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We are uniquely created with the ability to reason, make decisions, and be held accountable for our actions. When all of these factors come into play at the same time, we feel something approaching pure joy.

CHAPTER 3

From Misery to Joy

“THERE IS NO FUN LIKE WORK.” That was the motto of Dr. Charles Mayo, founder of the famous medical clinic. The key to joy at work is the personal freedom to take actions and make decisions using individual skills and talents. This is a simple concept but almost impossible to carry out because of the roadblocks thrown up by large organizations—as AES discovered with one of our early power plants.

I had just returned to my hotel room after a long day of trying to convince high-level Florida state government officials that our plant under construction in Jacksonville was following all the permit requirements (and then some). When the phone rang at 10:30 p.m., I was stunned by what I heard from Bill Arnold, the manager of the AES plant in Shady Point, Oklahoma, our newest, largest, and most profitable power-generating facility. The news he related to me would set in motion the most intense six months of learning in my professional career. It would also eventually drain the spirit of this gifted plant leader.

One of Bill’s assistants had discovered that nine technicians had conspired to falsify the results of water testing in the plant. They had sent inaccurate water-quality data to regulators at the Environmental Protection Agency. While the falsification did not result in any harm to the river into which the water was discharged, it was a major breach of our shared commitment to integrity and social responsibility. A week or so later, Roger Sant and I wrote a very strong and candid letter to our employees and shareholders. Because it captures the spirit, values, and operating ethos of AES, I think the letter is worth quoting. We were still in the process of refining our values, and, as you can see, we had yet to come down hard on training programs. The job security mentioned in the letter was needed to get to the bottom of a troubling situation, and in that sense it was an exception to my larger opposition to guaranteeing indefinite employment. Here are excerpts from our letter:

Dear Shareholders and People of AES:

Some disappointing news has just come to our attention which, consistent with our values, we felt we should share with you at the earliest opportunity. On Thursday, June 18, we notified the Environmental Protection Administration (EPA) and the State of Oklahoma that we had discovered in an internal review that some water discharge reports have been falsified at the AES Shady Point Plant in Oklahoma.

It appears that no one in the management structure outside of the water treatment area was aware of these violations. The people involved say that they falsified the samples because they feared for their jobs if they reported a violation. Yet no one at AES has ever lost his or her job for telling the truth, nor will they ever, as long as we have anything to say about it.

This answer is hard to understand because these were the sort of minor excursions to be expected during the first year of operation of a new plant. Since discovering violations, we have adjusted operating procedures and are adding new equipment so that it should be highly unlikely for such exceedences to occur in the future.

What disappoints us most is that no one mentions these violations in either of the two confidential and anonymous values surveys that were conducted at Shady Point during the time this was going on.

This action raises serious questions in our minds about our performance relative to our values. One of the founding tenets of this Company is the shared values. We thought we had explained our values enough to everyone in AES that this sort of thing could never happen here. We are trying to treat people like adults, trusting in their honesty, judgment, maturity, and professionalism—rather than relying on detailed procedures, manuals, and minute supervisory oversight. We cannot comprehend why anyone would trade our integrity to make our environmental performance look better. We hope that the steps we have taken today address the problem, but are embarrassed and disappointed and angry that this could have happened in AES.

The letter was leaked to the press, and we quickly learned how candor can be misconstrued by the investing public. We were a young publicly traded company at the time, and many investors assumed that the misconduct at Shady Point was an economic disaster. In fact, it would bring nothing more than a small EPA fine because no damage had been done to the environment. Nonetheless, our stock price dropped 40 percent the day the letter was leaked. The precipitous fall was on top of the previous month’s 20 percent decline from problems we were having in Florida, where a neighborhood group was mounting an effective challenge to our building permits, even though we had already begun construction on a new plant.

Before the stock plummeted, key board members and senior officers were seriously but constructively concerned about the incident. We started to investigate what happened and how. Roger and I circulated our letter. Beyond thinking about discipline and rehabilitation for those directly involved, we began asking what we could do better in hiring, leadership, and education to minimize the chances of something like this happening again.

After the stock price dropped, the nature of our response changed dramatically. We became panicky, and our emphasis shifted from disclosure to damage control. Much of our attention turned to reassuring our shareholders. A host of lawyers descended on the plant “to protect the assets.”

It seemed to me that most of our leaders, especially board members, were more concerned about the drop in stock price than the breach in our values. One of the lawyers’ first suggestions was to fire all nine of the people involved. When I asked why, he responded, “They will go easier on you at the Environmental Protection Agency.” From my perspective, that was an unacceptable reason for dismissing an employee. Rightly or wrongly, I decided that no one would be fired if he admitted wrongdoing, accepted his punishment, and pledged to adhere to AES values in the future. Under these conditions, seven of nine offending employees left the company one way or another within one year.

Several of our most senior people and board members raised the possibility that our approach to operations was a major part of the problem. It was as if the entire company were on the verge of ruin. They jumped to the conclusion that our radical decentralization, lack of organizational layers, and unorthodox operating style had caused “economic” collapse. There was, of course, no real economic collapse. Only the stock price had declined. In addition, one of our senior vice presidents did a presentation for the board suggesting that “Protect Our Assets” rather than “Serving Electrical Needs” should be the top goal of the company. What he meant was that we should follow a defensive strategy, led by a phalanx of lawyers, in order to avoid legal, environmental, and regulatory wrangles. There was also discussion of adding a new layer of operating vice presidents between me and the five plant managers we had at the time. A meeting of the company’s 13 top managers was convened when I was out of town. At the meeting, a senior officer of the company suggested that our outside counsel should be made vice chairman of the company, with authority over me when “compliance” issues were involved. The officers group took a straw vote that showed 11 in favor of the new organizational ideas and only two against.

Bill Arnold phoned me again about a month after all this trouble began. He asked me not to visit the Oklahoma plant anymore. Under pressure from lawyers and because of an understandable loss of confidence, the plant had decided to return to a “proven” approach to running industrial facilities. Back came shift supervisors, an assistant plant manager, and a new environmental staff department reporting to the plant manager (to make sure water treatment employees did the right thing). These steps increased our staffing level at the plant by more than 30 percent. Bill told me I would not be happy with the changes. He added that employees at Shady Point would feel “uncomfortable” if I were to visit as I had in the past. If I had not been preoccupied with the larger issues of maintaining our corporate values, I might have rejected Bill’s request. I felt hurt and humiliated, but at the time I had bigger problems. I was fighting with the board to preserve our values—and to keep my job. Instead, I told people in AES I had been “fired” from the plant. I did not meet with the Shady Point managers for over six months, and even then we conferred “off campus.” When I finally visited the plant a month after that, I was greeted by cheers. It was one of the sweetest moments of my career.

In the six months following the stock price decline, there was considerable pressure from some board members and officers to “tone down the rhetoric” about values. Several of them thought it arrogant of us to talk about values in public when we didn’t always practice them. “Investors would not treat us so harshly if we didn’t put the values out front so much and then fail to live them,” said one board member. Besides, profits—not values—were what investors cared about, so “let’s not talk about values outside the company,” another board member said. The issue of why we put so much emphasis on values was raised again. “They didn’t work, Dennis. We need to adjust,” is the way one of my associates put it. We engaged in lengthy discussions about whether we should change the way the company described the relationship between values and profits in our public-offering documents. During this time I felt under-appreciated and uncertain about how much support I had among board members, who seemed to like our values only because they generated good press and were popular among employees. I felt I was alone in fighting for our values because they were intrinsically right.

All of this put an enormous strain on the relationship between Roger and me. We spent most of a day at his home discussing what to do. The board had lost confidence in me and my leadership approach. (I believe Roger had, too.) Should we split the company? Should one of us quit? He wasn’t having fun and neither was I. I told him I wanted to stay and make the company work. We decided that I would visit all the board members who had been with the company since the beginning. I would apologize for what had happened and ask them to give me another chance to show that I could lead the company in a way that would make them proud.

One of the things I learned from this experience was that I had done a terrible job teaching people our values and principles. As a company, we did not understand in a practical way how those values shaped the way we organized our work and life together. Our values, perhaps most notably “fun,” had become mere public-relations words. Their connection to the day-to-day operations of the company was superficial at best. Other than a couple of senior staff members and three or four of the plant managers, few people felt strongly enough about the values to adhere to the path we had started down a few years before. This was especially true whenever the share price declined or other economic problems arose. It did not seem to matter to the skeptics that there was almost no evidence that the approach we had adopted in operating our plants had anything to do with the water-treatment fiasco. If anything, most of the serious trouble—the lying and the coverup—occurred because nine AES people at Shady Point had not adhered to our values.

The breach by our Oklahoma group was minor relative to similar missteps by dozens of large, conventionally managed organizations. There was nothing to suggest that operating the company in a more conventional manner would have protected AES from such mistakes. Most important, I was convinced that weakening our covenant of values and principles would take most of the joy out of working for AES.

All this questioning forced me to examine every aspect of my business philosophy. I crammed into a few months a lifetime of learning about people and organizations. I left for vacation that summer realizing that I had nearly lost my job. I knew that if I was to continue pursuing my radical approach to the workplace, especially the highly unorthodox goal of having fun, I would run the risk of being ousted at any time. I had learned that most of the board members did not agree with my philosophy. They weren’t particularly supportive of my leadership approach nor were they the least bit loyal to me. I did not forget this during the next 10 years, even when our stock price was rising rapidly and many board members sang my praises and appeared enthusiastic about my management approach. I kept saying that our values were not responsible for the run-up in our share price and should not be blamed for any down-turns in the future.

On my vacation, I focused on two options for using what I had learned. I could back off, softening my emphasis on values and taking a more conventional line in my actions and communications, especially outside the company. Or I could, as one of the senior vice presidents so aptly put it a few months later, “raise the values banner high and march full speed ahead.” I came back from the vacation determined to march smartly.

I committed myself to teach our values every day in word and deed. I planned regular and frequent travel everywhere in the company to do so. All outside communications would include a brief discussion of our purpose and principles and how they fit with the overall scheme of the business. I decided to return to fundamentals, especially as they related to our goal of making AES a fun place to work. A few years earlier, we had defined the assumptions about people that we believed had guided the workplaces of the Industrial Revolution. I took the next logical step and defined a new set of assumptions about people in the workplace that reflected our thinking at AES. Then I challenged myself and all other company leaders to evaluate every aspect of our existing organizational design and every system either in place or proposed. Was it more consistent with our basic assumptions, or was it less? I suggested we always choose the alternative that was more consistent with our values and in that way increase the chances of creating a rewarding, exciting, vibrant, successful, and fun workplace.

The assumptions about people in the workplace that follow were first put on paper in the summer of 1992, in the aftermath of Shady Point. I added the point about our fallibility a year or so later, but the others remained fundamentally unchanged over time. Note the striking difference between these assumptions and the ones that grew out of the Industrial Revolution.

AES people, I wrote:

♦ Are creative, thoughtful, trustworthy adults, capable of making important decisions;

♦ Are accountable and responsible for their decisions and actions;

♦ Are fallible. We make mistakes, sometimes on purpose;

♦ Are unique;

♦ Want to use our talents and skills to make a positive contribution to the organization and the world.

My hypothesis was that a fun workplace is one that allows people to work in an environment that is most consistent with human nature. While each person is different, some characteristics are common to all of us. The assumptions I made about AES people are intended to capture the most important of these characteristics.

Do not minimize the difficulty of matching assumptions about people with specific organizational structures and systems. It is almost impossible to do consistently. Economic realities, for example, always increase the difficulty of creating a workplace that takes into account human traits and frailties. Designing a great workplace would be difficult even if all people were the same. Because each of us is unique, it is a very tall order to create a working community that is fun and meets our individual needs—and that is also economically successful.

Compounding the problem of creating a fun workplace is the prevailing view among most people that work is, at best, a necessary evil. In my discussions about the workplace, I often ask people to play a word association game. I say “work” and ask what comes to mind. Invariably, they respond with words like “hard,” “drudgery,” “something I have to do,” “boring,” and “difficult.” I have noticed that words and phrases like these are used frequently by people who have been working for 20 years or more. That is understandable given the length of time they have spent in working environments where they were rarely challenged or called on to make an important decision. What’s surprising is that these same words are used nearly as often by people who are still in school and may not have had anything but part-time or summer jobs. Their parents and friends have crushed their expectations even before they reach working age.

For Christians, Jews, and Muslims, the story of Adam and Eve and the Fall often is cited as the reason that work is difficult. A few years ago, I was asked to give the commencement address at Eastern University, a Christian school in Pennsylvania. My topic was “Fun in the Workplace.” In preparation, I reread the Genesis account of the Creation and realized that many of us have misinterpreted the story.

God created Adam and Eve and placed them in the Garden of Eden. In the Garden, they named and cared for the animals. They tilled the ground and harvested the fruit and vegetables. In other words, they seemed to spend much of their time “working.” Their work was not hard, difficult, or the least bit boring. It was paradise. The whole experience was sublime. Of course, they sinned and were ousted from the garden, and life became more difficult. It is this last part of the story that appears to mark our attitude and expectations about work.

Another way to view the story, however, is that God intended that the workplace be beautiful, exciting, and satisfying. Work was to be filled with joy. Work was a major reason for our creation. It was intended to be an important act of worship. It was one of the most significant ways in which we could honor our Creator. From this perspective it is our responsibility to do whatever we can to make the modern workplace the way it was intended to be. While I realize the world is not the Garden of Eden, I do believe it is incumbent on those of us in leadership roles to do whatever we can to make the workplace as fun and successful as we can.

One Latin word for work is labor. It is similar in meaning to the word “labor” in English. It does not reflect any of the joy of work that we see in Genesis. Opus is another Latin word for work, and it comes closer to the concept of work that I am championing. Opus connotes a voluntary act, an act imbued with creativity and meaning. The development of a fun workplace is based on the opus concept of work.

In many of my interactions with people in the workplace, I ask the question, “What is the most important factor that makes a work-place rewarding, satisfying, exciting—fun? The typical answers I get will not surprise you:

♦ “Good friends”

♦ “Good environment”

♦ “It’s challenging”

♦ “I get to do what I’m good at”

♦ “Fair play”

♦ “I learn a lot”

♦ “Doing something worthwhile”

♦ “I’m needed”

♦ “I’m thought of as a person”

♦ “Winning”

♦ “Part of a team”

♦ “Significant responsibility”

The first thing that is obvious from these responses is that a fun workplace has a number of characteristics that help make it that way. My study and experience, however, lead me to believe that one factor is far more important than any other. First, let’s review some of the important factors that don’t make it to the top of the list.

Good relationships with colleagues and supervisors are almost always given as one of the answers to my question. However, when I ask people if they have ever worked in a place where they had good friends but no fun, almost everyone emphatically says yes. Although good relationships and camaraderie may be important to a good workplace, they are not the most important factor.

High pay and good benefits almost never are given as a serious answer to my question. I mention this because so many leaders spend enormous amounts of time on compensation questions. In my experience, unfair compensation can make a workplace less attractive, but fair or generous pay will have almost no effect on the quality of the work experience. People make pay an overly important factor when they choose a job, in my opinion. Most find out later that their happiness in the workplace has very little to do with the level of financial compensation they receive.

A special workplace has many ingredients. The feeling that you are part of a team, a sense of community, the knowledge that what you do has real purpose—all these things help make work fun. But by far the most important factor is whether people are able to use their individual talents and skills to do something useful, significant, and worthwhile. When bosses make all the decisions, we are apt to feel frustrated and powerless, like overgrown children being told what to do by our parents.

The difference can best be understood by considering the nature of sports. Why do people consider sports fun and exciting but view work as boring and burdensome? My longtime love of sports prompted me to look more closely at what made me enjoy playing them so much. Maybe I could gain an insight or two that could help turn work into a much more positive experience. Take basketball, for example. When I ask people what the most fun thing to do is in basketball, a few say “passing the ball.” Most say “shooting the ball.”

“When is it most fun to shoot the ball?” I ask.

“In a game,” is the response.

“When during the game?”

“When there are two seconds left and my team is 1 or 2 points behind or the score is tied.”

“What kind of basketball game?”

“In the championship game, in the NBA finals.”

Most people experience game settings as “fun,” “exciting,” and “rewarding” when they are playing for something important and have a key role in deciding the outcome of the contest. Similarly, while young children enjoy card and board games that rely on chance, adults prefer games that require skill, strategy, or memory. In other words, the more challenging the better. While such analogies are not perfect, sports and games can help us understand what brings joy to the workplace.

In the Virginia Independent School Championship football game, my son, Dennis Jr., was the quarterback for one of the teams. His team was a touchdown behind with six minutes remaining in the game. They had the ball on their own 20-yard line. It was third down and 10 yards to go for a first down. The team needed to advance 80 yards to tie the game. I was a nervous wreck. I was pacing on the top level of the bleachers, almost afraid to watch. From a distance, however, Dennis seemed cool and confident. He calmly broke the huddle and began calling signals. He dropped back to pass and threw a perfect spiral to a streaking wide receiver for an 80-yard touchdown.

Why was I nervous and my son calm? That’s simple: He was in control and I was not. He had the ball. The outcome of the play turned on his skills, his actions, and his decisions. My experiences as a manager, coach, parent, and player are similar in this respect. The person in control of the moment has more fun than people who are less likely to affect the outcome.

Related to this point is the complaint I often hear from people dissatisfied with their work because “it is so stressful.” I don’t believe that stress determines whether a workplace is fun. Was Dennis’s championship game stressful? Sure. Did it lessen the joy of playing? No, quite the contrary. As in most cases in which the outcome is on the line, stress enhances the experience, as long as a person has a certain amount of control over what happens. Debilitating stress stems from lack of control. The people who are probably most affected by this type of stress are middle managers caught between top executives, who won’t give them the power to make decisions, and subordinates, who are constantly pressing them for answers and direction.

Stress enhances the experience, as long as a person has a certain amount of control over what happens. Debilitating stress stems from lack of control.

Similarly, I hear people complain about their work because “it is so hard” and “takes so much time.” I doubt that hard work is the root of dissatisfaction. Again, I return to Dennis’s athletic experience for some insight. For eight weeks in the summer before his senior year in high school, he spent three to four hours a day at school running, throwing, lifting weights, and studying film. He worked extremely hard. He was not paid a cent for this work. He wasn’t even doing it to earn a scholarship to college; he had already concluded he had little chance of playing major college football. Why, then, would he work so hard? I believe it was for the opportunity that might come his way to run for a first down when it mattered or to throw a winning touchdown pass.

In basketball, football, and other games, another factor plays an important role: the scoreboard. Keeping score is a central part of the competitive experience, and it plays a crucial role in making games enjoyable. It doesn’t seem to matter if the game is Hopscotch, Four Square, Horseshoes, Hearts, Boggle, or the World Cup, we keep score and care about the results. We may lose as often as we win, but at least we can measure our performance.

“How am I doing?” former New York Mayor Ed Koch used to ask his constituents. In his flamboyant way, Koch was articulating a need that all of us feel. Feedback is essential to a joyful work experience.

Failure … teaches us humility. Failure is nearly as important as success in creating a great workplace.

Success obviously adds to our enjoyment of games and work. However, contrary to the rhetoric of coaches and inspirational leaders, this does not mean that we have to “win” all the time. A few years ago, there was an advertisement on television featuring basketball player Michael Jordan. In the ad, Jordan explained that from elementary school through his career in the NBA, he had played in 4,900 games. Thirty-nine times he had been in a position to win the game with the last shot—and missed. Was basketball fun for him even though he missed those shots and his team lost those games? I have no doubt that it is more fun to win the game than to lose. However, I believe the biggest source of joy to Jordan and other athletes—as well as to people in the workplace—is the opportunity to use their abilities when it really counts. From the perspective of the individual working person, the key to a great workplace is feeling wanted and important.

Failure and mistakes are also part of what makes games and work fun. In My Losing Season, an account of his high school and college basketball career, Pat Conroy says that failure is inevitable. It is also an essential element of learning and eventual success. Failure, in turn, teaches us humility, and because the experience is often painful, we learn indelible lessons. Indeed, failure is nearly as important as success in creating a great workplace.