a wider audience, but one aspect that all of the Enron coverage
seems to miss is that these guys were able to go so far off the legal
and moral reservation because of the stupidity, mendacity, and
outright collusion of governments.
“Pete Wilson’s ‘deregulation’ scheme actually put Californians at risk
for either brownouts or debilitating energy prices (in some cases
both) while denying them the benefits that a truly competitive power
market would provide them (Grayout Davis made the problem worse while
also dealing serious blows to contract law in California).”