Executive Times






2005 Book Reviews


Joy at Work: A Revolutionary Approach to Fun on the Job by Dennis W. Bakke


Rating: (Recommended)




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Former CEO of AES, Dennis Bakke, provides a combination of memoir and advice in his new book, Joy at Work: A Revolutionary Approach to Fun on the Job. Bakke can come across as stubborn and somewhat righteous in his exploration of the importance of affirming and practicing values in the workplace because of the importance of those values, not because such practice leads to specific results. At times, Bakke seems naïve, and at other times, he comes across as honest and firm in his methods and practices. Much of what Bakke created at AES has been dismantled since his departure following declines throughout the energy sector following the collapse of Enron. To some degree, Joy at Work is Bakke’s defense of his methods.


Here’s an excerpt, from the beginning of Chapter 5, “Scorekeeping, Accountability, and Rewards,” pp. 109-113:


My view on accountability may be the least understood part of my vision of a better workplace. Freedom is the key to joy at work, but getting feedback on performance and taking responsibility for results are also crucial. Scorekeeping is tracking what happens as a result of decisions and actions. Accountability means taking responsibility for outcomes. I have noted that keeping score is important to the success and enjoyment of games. The same is true in workplaces.

During my only face-to-face meeting with Peter Block, who in­fluenced me greatly with his writing on stewardship, accountability, and empowerment, we got into a discussion of how best to judge the performance of subordinates. He told me he had once been an advocate of “annual reviews” in which the boss would meet with a subordinate and go over the previous year. One day, in a moment of reflection, Block imagined calling his wife into his office at home. “Sit down, honey. It’s time for your annual review.” The absurdity of this imaginary session prompted him to change his mind about re­views. He realized that the relationship between supervisor and sub­ordinate should be closer to a partnership of equals. He suggested a process within organizations that starts with the subordinate doing an extensive self-review. The leader’s role in this approach is much diminished from that of the typical supervisor-led review. The boss becomes primarily a commentator, questioner, encourager, and, to a lesser extent, an evaluator.

I decided to try a variation of this approach with my senior team. Fourteen of us gathered at the home of one of the team members. One by one, each of us reviewed our own performance during the previous year. Most people outlined their successes, failures, and problems, as well as their goals for the year ahead. In nearly every case, four or five would offer a comment or question something the person had said. Sometimes they reinforced the person’s self-assess­ment; other times they suggested a problem or an accomplishment that had not been mentioned.

We held this type of session annually until I left the company. It became one of my favorite evenings with the senior team. There was not, of course, perfect honesty. Light did not shine on every issue. It was much too general for those who preferred specific quantifiable goals, but it was enormously valuable in other ways. It honored each individual as an important member of the team, regardless of title or status or compensation. It allowed us to show our respect for one another. It brought us closer together as a group. At the same time, I got a good sense of how people thought they had performed—and whether their self-assessments squared with the views of their colleagues.

I was a full participant in these discussions. I reviewed my own performance and chipped in comments about my colleagues. I took notes and afterward wrote a report summarizing the reviews. That report was submitted to the board of directors and to the compensa­tion committee, which found it helpful when evaluating organiza­tional changes and setting compensation. Doing annual reviews in a team setting was far more revealing and effective than having bosses do individual assessments of their subordinates. As Rob Lebow and Randy Spitzer wrote in Accountability: Freedom and Responsibility Without Control, “Too often, appraisal destroys human spirit and, in the span of a 30-minute meeting, can transform a vibrant, committed employee into a demoralized, indifferent wallflower who reads the want ads on the weekend. ... They don’t work because most performance appraisal systems are a form of judgment and control.”

This approach did not always translate well in other countries. Paul Hanrahan, the humble, courageous, and gifted leader who became CEO of AES when I left, was leading our China business when I started this approach to annual reviews. He mentioned to some of his Chinese colleagues that he was heading back to the home office for a self-review of the year. Did they have any suggestions? They were horrified.

“Self-criticism is very dangerous,” they said, remembering the experience of their parents not many years before under communism. “Don’t brag about your great successes. They will not believe you, and your credibility will be destroyed. Don’t talk about our problems or take responsibility for mistakes because they will blame you and you will get fired.” “What do you suggest?” asked Paul. “Try using lots of statistics. Statistics are good,” was their sin­cere and very concerned reply. If you have ever listened to a Chinese leader’s speech, you will realize how widespread this simple advice must be.

After In Search of Excellence was published, many organizations, including AES, asked themselves some tough questions. What are we trying to achieve? Where do we want to be in five years? What kind of place do we want to become? What is the bottom line? The search for answers revitalized countless large organizations—com­panies, nonprofits, and governments—and helped them achieve higher levels of performance.

At AES, the primary reason we existed was to help the world meet its electricity needs. To track our progress, we started calculat­ing the number of people who were served by our facilities. By the year 2000, AES served the electricity needs of more than 100 mil­lion people—not bad for a company that had only been in existence for two decades.

But offering an important service or serving large numbers of customers does not mean that a company will be deemed a success. Increasingly, success is defined by purely economic measures, espe­cially shareholder “value”—as if a company’s highest purpose were pumping up its stock price.

What about stock price as a measure of performance? Few non-investors believe it says much about actual performance, especially in the short term. It’s worth remembering, too, that it’s a yardstick that can be applied only to publicly traded corporations. This is a small minority of the universe of organizations that need a way to judge their performance. But despite its shortcomings, stock price is not only used as a measure of success but often the primary one. Even Jim Collins uses stock-price gains to separate the “good” companies from the “great” ones in his book Good to Great.

I do not recommend using stock-price changes, either up or down, as a significant measure of performance, even economic performance. Stock price puts far too much emphasis on one stake-holder—the shareholder—and is driven by external factors that have little to do with internal economic performance. Its use leads to poor decisions by people who work in the organization, and, as I will argue later, it distorts the real purpose of a company and discourages a more balanced approach to measuring success. Cash flow, income, and balance sheets are more reliable economic mea­sures, but even these can be presented in a way that blurs the overall performance of a company.

The scoreboard for tracking success at AES was designed to buck this trend. Roger Sant first suggested that compensation for senior leaders be based half on whether an executive advanced the organization’s values and principles and half on technical perfor­mance, which included protecting the environment, meeting safety standards, developing new business, and hitting ambitious targets for earnings and growth. I suggested that this “50/50” design be ad­opted by all leaders and teams throughout the organization. A good way to see what an organization really stands for is to examine the criteria used to determine executive compensation. You quickly find out whether companies put their money where their values are.

We evaluated performance on “technical factors” in a straight­forward way. We kept track of emission rates of pollutants at every plant. We compared these emission rates with the limits specified in our permits. We also compared them with the emissions of similar plants operated by U.S. companies, even if the plant was in South America or Asia. We established a process of regular internal audits by task forces. Similarly, we tracked all safety incidents and accidents. Results were compared with those of U.S. companies in our industry. A rigorous internal audit process was also in place to review our safety record.

Financial performance was tracked using Securities and Ex­change Commission standards and generally accepted accounting principles. Even before going public in 1991, the company adopted accounting and financial reporting standards that conformed to those used by publicly traded companies. In addition to indepen­dent audits by a major public accounting firm, AES organized task forces to do internal audits.

We had the hardest time measuring success in business develop­ment. While we certainly celebrated “wins” and mourned “losses” in creating business opportunities, it was difficult to assess in a timely fashion the long-term value of new undertakings. For example, it sometimes took four or five years to determine whether a new proj­ect was an economic success. Timely evaluations of noneconomic aspects of new businesses were troublesome as well.

Judging performance on our values and principles was more subjective and required greater creativity. In the first place, we had a difficult time finding a basis of comparison. No other organiza­tion put as much weight on these factors as we did. Among the companies that did stress values, few had methods for determining whether individual employees were practicing them. Because our values were so central to the way we did business, we had to come up with a tool for evaluating our employees.


Executives looking to differentiate themselves and their organizations may find some useful ideas on the pages of Joy at Work. Few workplaces operate the way Bakke describes, but if many of the outcomes Bakke describes in this book are accurate, those executives looking to support a motivated and happy workforce will want to adopt his approach.


Steve Hopkins, June 25, 2005



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The recommendation rating for this book appeared

 in the July 2005 issue of Executive Times


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